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Usmanov's Open Letter To The Arsenal Board

Arsenal shareholders Red and White holdings, headed by Alisher Usmanov, yesterday leaked an open letter to the current Arsenal board. It is reproduced in its entirety below:

To: The Board of Directors of Arsenal Holdings Plc: Peter Hill-Wood, Ivan Gazidis, Ken Friar, Sir Chips Keswick, Lord Harris of Peckham, Stanley Kroenke

With copy to: David Miles, Mark Gonnella

5th July 2012
Re: Open Letter to the Board of Directors of Arsenal Holdings Plc (the 'Club')

Dear Sirs,
In recent weeks a couple of separate actions have occurred, which have caused us, as a near 30% shareholder in the Club, to have serious concerns about the approach of the Board and the management team:

• Firstly, there were some very deliberate and public comments by Ivan Gazidis which were intended to leave the Club's supporters with an impression that Red & White is in some bitter stand-off with the Board over its desire for a Board seat and that our involvement on the Club's Board might cause conflict and 'destabilize' the Club; and

• Secondly, OJSC MegaFon (Russia) received a cold call letter from Mr Gazidis requesting a meeting to discuss a possible international partnership deal including shirt sponsorship. MegaFon is one of the three largest mobile phone companies in Russia and also happens to be over 50% owned by Alisher Usmanov. Is this really the level of professionalism that is being applied to securing long-term commercial contracts?

Let us not forget that we have invested circa £200 million of cash in the equity of the Club. We are part of this Club and naturally want the best for it, but our investment is less important than the fact that we are loyal supporters and will never do anything that would destabilize or 'create conflict' at the Club.

We do however believe that you, the Board, and the executive management team should focus your energies on the most efficient operation of the Club and desist from seeking to create a false enemy in Red & White. In our view it is clear that you are trying to distract attention from the more fundamental issues facing the Club, and which indeed many of the supporters discuss through social media sites and other forums on a regular basis. These are the financial model, the lack of investment and the Club's future strategic direction.

However, before addressing these points, it is important to deal with the issues surrounding a Board seat for Red & White once and for all. As you all know well, Mr Usmanov has never sought for himself a Board seat at the Club. Indeed Mr Usmanov does not hold any board seat in any of the companies where he is an investor. Since the purchase of our first share in the Club, we have not only steadfastly adhered to a policy of non-interference in the running of the Club, but have consistently supported the management and given no reason whatsoever to be accused of subversion or sabotage. The history of our voting in support of the Board at the annual general meetings is proof of this.

Indeed, in any conversation about conflict, it is clear from a look at the history of the Club in recent years that the Board has achieved conflict without the help of any outside parties, notably the acrimonious departures of David Dein, Keith Edelman, Lady Nina Bracewell-Smith and Richard Carr, who then reappeared on the Football Club Board. You also instituted a lock-down agreement originally to prevent Mr Kroenke from gaining control and then, later, to exclude our involvement even though there were no grounds or need to do so.

The real conflict seems to be between the supporters' expectations and your vision for the Club and at the heart of this is the policy of so-called self-financing. The self-financing model was created to suit the major shareholders at the time, all of whom subsequently sold their shares.
The previous decision by the Board to fund the building of the Emirates Stadium with long-term debt was, we believe, certainly not about self-financing. If it had been, it would have been funded through a mixture of debt and non-dividend equity. Instead it allowed, in our view, the major shareholders of the time, who happened to all be Board directors, to load the Club with a liability, to benefit from increased future revenue streams and consequent increase in the value of their holdings, whilst avoiding dilution of their equity.

The Board of the time then appeared to pursue a policy of increasing ticket prices and squeezing the fans to cover the short term cost increases which allowed them to bridge until all of these shareholders and Board directors sold 100% of their holdings and cashed out at vast profits.

