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Big picture painters sober up

Big picture painters sober up

I guess you can be sure that it is a pretty arid news climate when you reference a distorted piece of red top tabloid rubbish and then distort it yourself to justify a piece with a grandiose title claiming that the big picture is sobering. Somehow that is what Myles Palmer managed to convince himself was a good idea when he asserted that Arsenal had to generate £24m from player sales each year to pay for the stadium. Maybe the sobering process hadn`t got underway when he penned that piece. Especially as even the NOTW article he referenced had made no such claim.

In trying to climb out of a hole of his own making he ignores the first rule of holes - when in one stop digging. Apologising for his first error Palmer produces a second piece which uses an amusing 'back of cigarette pack` financial analysis to conclude little of any use whatsoever. In the process he rounds figures up or down by the odd £10m or so as though they were petty cash. The problem with analysing company accounts is that, like many sets of statistical data, you can steer some conclusions in the direction that you want it to go. That`s why due diligence in corporate mergers and takeovers can be such a lengthy and costly business.

In the end Palmer`s 'get out of jail` review concluded that Arsenal had to be careful and not increase their overall wage bill unless revenues increased. That`s not an earth shaking conclusion and one that Wenger some time ago announced when he declared that, as in any business, you cannot afford not to adhere to your budgets. His other conclusion was that some of the sponsorship deals struck in some cases 3 or 4 years ago which provided important up front funds to support the stadium project may, with the benefit of hindsight, not have been the best we could have achieved. That`s possibly true - many things look different in hindsight than they do when you have a complicated financial structuring process funding the stadium to wrestle with. Especially when you are looking back some years later. These deals can only be properly understood in context and only when you do take in the 'big picture` which despite his claim Palmer has failed to do.

By contrast the Arsenal Supporters` Trust carried out a more forensic examination of the interim accounts to November 2007 in April of this year. They concluded that not only did we appear to have paid Henry something like a £10m signing on fee for his new contract but that we had the potential to spend some £25m on transfers and players wages. A different conclusion then but again any independent analysis is only dependent on the information in the accounts. The AST though did a pretty good job of genuine independent analysis and interpretation unlike others.

Arsenals financial picture is likely to be affected by the property slump. Though the Highbury Square development is pretty secure there maybe some units that will take longer to shift but on the grand scale this itself is not a major problem. A bigger difficulty could be the Queensland Road development for which the club has had their original plans rejected. It may now take some time longer to get the returns from this project than they had anticipated but even this shouldn`t affect the big picture. The bottom line is that the new stadium is generating more revenue than it consumes. We are much further ahead in financial terms than if we had stayed at Highbury. That`s all we need to bother with.

You see what doing without proper football does for us! Would anyone have been as concerned in Chapmans day of the costs and financing of building new stands and marble halls? Now we end up looking into all sorts of corners that are of little real concern to the average supporter who just wants to see some brilliant football and our club totally crush all before them as they achieve world footballing domination. An Arsenal XI are playing Crawley this afternoon. It`s a start!

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Date:Saturday July 26 2008
Time: 10:55AM


