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Transfers in Recession

When Sky News in manufactured excitement describes Robbie Keane`s loan move to the footballing backwater of the SPL as the major transfer story of the day then you know just how subdued this window has been.

January transfers have been conducted in an atmosphere which reflects the tightening grip that financial reality is bringing to bear on the game. With a report in this week`s Financial Times that HMRC are taking an increasingly aggressive attitude to raising much needed revenue, issuing winding up petitions more readily than in the recent past, Crystal Palace has gone into administration with Portsmouth teetering on the brink. This 'get tough` policy, the report suggests, is forcing clubs to consider their cash position with ever greater caution. Though the club was successful in raising £500m of bond debt Manchester United supporters can see a threat to long term financial stability strongly enough to plan a protest at the Milan game in March. Liverpool supporters have been unhappy with the fragile state of their clubs finances for some time. West Hams new owners have publically declared the parlous state of their finances. For football it isn`t just a matter of clubs going to the wall but the extent to which this distorts competition. Playing Portsmouth isn`t exactly getting harder as this season progresses.

All just the tip of the iceberg according to a Uefa report due to be published next month. Despite the game generating record revenues half of all European professional football clubs are running at a loss, with more than 20 percent recording enormous deficits in the past year the study reveals. Uefa`s general secretary Gianni Infantino said the principal reason for the losses was inflationary wage and transfer costs driven by clubs relying on owner finance or debt. "Around one-third of the clubs are spending 70 per cent or more of their revenues on wages. Revenues across European football grew by 10 per cent last year, but the salaries of players and coaches have gone up by around 18 per cent."

As a pre-cursor to the planned Uefa 'financial fair play ' rules due to be introduced form the 2012/2013 season this background is beginning to shape the financial behaviour of clubs. Chelsea and City`s conversion of 'soft loans` into equity makes the proper adjustment to the balance sheet but still leaves them with the need to break even or turn a profit within the next 2 years if they are to compete in European competition. Wage costs will be capped by financial realism and the need to adhere to the planned rule changes.

Back in December Wenger predicted this reality would be hard to ignore in the transfer window indicating that when we loan players to clubs it isn`t always certain that we`ll be paid the wages agreed.

"January won`t be busy," he warned, "because people don`t realise there is no money in football, in Europe, in general. We still live in dreamland in football because if you look at how many clubs are struggling in the Premier League and the Championship in England, it is time for us to get a wakeup call and not think the situation will last as it has until now.

"What is so terrible about debts is that at some stage you have to pay it back. If it was just an intellectual problem it is not terrible but at some stage somebody will knock at your door and say 'Please, can you pay me back?` And that is what is going to happen in football.

"It is certainly the worst financial situation in football in my 13 years in England," said Wenger. "I can`t see the reason why the transfer market should be very busy because many clubs struggle financially.

"When you have players out on loan, they [clubs] struggle with the wages of the players.

"I don`t know if a club will disappear, I hope not. But what is happening at the moment, all the clubs live in debt and think a rich owner will come and buy. That is what happened to Chelsea and that is what we thought happened at Portsmouth but you will find out that not necessarily everybody has the amount of resources needed today in football."

The scale of resources needed seem to have dawned on a number of clubs as short term loan deals with little ongoing commitment have coloured the transfer picture in this window. A period which some are claiming could be the lowest spending since the introduction of the January transfer window seven years ago. If this is the first indication that football has to adjust to a new era of fiscal responsibility then the game will be better and fairer for it.