This policy does not seem to have changed. We have sought and been refused any meetings with Mr Kroenke despite the fact that we own almost 30% of the Club or to put another way almost 1 in every 3 seats in the stadium. It is clear that our stated policy for the major shareholders, namely Mr Kroenke and ourselves, to inject non-dividend paying equity into the Club by way of a rights issue to reduce the debt and invest in the future is of no interest to the Board. Mr Kroenke was sold a vision by the Board at the time that the Club could be successful without further investment, so he is pursuing a similar policy which is to run the Club without any investment and to avoid any dilution of his equity, a good part of which was funded by a loan from Deutsche Bank AG to KSE, UK, Inc. at the time of the mandatory offer. The status of that loan and whether it is still outstanding has not been clarified by Mr Kroenke.

As a consequence of this policy, which is dressed up as prudent financial planning, it is down to our manager, and not the shareholders, to have to deal with the Club's tight finances, carry the burden of repaying the stadium debt by selling his best players and having to continue to find cheaper replacements. All of that, naturally, comes at the expense of performance on the pitch.

This policy is leading to the loss of our best players, often to our main competitors, and even causes the players themselves to question their future at the Club and the Club's ambitions. The situation with our captain and outstanding performer from last season Robin van Persie sums this up. Yet again we are faced with losing our true marquee player at the Club because we cannot assure him of the future direction and give confidence that we can win trophies. Where are the safeguards to ensure that this doesn't happen again and again in the future? As a top Club we should, at the very least, match if not beat the offers that other clubs make to try and lure our very best players away, and also provide a more compelling vision of the future. You can try and put a good face on a bad game for as long as you want, pontificating about the merits of this model, but it will not hide the obvious fact that it just does not allow our great manager to fully realize his managerial talent and deliver success for the fans who are paying the highest prices in the land. It appears that a place in the Champions League will be the pinnacle of our ambition again next season. Unfortunately, in the future we may see this ambition lowered further. It doesn't help to turn a blind eye to the reality of the situation and keep thinking of ourselves as being in the same league as Real Madrid, Chelsea, Manchester City and Barcelona. To have a fighting chance of success, which means winning trophies, we need to match them in every aspect, including, if not first and foremost, financial.

So what is Red & White's vision for the Club? It is simple. A debt free Club, with a big enough war chest to buy top talent players who can hit the ground running and who can complement the Club's long tradition of developing young players and homegrown talent. Together they can help the Club win the most prestigious trophies -because it is the trophies which are the crowning achievement for everybody at the Club. The trophies are also key to the commercial success of the Club - they increase the value of the players, the value of the brand, attract the best sponsors and maximize the value of our commercial contracts which should in turn mean that the Club does not have to squeeze any more income from hard pressed fans. We also believe in the transparency that a stock market listing brings so are committed to the Club remaining listed on the stock exchange and to greater fan involvement both through share ownership and also Board representation for the fans.
Today we wish the majority shareholder Mr Kroenke every success in running the Club, even though we have deep reservations about the viability of the policies being pursued by his management team and sanctioned by the Board.

Finally and reflecting our long-term commitment to the Club, we will continue to purchase more shares in the Club from anyone who wants to sell them to us. Also in order to formalize our long-term involvement with the Club and put an end to any speculation over our position, we, as the co-owners of Red &White, will proudly retain our holding in the Club as a long-term investment for ourselves and our family members to benefit for generations to come. We want the absolute best for the Club and will do what is necessary to ensure the success of the Club that we all love.

Yours sincerely,
Alisher Usmanov
Farhad Moshiri


I`ll add only two things. Firstly, I believe this to be the best rebuttal I have read. Secondly, as a season ticket holder that attends with two good friends, I thoroughly reject the notion that Red & White "owns" one of our seats. You don`t. The rest I shall leave you to discuss in the comments section. LD.