Never liked Myles Palmer anyway.
26/07/2008 11:27:00
And yet Wenger still can't afford to buy the players he wants, stats and figures are used all the time to assist any viewpoint, politicians are masters of this. Looking at Arsenal's transfer dealings over the past 3 years, it is clear that Wenger has not been able to sign the players Arsenal needed/need, things may be turning around now but that is more due to Arsenal surviving the transition of a new generation of players rather than the Emirates bringing in a new era of financial power in terms of signing players, which is what the new stadium was all about, and I also could get stats, figures and quotes to back up that particular viewpoint.
Professor Calculus
26/07/2008 11:29:00
Of course you can use figures to support most view points which is mainly what the article is about - though some bend them more than others. But Wenger not being able to afford the players he wants or needs is an academic argument. He can more afford to buy the players he wants than all but two PL clubs and one of those is dependent on one man's largesse. Looking at the 'big picture' the Emirates is underpinning his, and whoever comes after him, ability to attract players for the foreseeable future. Which is what the project was ultimately all about. No one thinks we would have been better off staying where we were surely?
26/07/2008 11:58:00
Firstly, Myles Palmer is a *****. Always has been always will be. His articles pretty much focus on him and the famous people he's met and most of his articles are pure twaddle anyway. I'm not really one for figures but if you think of the short term financial figures, am I right in thinking that with the loan repayments the amount of money that we have to repay on our loans for the Emirates, averages out and so we technically make the same amount of money what we got from Highbury? HOWEVER you have got to focus on the long term effects and after all the loans have been repayed we will deffinitly have the financial muscle to compete with Man Utd and Chelsea, if they both havent crumbled away by then!!!
26/07/2008 12:26:00
Okay Amos, I'll join you in your off-field musings... first of all Palmer made no apology - in fact probably the opposite. When you make a dick of yourself you can either throw your hands up and say "I really know how to c0ck up sometimes folks... I'm sorry!" or you can correct yourself without apologising because you have higher-than-average levels of self-importance and think admission of error is a weakness. As for the financials, thanks for the info - AST's 2-page summary is perfect to avoid wading through official accounts... I'm no expert but think that Arsenal Holdings has an over-reliance on property now the market has turned (wouldn't be surprised if that's why Edelman went). I read somewhere that some buyers walked away from their deposit on Highbury Sq. and this is only likely to increase, though overall the project will make money. I dont see how Queensland Rd can go according to plan though. Housing associations marked out to buy lots of those units are going to be spoilt for choice with already-completed new-build flats which have gone up all over the place, so I don't see how there will be demand for Arsenal's developments. My guess is they might well can the whole project, but I hope that if they don't, it won't have any negative come-back on the football side - because if I understand this, property and football revenues are all in the same pot. Imagine if we made a loss on property and the football revenue had to offset some of it! While it may not be likely, it would be a tragedy. The only person happy at that outcome would be Usmanov and Dein. If the board want non-football revenue they need to find other areas and this might be why they need some fresh blood and also why they might talk more with Kroenke. End of muse.
26/07/2008 12:29:00
As far as I know the accounts haven't brought forward profits from property development. On the contrary they reflect some loans needed to complete developments essentially the Highbury Square one. It is difficult to know what the current position really is but from I have read elsewhere they have had very few walking away and sacrificing deposits. It isn't going to be so easy to sell those remaining at the moment but they could carry that revenue forward in the books. It would affect cash flow but not a huge pressure on profits. In the current climate the Queensland Road development could be parked for a year or two which would affect profit forecasts for the same period of time but the land values which are probably all that are currently in the accounts wouldn't be affected. All of this though is the micro picture. The bigger picture which Palmer claimed was sobering is as it's always been. The Emirates project is revenue positive for the club and is and will continue to enable the club to compete amongst the big players financially and sportingly.
26/07/2008 13:44:00
Hehe Amos when I saw those 2 pieces I thought you'd say something back!
Lou the Gunneress
26/07/2008 14:17:00
I don't know who Myles Palmer is...I have not bought the News of the world for about 15 years...generally I don't even read any of the papers...I just go and watch the games as I have been doing for over forty years...I am not interested in what jounalists have to say because most of what they say is speculation, hearsay and more often than not , in time, proved to be BS....... and you can get that down the pub for free !!.....Everybody seems to be pre-occupied with what journalists say.....they are just a handful of people writing stories for a living to sell newspapers. That may be a simplistic view but it's one I have come to hold as I have got older. I don't think there is one proffessional journalist ( not ex coach or manager) that could ever influence my outlook on the game. I have held that view for many years and this was reinforced last year by all of the journalists predicting we would be fighting it out with Spurs for fourth place....some respected journalists too !!!....and people ask me why I never buy a paper ????....
26/07/2008 14:46:00
According to Danny Fiszman Regarding the Queensland Road development, he says it is going to be a mixed use site, with houses, cinemas restaurants and office space etc which will set off the last part of the development. But it sounds like they are just going to go straight on with it whatever the economic climate as he also says 'It's in planning and hopefully as soon as we get planning permission then we will be able to go to market. This is not a development we are doing ourselves, but we will be looking to bring in development partners.' There will always be a demand for houses and shopping space, but I think they might have trouble selling the office space when its finished.
26/07/2008 14:55:00
The accounts say Queensland Rd only intends to break-even as its just us fulfilling the terms under which we got stadium planning, so I wonder if we can, just 'park' it. Interim accounts also talk about advanced discussions for its sale, so I guess we'll have to wait and see how that pans out. Just not so hopeful of everything going to plan when housing and the economy are just not going to plan! Anyway the big picture conclusion seems to be that we have cash and can spend carefully, so I don't believe we CAN afford to match Chelsea/ManU/Liverpool, because these clubs seems to be wilfully able (superficially) to just go along and pay £20m+ for a player. We do rely to an extent on Wenger's frugality and good management to get us through, and I hope he can carry on pulling it off.
26/07/2008 15:39:00
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