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Premier League Clubs Agree New Spending Controls

Yesterday, Premier League clubs voted for new legislation on spending, with a less stringent version of UEFA's Financial Fair Play regulations set to be enforced in England's top flight from 2013/14.

The Football Association have not been involved in these talks, but Premier League bigwig Richard Scudamore suggests there will be an 'absolute prohibition' on clubs posting losses of £105m over the next three years. Any club making a loss of £5m a year will have be obliged to guarantee those losses against the owner's assets.

A restriction on salary increases will also be implemented. Premier League clubs are restricted in terms the amount of increased PL Central Funds that can be used to increase current player wage costs to the tune of:

2013/14: £4m
2014/14: £8m
2015/16: £12m

The Short Term Cost Control measure applies only to clubs with a player wage bill in excess of £52m in 2013/14, £56m in 2014/15 and £60m in 2015/16.

Premier League Chief Executive Richard Scudamore said, 'Normally we stay silent on sanctions as the commission has a free range but clearly if there is a material breach of that rule we will be asking the commission to consider top-end sanctions.'

He added: 'The balance we have tried to strike is that a new owner can still invest a decent amount of money to improve their club but they are not going to be throwing hundreds and hundreds of millions in a very short period of time.

'While it has worked for a couple of clubs in the last 10 years, and I am not critical of that, if that's going to be done in the future it's going to have to be over a slightly longer term without the huge losses being made.'