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The Journalist

Writer: Tim Stillman Mail feedback, articles or suggestions

Date:Friday July 6 2012

Time: 9:48AM

Your Comments

LD, thanks for posting that. We may not all agree with what Usmanov is saying but he is a 30% shareholder, his words are getting a lot of airtime, and I think the board need to respond to some of the questions that are being asked.
Wyn Mills
Certainly some worthy questions there, I agree. The manner in which they're being asked is as transparent as anything. But at least he didn't go and destabilise the club, that would've been really uncool given the events of the week……...
Little Dutch
i absolutely agree with the point that the policy of the club is skewed towards enriching the shareholders rather than winning titles. by the time the debt is paid off, the club would still have won nothing but kroenke is sure to be one very rich b*****d
Joe_@**
R & W Holdings always issue press releases when we sign a new player or when we win a vital game. To date, I have never seen them try and destabilise the club or try and milk the feelings of fans :-) On a more serious note, the essence of Usmanov's vision for the club is to make us a Chelsea or City i.e. no debt because the benefactor would purchase the club outright with his own equity and then play fantasy football in the transfer market. Buying into his vision means accepting being a sugar daddy's plaything. It is a real struggle watching some clubs buy the title but to join their ranks is something one would rather not prefer as it would be an empty achievement.
Deltaforce
Usmanov will also make a tidy profit. What interests me is what he says about the inability of the board to sell a vision of success. Does he really want to wrest control away or is he just trying to have some influence?
Wyn Mills
Different culture Delta. Chelsea and City continue to pump huge amounts into player fees and wages. That clearly isn't self-sustainable. However we are still paying off a long-term mortgage debt which R&W could cover overnight. The removal of that infrastructure debt would enable this club to better compete by focusing its match-day and commercial income on the team rather than the stadium.
Wyn Mills
R & W Holdings is wasting it's time, effort and money (effectively) if they think these Arse's will spend money.
@Mq
The last time Arse's won a cup was when my dog was still a puppy.
@Mq
Yeah, after all we just bought Podolski and Giroud with magic beans...............
Little Dutch
Wyn, our mortgage costs us 15 million pounds a year and is tied in on a low interest rate. There are also prepayment penalties if we were to repay the loan in advance. With annual operating profits in the range of 40-50 million pounds, the mortgage is not what is holding us back financially, whats holding us back are our low commercial income streams. As we can not do much about our two main sponsors before 2014 due to contract law getting other income streams was important. Selling the queensland road site was a good development and has essentially funded the purchase of both Podolski and Giroud. Signing secondary sponsors, selling some squad players and the tour to Asia should take care of the rest of the transfers. While a lot can be done to improve our team and our income, its all possible in our current framework in my view.
Deltaforce
I don't agree with the R&W 'vision' for the club or with the timing of this letter, this is a blatant attempt to curry favour with disenchanted Arsenal fans. However, the Board has left them no choice as they do not engage with R&W, which means they are left with no other option than send letters in this manner. Pretty depressing state of affairs with the ownership structure, with no solution in sight.
prits
R&W "will never do anything that would destabilize or 'create conflict' at the Club" - errr.... how about a scathing open letter based on nowt? Cockmunchers.
damiano_tommassi
Delta, although the annual mortgage payment is not exactly sky-high it is spread over a long term and means the club having to keep a healthy amount in reserve to cover interest payments. There also seems to be evidence of excess profit not being reinvested in the team, but instead sitting in the bank. Why? It may well be that Arsenal as a club have always had a culture of financial prudence, but when it results in what is commonly being seen as underinvestment in the team that approach has to be questioned. The mortgage may not necessarily be keeping us back, but I'd say its a huge distraction.
Wyn Mills