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The Journalist

Writer: Amos Mail feedback, articles or suggestions

Date:Tuesday February 2 2010

Time: 11:23AM

Your Comments (oldest first)

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I think more and more we're beginning to see that our board have been close to exemplary in their running of the club and that picture is going to emerge even more in the next 2 years.
Little Dutch
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02/02/2010 11:39:00

I still think wages need to be capped as players are taking too much money out of a club. No matter how good a player like Fabregas is i dont think he should be earning in a week 3 times more than what i earn in a year for doing what he loves. Our club pays 2 million pound a week on wages, ridiculous really.
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02/02/2010 11:56:00

Arsenals wages are around 50% or less of turnover - Chelsea's has been as high as 84%+. Uefa's financial fairplay rules, as long as they are implemented as planned, will make it much harder for that to happen in future.
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02/02/2010 12:03:00

LD, try to explain that to some of Arsenal's faithless.
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02/02/2010 12:05:00

I totally agree that wages should not be allowed to constitute more than 50% of turnover. I don't really have a problem with players earning big money, fact is, they are worth it because of the money they generate themselves. If 60,000 people pay upwards of £35 for a ticket to a match to see the likes of Fabregas and van Persie, then those players deserve a fair wedge of the money they generate. It's certainly better than the money going out of the game. What I can't condone is teams spending money they don't earn on wages. It's practically cheating in one way. But in another, my attitude is, clubs are free to be run as the owners would like and they have to run the risks associated with their business model. All debts have to be paid eventually.
Little Dutch
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02/02/2010 12:09:00

In the information age it's hard not to get drawn into these issues but I can't imagine supporters during the Chapman era being overly concerned about the financial background to building the new stands at Highbury. Sadly the game has changed dramatically to the extent that it is all about the money now. For once I think Uefa are on the right track with their 'fairplay' policy. I just wonder whether they really have the balls to see it through. The game does need it. Football needs to become a sporting competition again and not some billionaires poker game.
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02/02/2010 12:12:00

I too think it's fair enough that with the massive wealth pumped in by the supporters that players see a fair old wedge of that, but then you see the likes of Jay Emmanuel Thomas playing OJ Simpson in his 100,000 motor after only 1 or 2 first team performances and you have to ask WTF?
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02/02/2010 12:25:00

I agree to an extent that if the players make that much money for the club then they should take a nice wedge home, but i still think its too much. Ticket prices should be lowered, wages capped and clubs should have more cash in the bank to improve all aspect of the club (stadium, sorroundings, hospitality etc)
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02/02/2010 12:26:00

That too Niko. A mate of a mate is friends with Gibbs and said he was on 8k a week, and this before he had played for the first team. Id imagine his new contract is around the 20 mark
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02/02/2010 12:32:00

I guess it's all relative, if they didn't get it with us they'd get poached and paid it elsewhere.
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02/02/2010 12:47:00

If UEFA are serious about their financial fair play conditions, then we could really see the football environment change drastically, and for the better. However, I dont know if the bigger clubs in Europe (Milan, Inter, Madrid etc) run their business at a loss and that could impact its implementation. Arsenal will certainly benefit from any such legislation.
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02/02/2010 12:50:00

I am going to go out on a limb and say that a player like babel would thrive in your team as a striker as he has the pace to stretch defences and remember he is actually quicker than torres,he has the pace,skill and shooting ability to be a world beater but hasn't been given the same amount of chances that players lucas and n'gog have had. There was a rumour that rafa benitez wanted to make a swap with whom a don't know but really wenger should taken babel he is like a clone of henry and anelka as he has their both attributes,fast,skilled to play as a striker like a young anelka but also versatile to play as a right or left winger like a young thierry henry,really wenger i am sure could turn him into a deadly player,he is definitely more talented than walcott and had he been the one at arsenal then i am sure he would be a started right now. But eh there is still the summer and who knows maybe for the first time wenger might be willing to spend but i wouldn't count on in as i can see already chamakh coming in but with one of your main players being sold to appease the debts unfortunately.
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02/02/2010 13:09:00

I think Babel was looked at and passed up a couple of seasons back - you never know of course but he seems to have his limitations. Whatever happens though we won't be selling to appease debts. We've passed that stage.
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02/02/2010 13:34:00

Very good - similar articles with as much, if not more depth and relating to Arsenals past can be found on the glorious Tony Attwoods "Arsenal News" site. Required reading for all gooners with a modicum of intelligence, these articles run one after the other :-) #warning - this blog is not suitable for doom & gloom merchants#
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02/02/2010 13:41:00

happy 2nd feb lads from all the boys at everton
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02/02/2010 14:26:00

hope u have a good one
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02/02/2010 14:26:00