13 Premier League clubs voted for the new sanctions, 6 voted against. Reading obstained from the vote.




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The Journalist

Writer: Tim Stillman Mail feedback, articles or suggestions

Date:Friday February 8 2013

Time: 9:04AM

Your Comments

http://www.independent.co.uk/sport/football/news-and-comment/sam-wallace-elite-clubs-seek-to-reinforce-their-closed-shop-at-the-top-8486177.html good article here by Sam Wallace in the Independent with regards to these new rules.
Little Dutch
A depressing read over my muesli this morning, all it does is reaffirm what the owners such as Kroenke (roach), and the others that are here purely for profit are all about. At least the oligarchs want to win and the prestige associated with it.
shewore
although such initiative is lauded, there is concern that epl in general would be less competitive as it would become less attractive for world class players to ply their trade here. spain is already a preferred destination now due to their lower tax rate. as a gooner, i am not complaining as we already have such self-imposed restrictions in place for years
Joe_@**
now kroenke has all justifications he needed to reap the gain from the club's big fat saving at the expense of the fans who endured endless frustration from the frugal policy over the years
Joe_@**
Interestingly diverse reactions to what is a sensible move. Sam Wallace asks what happens to the money that isn't spent on wages and transfer fees? Not the brightest question in my book given that most PL clubs make a loss. How about using it to avoid making losses? Why not use the profits to develop the basic raw material of their industry? Say better facilities for supporters, lower ticket prices, maybe investing in long term structural improvements using academies to develop their own players. It should also make the league more competitive which is going to be in the interests of more supporters of more clubs. The bigger clubs looking to participate in the CL will, in any event, be restricted by the much tougher Uefa FFP rules while those aspiring to reach that level will use the looser PL conditions until they look as though they can get there. Maybe football stands a better chance of being a real competition once more. Amazing that some can only see negatives.
Amos.
My money's on it not going on those things Amos, especially for us
shewore
Unlike you to be so cynical shewore! Some of it has already gone on those things. Facilities at the club are good, they've improved the environment around what is after all a new state of the art stadium. They've invested money in developing players and training and academy facilities so your money is already at risk. Ticket prices will always primarily be driven by supply and demand in which case they, as with all clubs, will have to maintain or increase the demand. We're already a pretty good club to follow, if you choose to follow a football club, while remaining financially sound and secure enough to ensure we can challenge on an enduring basis. What's to be cynical about?
Amos.
I'm cynical cos I don't trust a non football man who's in charge of my club and who's only here to make money out of something he probably had never heard of til 5 years ago. Arsenal is just an investment opportunity cos of the frugal way the club's been run under Wenger and the good position we're in to make money out of this FFP in the future.
shewore
We've never had anything other than non-football men in charge of the club! Kroenke will only make money out of the club if he makes money for the club. That's the way proper business works. The club hasn't been run frugally. We've spent £400m on a new stadium and have the 4th highest spend on player budgets in the PL while also being among the highest gross spenders on transfer fees. I think you're confusing frugal with prudent.
Amos.
Don't split hairs, you know exactly what i mean, I don't mean ex arsenal captains running it for example. It's a lot harder not to make money in this business as Arsenal in the next few years, he doesn't have to be a mastermind, he has to sit back, not invest anything in the team, and watch the cash roll in - as i've said over, and over, and over again.
shewore
You were splitting hairs in a snide reference to non-football men. It was just too easy to point out the contradiction. If you look at the profit figures of all the clubs in the PL most clubs would be compelled to tell you that it isn't easy to make money in this business. Alan Sugar's 'prune juice effect' reasoning has never been more apparent. Kroenke has spent a lot of money buying his investment. In order to earn a return he has to improve it's capital value. He can't do that sitting back waiting for the money to come in. He can, and will eventually I'm sure, take dividends out of the club just as ManU owners and most other profitable businesses have always done, but if those dividends are paid out of static revenue streams they'll almost certainly impact negatively on his capital investment. Therefore in order to run the business in his own best interests he also has to run it in the interests of the club. But you're right that you've failed to understand the fundamentals of business and investment and returns over, and over and over again.
Amos.
I don't think examples to early pre sky/early 90s are that relevant, fair enough if you can't see that though and think that they are. Arsenal, as i've said, are in a fantastic, cash rich position and with the new money pouring in to the club, which now isn't going to go on any more of the arms race of players wagest - what's going to happen to it? A lot of it will go to his pockets. Sorry but referencing non football men is hardly splitting hairs - the only football man we have high in the administration is Wenger, and I don't think that's healthy.
shewore
I think shewore's point was more that the club only really has to stand still for Kroenke to see a healthy return on his investment. He's well versed in the business of media and he'd probably have speculated that TV revenue was about to go through the roof. In fact, the club could probably even go a little bit backwards and Kroenke will see a big return, especially because of the equal nature of TV money distribution. (Though obviously his return will be bigger if we stay in the CL).
Little Dutch
I'm not sure what clock your time scale is working from but it needs a new battery or winding up if its still clockwork. The losses made by PL clubs are losses being made now - and have been made for some time. Sugars 'prune juice effect' reference was from a business lecture to the Oxford Union about 10 years ago not the early 90s. Who says the new money isn't going on wages? The clubs below will be able to spend much more on wages bringing them closer to the elite clubs. They'll just be able to do so without necessarily making crippling losses. The league will become more evenly competitive overall because no-one will be able to spend much more (at least not more than £105m) than their revenues over 5 years. As for football men Gazidis is clearly a football man, running the MLS as he did, and played at amateur level, Ken Friar is still there of course and he's a football man. Not really different from previous Arsenal boards.
Amos.
The club can't just stand still in order for Kroenke to make a return on his investment. The increased TV revenue isn't only coming to Arsenal. It's going into the pockets of all other 19 teams in the PL who will use it to invest in their clubs and thereby compete as aggressively in the same market as AFC. In order to improve his returns he has to increase revenue streams at a faster rate than his competitors which means he has to be more successful as often as, if not more often, than his competitors. At the same time he has to use his expertise to run the business more efficiently and to increase other revenue streams to advance commercial development. To believe you can just sit back and rake in the money is to fundamentally fail to understand the nature of competitive business and investment returns. It just ain't that easy.
Amos.