sustainable means reaping as you sow. it seems to me kroenke is just keeping the money in the bank to inflate the value of the club for future disposal. he owns a number of sport franchises but seriously, has any of his franchise won anything? one fine day, he may just sell arsenal to someone like glazer who would finance the purchase with heavy debt. what he cares apart from enriching himself?
Joe_@**
Joe, while Kroenke's vision about the club is unknown and he needs to communicate and engage us far more, what is known for now is that he hasn't sold a share in any of his teams. He clearly is a long term investor. Moreover, it helps that the interests of Kroenke and Arsenal are quite aligned. Success on the pitch is the single biggest guarantee of long term wealth creation for Kroenke. It has been one year since he assumed ownership and that summer was the worst transfer season in many years. One has to see the club's activity this summer to better know what kind of investment he is comfortable making.
Deltaforce
Wyn, Usmanov has a demonstrated history of demanding dividends from all his investee companies. Mettaloinvest and Megafon are two recent examples where large dividends were paid out to Usmanov following his controlling shareholding. The Facebook management also conceded that their recent acquisition activity was driven by using their cash reserves for purposes other than paying out significant shareholders large demanded dividends. Usmanov asked for a dividend at Arsenal the moment he crossed the 16% mark of shareholding. Perhaps we are assuming a lot about Usmanov's intentions without actually understanding his past history of investment management.
Deltaforce
Stan kroenke does not care about our success on the pitch, if he was offered a decent amount of return on investment at the expense of trophies you can bet your bottom dollar he'd take it. He's terrible for Arsenal football club, none of his teams win anything, they're all just franchises that he makes money out of. The worst part of it is that he's here to stay.
shewore
Thing is with Kroenke, with the way TV deals keep inflating, he doesn't really need to do a lot. It's not worth his while spunking cash on players because us winning the title doesn't represent much in terms of prize money. With the TV deal that's just been signed, you barely even have to stand still for the club to still be worth more.
Little Dutch
Laughably stupid proposition from Usmanov. So if the club is debt free it will then be on a par with City and Chelsea will it? Think again. The stadium debt costs £15m a year. The difference in our wage bill and that of City's is estimated at some £60m a year. So even, with out the debt we'll still fall short of City on wages alone of £45m a year. Even then there's no extra money to even begin the scratch the surface of the disparity in transfer spending. The figures aren't quite so marked compared to Chelsea but still large enough for the debt to be largely irrelevant when making financial comparisons. Who was it who said giving stupid people success makes them more stupid?
Amos.
I don't think Usmanov is stupid, only stupid people would think he's stupid. I don't think he's saying "as soon" as we're debt free we'd be on a par with City, he's saying he wants to spend on top talent - not that I definitely believe him. LD you've backed up what I was attempting to say very nicely, thankyou :)
shewore
It was still a stupid proposition that would only be bought by stupid people. Usmanov was being stupid in not imagining how transparently silly the suggestion is. Broadcasting revenue alone won't make any club worth more. Only what you do with the revenues will achieve that.
Amos.
No but they can make certain individuals richer. I think Usmanov would be completely aware how transparent that letter is
shewore
They'll make those individuals clever enough to use the revenues wisely richer. Those that p*ss them up against the wall will usually end up poorer. I don't imagine that Usmanov thought for one moment that so many would see through the completely bogus arguments as quickly as they have done. He's clearly not clever enough have avoided making himself look so silly.
Amos.
Either Usmanov is also in it for the money (like Kroenke), or he wants to run the club like Chelsea or City. Neither option is going to make things better for the club in the long run.
prits
Clearly Kroenke is doing a lot morein expanding the commercial capability of the club. But the point is, even if he did nothing with it and didn't get Arsenal relegated, the value of the club would grow. The team tat finishes bottom of the league this year will get more than the winners did in 2005 in terms of TV money.
Little Dutch