Didnt know groundhog day was celebrated on merseyside
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02/02/2010 14:39:00

It wasn't passed upon on but told to wait one more year i guess wenger wanted to see whether henry would still be at the club but babel was impatient and left for loserpool and the rest is history.
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02/02/2010 15:15:00

Actually, I've always thought that Babel would do better under Wenger than Benitez (just like I think JCole and Robben would've done better under Wenger than Mourinho). Not saying Babel's an Henry or Fabregas but I do think he's a good player who would thrive and develop into something more than he is today under Wenger. As for football's finances, it never ceases to amaze me how the supercapitalist darwinian USA has a far more egalitarian sports structure than Europe, which is certainly darwinian in the sports arena. Here we are a month before the superbowl, the US' biggest sports event, and one of the teams have never been there (the Saints, aka the "Aints", whose fans wear brown bags over their heads because they're so embarrassed by their team's lack of achievement in anything) while the other have reached the superbowl only 3 times in their history and won it only once. Neither are big money teams.
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02/02/2010 16:14:00

Is it the NFL that has the uber socialist roster system? In which there is a shared pot of money and the team that finishes top gets the smallest share of the money in the off season whilst the team that finishes bottom gets the most? I don't think I have the details absolutely bang on, but I'm sure there is a big American sport that has something to that effect?
Little Dutch
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02/02/2010 16:20:00

Jaelle, Superbowl is on Sunday. Also if the CBA goes out of the window next year the competition could be very different.
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02/02/2010 16:29:00

I believe you are thinking of the college player draft- at the end of the season, the worst team gets the first pick of the emerging college class, the best team picks last. I'm not sure at the team level, but at the player level, the winning team get bonuses roughly double that of the losing teams (the winning bonus is still less than the weekly wage of any player in England- last year the winner's bonus added £1,000 per week annualized).
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02/02/2010 17:15:00

***of course I meant the Super Bowl game winner's bonus.
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02/02/2010 17:16:00

Penz, I meant to write "week" instead of "month". I think elbondo answered LD's question.
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02/02/2010 18:13:00

Oh, and LD, yes it's the NFL.
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02/02/2010 18:13:00

That's right, the player draft. I am not into US sports one iota (I used to like playing basketball as a kid, until a) I got a hernia going for a 3 pointer and b) I realised how many bloody breaks there are), but I remember being shocked to read in the U.S. of all places that they would do something like that. Then again, if there is one thing on earth the American nation takes more seriously than money, it's competitive sport. I happen to think the scholarship system is pretty outstanding too.
Little Dutch
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02/02/2010 23:00:00

A song i heard on a blog. Chelsea where ever you may be, Dont trust your wives with John Terry, His dad sells crack and his mum a thief and he crys when he misses a penalty!
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03/02/2010 01:25:00

Thanks for the links Gunnerman. Historical and considered analysis - a refreshing change from the knee jerk hysteria churned out by too many pundits.
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03/02/2010 01:27:00

How true is this?
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03/02/2010 04:47:00

The word is he will play in a friendly gainst Dagenham & Redbridge behind closed doors this evening to make a final impression before Wenger decides. The 2.5m is a stumbling block at the moment
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03/02/2010 14:45:00

Great, thought-provoking article Amos! Helps us to put into perspective just how well run and well positioned Arsenal are and how unrealistic some of the cries for signings are.
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03/02/2010 14:59:00

I will expect the match with Dag &Red to include some of our under-performing, returnee players, to help with their rehab process and give them some additional (easy) match practice before the weekend game. I read that NB52 is keen to play; Clichy, Nasri, Theo, should all have about 45 minutes, in that case.
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03/02/2010 15:54:00

Alumnia should practice juggling too, he already has the clown status
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03/02/2010 16:27:00

This is Wenger's way of saying sorry lads we wont be spending.
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03/02/2010 19:34:00


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