SlavaMedvedenko wrote:J.Kim wrote:But it hinges on the next match-up with Udinese in CL 3rd round and there's a very likely chance that Arsene Wenger is waiting on the result of this match to pounce in the transfer period. Considering there's a hefty share of TV revenue waiting to be had for teams who advance to group stages and also a considerable sum of money for each Win/Draw (€800,000 for a win, €400,000 for a draw), it makes sense for Arsene to wait until the match with Udinese is done and take action then because there's still 7 days left in the transfer window. Winning means, being able to re-fill the coffers, pay down the debt and also pursue talent. Losing means pursuing other means of staying afloat (they've spent/saved up prudently over the past 5-6 years so they wouldn't be in immediate trouble however, it would be some lean years watching fetuses play on the pitch and being satisfied with watching them developing, while they pay down the debt, I'd imagine)
That's a very negative way of thinking. If he just went in and reinforced the squad before the season started, losing would certainly not be an option like it is now. That's what managers do at top clubs, they make sure they win the big games.
You cannot prepare for a match of that magnitude with the rest of the season hanging in balance, especially with a team as mentally fragile as the current bunch.
This is what fascinates me about sports; the added factor of human irrationality/rationality that plays into the results of the squad, which directly correlate to financial results of the club (especially in a league like the EPL/CL where placement directly affects revenues)
If your mentality is one of winning championships, you are very correct. You need to poach top talent; any that really fits into your team, financials be damned
However, if you approach your sports team like a business (like Arsenal seems to have done over the years. e.g. Highbury Square), then you forecast, expand out financials to future years and compare the NPVs and determine which option is better. The reason why Arsenal would play it safely in a situation like this is because of the deals that they were tied to before the economy went to the ****.
On construction of the stadium, they switched from bank loans to issuing public bonds, but instead of pursuing a variable rate or even a 5-year renegotiable rate (or other things that would allow them to freely pursue getting cheaper rates), they locked themselves into a long-term fixed rate contract (for £210 Million, with the remaining left in variable rate based on LIBOR). Doing this somewhat screwed them over since 10-year rates have dropped approximately 100 basis points over the past 5-6 years. Basically around £2M (baseline figure, I'm pretty sure it's more but I'm not sure what the amortization schedule looks like) per year that they're spending extra to service their debt.
And then there's the naming rights/kit deals that they entered into with Emirates. They basically financed the remainder of the stadium through the naming rights and kit deals, but this basically amounted to a bargain basement discount sponsorship deal for Emirates. Arsenal received £100M from Emirates for the naming rights to the stadium and kit for 15 years. This basically amounts to less than £7M per year on naming rights for both stadium and kit, which is drastically lower than market value deals that other teams have gotten in recent years (for example, Aon paid Manchester United £80M for four years, same with Liverpool and Standard Chartered... hell frigging Spurs are getting £20M for 2 years with Autonomy!). There's significant lost revenues because of these safe deals that they locked themselves into over the years.
Considering what the lending rate would be for a holding company with significant debt, and compared to the return out there, it's very likely that from a business perspective, it is much more prudent for Wenger and the Board to wait and react rather than take a proactive approach.
(Though, as a fan first and foremost, I don't really agree with it...)
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