The value of the club could and should grow along with revenues but revenue alone doesn't create value. It depends on what the revenue is spent on. If it's spent on depreciating assets then that value will fade. Chelsea and Arsenal have roughly the same revenues but Arsenal is valued at about 70% more than Chelsea. Kroenke needs to grow revenues not value in order to earn a return on his investment. That's his area of expertise and the club is likely to see rapid growth, and the payment of dividends to shareholders, over the next 2 to 5 years.
Amos.
For starters I don't know how you can 'leak an open letter'? Anyhoo, if Usmanov has consistently backed the board with acquiescent voting at AGM's, it ill-behoves him to start publicly ridiculing them now. After all, RVP is not the first high-profiler to skeedaddle. Furthermore, for someone who would never do anything that would destabilise or cause conflict at your club, R & W is doing a pretty good impersonation of it with this missive. Perhaps its time for Hill-Wood and his ilk to have a word with Kroenke. After all, wasn't it the Old Etonian who sniffily responded to the Yank's overtures with a withering 'we don't want HIS sort around here', and lo and behold next we knew he was whistling Dixie with his new best mate Stan some short time later. And, as for the pompous posturing about the infra-dig nature of buying success, perleease, give us a break, wasn't it ever thus, albeit on not such a billionaire scale as now. If clubs sell out, as is increasingly common these days. that's showbiz. It ain't the supporters fault, and personally, I'm happy for City fans, who've suffered as much as anyone down the years. It doesn't hold water for anyone to be snobby about the game these days. After all, when your lot converted to playing football properly under Prof. Vinegar, you were appreciated for it, and most conveniently forgot the old 1-0 song. If an Usmanov gets the green light to shower his billions upon the next superstar, are you really going to turn up your collective noses, for fear of cries of hypocrisy from Chavski and City fans?
lordjohnny
I'm damn tired of all you "value" fans. You guys are living in La La Land. You might not like the trends, but you better move with the times. I don't think any City fan gives a ***** on the billions they've spent. This is juts like evolution. Evolve OR go extinct. I love the club enough to compromise idealism for pragmatism than see the club go extinct.
Gunnerfan1987
gunnerfan1987, i second your opinion. many years back when we were challenging titles with man u and lost, our fans used to argue that we were proud because we did not buy titles like man u even thought they were self-sustained. then, after glazer & abramovic came into picture, we started to taunt them for selling out to foreigners. not long after, we have kroenke and usmanov havent we? then the taunt was on buying titles with petrol money from outside of the system i.e. chelsea an man city. ideally, if all clubs were self-sustained and compete like us and we would be winning titles every year, but it is never going to happen. thus, lets not kid ourselves and be pragmatic. good teams in the league are generally divided into two types: 1) those that play the money game and grab all the creame la de creame to try to win something i.e. man u, chelsea, man city 2) those who refuse to join bandwagon and left with 2nd tier players, not winning anything but with their pride intact i.e. arsenal, everton. from my observation, our supporters' opinions are deeply divided between these two alternatives as a way forward for the club. if we want to argue about how proud we were flashing our bank balance, then stop complaining about others buying titles and be content with the fact that we are not titles challenger. if we want to be serious contender, then we have to break our mould and break our bank - simple. i am not arguing which is the best path for club but this is the reality. either we believe in “the end justifies the means” or be principle with the means but never achieving in the end
Joe_@**
Good post Joe. As some contributors here have already pointed out, Arsenal will see a big increase in revenues in the coming years from the new PL TV deal as well as new commercial deals being signed. Analysts have our 2014 pre tax profits post the expiry of our commercial deals pegged at 70 million pounds. This season we have sold our land on Queensland road and any money from sales of players will be reinvested. This current press furore about our competitivenes post the RVP transfer request is overstated. Our squad and competitiveness in my view will improve this summer.
Deltaforce
The timing of R & W's letter is so wrong and suggests a more sinister motive. If it isn't an attempt to destabilize the club, at a time it was trying to come to terms with RvP's "bombshell", then I don't know what is. The fact that Usmanov intends to use such medium to ingratiate himself with the fans (stuck his face so deep into Wenger's back side) may imply he is on a mission and the board has to respond to this. We all want the good of the club but Usmanov's vision is not the way Arsenal is set up to be run and will change a lot of things around the club. Change is not always a bad thing, but the type on offer reeks of someone's attempt to achieve their selfish interest and will not augur well for the club and pride of the fans. Interesting times ahead.
Naijagunner
"system i.e. chelsea an man city. ideally, if all clubs were self-sustained and compete like us and we would be winning titles every year, but it is never going to happen. thus, lets not kid ourselves and be pragmatic" So then you agree that we must abandon this self-sustaining model, right? Think what could happen if Usmanov was allowed to spend £1B.
Gunnerfan1987
After Usmanov had spent £1bn we'd owe Usmanov £1bn.
Amos.
gunnerfan1987 & amos make the best example of the two divides. i have my opinion on this but i am not asserting others to espouse it
Joe_@**
Call me alarmist or paranoid, but I see us doing something Lees-esque. Sure we wont get relegated to League 2 but we're heading down the same road. We've got our new stadium, but seem not to have the money to really compete. So now our goal is not to win the league, but just get 3rd or 4th If we keep losing top players at this rate, we'll soon be asked to put up with Europa.
Gunnerfan1987
Much better to win the Europa than the league with a sugar-daddy, right?
Gunnerfan1987
my observation is we are not merely self-sustained club but a for-profit club. wenger has stated that it's the club's aim to make 15-20 mil a season - at the fans' expense?. at the risk of repeating myself, we have over a hundred million cash sitting in the bank. i dont believe we will be relegated but it will just take another couple of title-buying sugar daddies to knock us out of top 4
Joe_@**
And what will you have us do @Gunnerfan1987, borrow money to buy titles? Our revenues jumped once we moved to Ashburton Grove and we are paying up our debt for that. Its really illogical to go borrow more at this stage. I don't know what Usmanov is up to but i'll be a proud gooner when we win a trophy this way than buy one. And really what makes u think Man City are assured of a trophy next season? Or Chelsea will repeat their lucky streak to the champions league trophy? The Citizens won the league on goal difference, barely goal difference. Enough of this talk about money. Dortmund won two trophies off Bayern last season and they didn't have the so called world class players some disillusioned fans crave. These players built a name for themselves, why can't we do the same here? RvP, Cesc, Nasri, Toure, Vieira, Bobby, Henry to name a few all built their world class status with us. They were not stars when we acquired them. Let's make a team out of what we have got and rest this issue of spending billions on 11 players on a game of football.
Guyfox
Maybe you do BUT I don't want us to simply be a refinery.
Gunnerfan1987
When Wenger said we needed to make £15m-£20m a season he meant that the club had to earn at least that to pay the stadium debt. As it happens the club generally earn a fair bit more than that (though not all from the footballing side alone) which is why it has to be a 'for-profit' club in order to be a self-sustained club. That's precisely what being self-sustaining means. You earn enough to make the investments you want to make. If you're not being run to generate profits you'll have to depend on someone lending you the money to make up any shortfall or seek charitable donations from some generous benefactor. Only one of the available options is sustainable.
Amos.
i believe profit means nett of gross income minus all operating expenses, inclusive of debt services. that's exactly what manifested in our p&l over the years and these profits were accumulated in retained earning which swell well over a hundred mil
Joe_@**
Bang on it Amos. Some of us fans fail to realize that football has grown from just a sport to a business. For the business to remain a going concern, it must run a sustainable model. Generate revenues from its operations and take care of its expenses. Lets move away from Arsenal and focus a lil on Barca. The top players in Barcelona were not bought for huge sums. The core of the team: Valdes, Puyol, Pique, Xavi, Iniesta, Messi are all products of La Masia. Even our own Cesc. They have just concluded a deal for Jordi Alba and surprisingly he's also a product of La Masia. Barca would have still won all those titles, to be reasonable maybe less, without spending big. IMO, they paid huge transfer fees for Zlatan in reaction to Madrid. And look at how he turned out. Back to the Gunners, Hillwood is right. We can't compete with the likes of Citeh and the Chavs without disrupting our model and where will that leave us. The club has a budget to work with and a target to meet every season. My dear, we are not a refinery. I don't support Usmanov's theory one bit. Years from now, we will beat our chest saying we paid our debts without any help and still won trophies. Everton, the Spuds and Pool have all attempted at building a stadium or acquiring one. Maybe its too early to judge but they have had little progress there. Its a storm (losing our players now) but its passing.
Guyfox
guyfox, i agree it's irrational to spend 1 bil on a team. man city may not repeat their feat again next season but probably they'll stay in top 3. same applies to chelsea. they may not repeat finishing out of top 4. of course man u will be up there too. so our most realistic pre-season target is yet again 4th. german league is a different scenario because it is not distorted by the money game like in the epl and la liga (read the two-horse league of barca & r. madrid). the german league is just like those days with man u (bayern munich) dominating while others stood a fair chance of springing an occasional shot for titles. b. dortmund success was good for the neutrals but it came with a price. their star performers are all targeted by rich clubs immediately. kagawa has gone to man u. next in the line could be lewandowski, subotic, reus and gotze. with crazy money being thrown around, i do not believe we can build another successful era like in the early 2000s. players will be gone after a couple of successful season here. there’s no continuity and we would be forever in transition. because we are now being considered as a 2nd tier club in epl – not in terms of tradition and class but in terms of competitiveness and wages structure. that’s the sad reality. we will get the admiration and the respect from the neutrals like how everton and their moyes do but we will also suffer like them, building sand castle on a rushing shore. I believe there is no right or wrong between the two great divides of spending big or otherwise. it’s just a matter of adapting our expectation. i’ll still be proud being a gooner (maybe an occasional ranting) if we finished out of top 4 without financial doping and i certainly do not think anyone will be complaining if we managed to win a couple of titles with money from kroenke or usmanov
Joe_@**
No attempt to create conflict or de-stablising the club? The timing of this open letter suggests otherwise. I think Usmanov's solution would be just to throw money at the problem and hope it goes away. It is much deeper than that I am afraid. Yes it is frustrating that there has been a scarcity of trophies for a long time and yes it hurts when you see the likes of the Lotto Chavs and Citeh lifting EPL and CL trophies, but at the same time, I would not want Usmanov turning us into something that we despise and that is exactly another Chavski or Citeh. Yes we would have success but it would not shake this horrible feeling that we needed the cash of a sugar daddy to do it and we did not really do it on our own esteem.
Ned Stark
I think your understanding of what constitutes profit is a bit simplistic Joe. In fact the P&L account is in credit to the tune of about £250m - well over a £100m. But all profit isn't cash in the bank. Much of it is held in other assets. tangible ones such as the equity in the stadium, training ground et cetera and intangible assets such as player contracts. Profits need to be retained for future obligations, contract renewals, transfer fee conditions, wage inflation and the like. That Arsenal holds good cash reserves is a good thing but using all your working capital on one dash for success is bad business and could handicap the club for some years. They can't afford too many mistakes.
Amos.
Well at least Hill Wood has now publicly stated that Arsenal cannot compete. So now we know what was said to Van Persie and why he is leaving. Those of us who renew our fabulously expensive season tickets should be under no illusions what we are paying for...3rd place at best. We need to concentrate on winning the FA or Carling Cup if we want to put more silver in our cabinets.
Wyn Mills
And pray that Wenger hangs around a bit longer, because our 'sustainable model' is very much indebted to his skill as a manger in getting the most out of the least investment.
Wyn Mills
It didn't really need Hill-Wood to tell us, or RvP for that matter, that we can't pay the wages and transfer fees that City and Chelsea have paid and are paying did it. In any event Gazidis and Wenger have said similar things for some time. Even Dein complained about Abramovich firing £50 notes at us a while back. But if RvP's statement, and other comments since, are honest it isn't why he isn't renewing his contract "Financial terms or a contract have not been discussed, since that is not my priority at all" It's true our sustainable model is dependent on Wenger which is why his stewardship has been sustained but the competitive environment will change over the next 3-5 seasons as existing sponsorship deals unravel and financial restrictions play some part. He won't be quite as essential in the future. That's the benefit of pursuing strategies and policies that can be sustained.
Amos.
amos, i know exactly what i was talking. i am trained in finance and i based my argument on the the group's financial report 2011. i was tempted to go into financial ratios analysis but i dont think it's necessary. i believe we are too conservative in running the club but no one has to agree with me. it's just my opinion. i am just a bit puzzle as to how we as consumer (in economics term) who cheer when the producer surplus goes up in a sum zero framework (if the quantity delivered is theoretically termed in the club's success or utility / satisfaction derived by the fans)
Joe_@**
Trained in finance or not your reading of retained profit in the 2011 report wasn't accurate. I don't think financial ratios analysis is necessary either. It's certainly not very interesting. It's a fair comment that the club are conservative spenders - they always have been really. Even when we were known as the 'Bank of England' club it wasn't a reputation gained as a consequence of spending outside our ability. Your last sentence may be interesting but I am afraid I haven't the slightest idea what you're talking about.
Amos.
Agree with Amos, we need to be patient and wait for the sponsorship deals to be renewed and the FFP restrictions to play some part. Hopefully we will be in a better position to compete then. If not, I'd still be happier finishing mid table than buying titles like Citeh and Chavski. The person suggesting we might end up as another Leeds has lost tocuh with reality. We are the complete opposite of Leeds, very risk averse in our spending.
bowiecokemirror
FFP will make or break us, we just have to wait. Without Wenger we'd be Newcastle of the last few years, massive gates but not trophies. It's all on his shoulders to keep this cash cow going for this fkin not welcome septic owner.
shewore
FFP, counter-intuitively, will be the most undemocratic sanction applied by any sporting body, if it comes to pass.
lordjohnny
Undemocratic johnny? Not sure about that... anti-capitalist, perhaps, but undemocratic? Is there anyone in the world who thinks footballers/agents/clubs don't get paid enough already, or shouldn't have a smaller budget?
damiano_tommassi
Was gonna say much the same thing re anti-capitalism on an uber scale.
shewore
Anyone who looks at the surplus cash on the balance sheet, claims that the club is conservative AND claims that we should spend more of that, has not really read the entire report. It clearly states that we need to keep a large balance of that cash aside as buffer for the loan outstanding. The club cannot spend that money, even if they wanted to.
prits
It's true that many don't understand the difference between free cash and cash flow. £23m is held in the debt reserve accounts which would seem to leave a lot of the £115m held, according to the last report, available for spending. But much of the cash is collected prior to the year end as season ticket and membership renewals and is used for spending on operating costs and wages through the year. You'll also find net debt reported as debt. Total long term loans are over £260m not the £100m or so reported net debt which is simply the difference between cash held and borrowings. When cash held is reduced net debt increases.
Amos.
damiano- Without wishing to enter into the dangerous world of politics... no..sorry.. scrub that .....if you're a socialist see you next tuesday then democracy will mean nothing to you. Capitalism is democracy. Who is Platini or Blatter to tell any club how they are financed. Feck right off. Do they want the status quo to remain? What hope does that give any other club about a possible injection of cash? Should we all know our place, and there be no movement? Complete t***. FFP is socialism by any other name and should be resisted at all costs. No body or government has the right to tell us how big or successful our club should be, irrespective of provenance.
lordjohnny
It won't be democracy if there isn't some regulatory framework to ensure a reasonable degree of equitable balance. It will never be entirely fair - democracy isn't - but autocracy is much less so. Absolute power corrupts absolutely and all that.
Amos.
 

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