Thanks L Dutch, that's exactly the point - one which i'm sure you can see Amos. I've got no interest in listening to Alan Sugar's lectures, i just assumed it was from his time up the road. How will the lower league clubs be able to do that when the clubs that are above them suck up the best players, on a larger scale than they do so at the moment? Hmm i wonder how much Gazidis really provides challenge and constructive feedback to Wenger behind the scenes, or just lets him get on with it - i'd assume that latter, what with Wenger playing a part in hiring him.
shewore
I think he can sit back with Wenger at the helm. Wenger keeps us there operating off no budget at all in the transfer market (making profit), that has to be one of the major attractions to his investment, as he doesn't have to do that much. Apart from hire people to sort out tours to Asia and get 1m likes on facebook.
shewore
I can see that you misunderstand the point easily enough. You should take an interest in business lectures, especially where they concern the business of football. They'll enable you to see the flaws in your own present argument and might even provide you with counter arguments to mine! The point is that the larger clubs relatively speaking won't be financially as disproportionately large to the clubs in the existing leagues. At the same time as there is a guaranteed 3 up 3 down movement between the PL and the lower leagues it's always possible for someone to invest in a lower league club and progress through the divisions. It just has to be on a sensible pragmatic basis. Wenger is among the biggest spenders on transfers in the PL. He's just good at understanding the difference between the price of something and its value. But we will still have at least the 4th highest player budgets in the PL and if the business is run successfully it's not inconceivable that we'll have the biggest in the PL. The myth about Wenger hiring Gazidis has been dispelled enough times (you don't even need to bother with any lectures to know that). Gazidis was Kroenke's man from the start and he only had to get Fizsman to agree. If you can find the time though dig a little into understanding the role that social media will increasingly play in revenue generation and their relationship with exhibition tours. On the other hand you may find it a lot easier just to sneer at those concepts. ;)
Amos.
He wouldn't be one of the biggest spenders if he wasn't the biggest benefactor though would ne now. And it won't be possible for clubs to climb up cos their best players will simply be purchased by the clubs that are already at the top. Sugar's someone to listen to when it comes to running football clubs then, is he? So Wenger didn't play a part in hiring Gazidis? Where's that been dispelled?
shewore
You're beginning to lose me and probably yourself too but perhaps you've just used benefactor incorrectly. I'll assume you mean 'beneficiary' in the context of your previous opinions. In fact that's kind of my point that in order to be a big beneficiary he has to be a big spender relative to those he's competing with. As for your concerns about the lower leagues can't the PL clubs by the best players already and hasn't that always been the case? What's different now? Sugar's someone to listen to on business and on the business of football though his isn't the only input you should seek. Gazidis himself said that he was approached very early on as soon as Edelman was dismissed - months before the appointment was even mooted. Wenger met him much later along with other club officials but this wasn't an interview as it had to be ratified by the board. A director can really only be appointed by shareholders and Fiszman and Kroenke held the majority of shares enabling them to make the appointment without the need to get others to agree though the friendly shareholders would have been on board.
Amos.
If Kroenke sells now, he's already made a return on his investment. Not as big a one as he'll undoubtedly make following the private equity model he seems to be following for a few more years, but if he sells today he'll do so at profit. Subjective I grant, but I wouldn't say Arsenal have moved forward as a club in his tenure at this stage.
Little Dutch
If he's selling a controlling interest in Arsenal you'd imagine he would realise a profit but he's held them for sometime now so there's an opportunity cost to factor in. But what does that have to do with the club? The club only has interest in the share value when it issues shares not on their value in secondary markets. An increasing share value could be of potential benefit to the club if it decides to raise more capital by issuing more shares. As a business Arsenal has moved forward though Kroenke's only been in control for a relatively short time. Debt has been paid down, legal matters have been brought in house, a commercial department has been installed and seems to be producing results. A younger more switched on executive team is in place. The media business has received investment and looks to be able to contribute increasingly. On all the business side of things since Kroenke came in the club has become infinitely more professional. That's all you can expect of him.
Amos.
It will be interesting to see how this plays out, how strictly the PL enforces compliance, and how much of a deterrent it will be that excessive losses will have to be guaranteed against the owner's assets. But on the face of it this looks like a good measure to introduce. Wage inflation should be reduced which will help all clubs, especially the smaller ones, and the emphasis is put back on growing a club sustainably. I'm also glad to see that the capping of the amount of Central Funds (I assume that means TV money) which can go to wages, presumably so that clubs can build or improve stadia and infrastructure rather than be forced into a wages war. But does that cost control restriction apply to using that money for transfer fees as well? Are they "player wage costs"? We've built our stadium, new medical centre and our training ground, we're already re-vamping Hale End, all with our own money. So in our case, I'm not sure what will happen to the rest of our TV money over and above the permitted expenditure - more personnel/physical infrastructure?
FunGunner
Apologies if my questions have already been answered - I read the blog post and wrote my comment without reading previous comments.
FunGunner
Whatever Kroenke gets for his shares will come from whoever buys them, not out of the club's coffers. The value of a company's shares relates to the success of the company and how well it is run. @shewore - spending on players' wages and transfer fees is not the only form of investment there is, nor is it the only investment which matters. Facilities, staff and training are also forms of investment. Many other clubs would like to do what we have done, and they need the TV money to do that. They don't want to just siphon it into the pockets of players and agents. That was the impetus behind the move for FFP in the PL.
FunGunner
@ LD - Arsenal have definitely moved on since 2009. We now have whole departments which we never had before, which are focussed on increasing our commercial revenue and raising the profile of the Arsenal brand. We have a presence in Asia. Before anyone sneers about any of that, remember how much your tickets cost - the best chance of a long-term freeze or even a reduction is from extra income from elsewhere. Plus he has tried to rebuild the relationship between club and fans. Regular Q&As, the Arsenalisation project, etc. Also I can't help thinking as well that IG wouldn't have been elected or appointed to influential positions in several organisations if he wasn't highly rated by his peers. @ shewore, Arsene and IG met before he was formally appointed, but just to make sure they could get on, as it is important that that relationship functions smoothly.
FunGunner
Just me today, then? :)
FunGunner
The Q & A's long pre date Kroenke's involvement with the club. Ditto Arsenalisation, nowt to do with Kroenke, those plans were in place prior to the arrival of Gazidis or Kroenke (in fairness, Gazidis made sure they were driven through and added to them). Point taken re: Asia, but at the risk of being hypercritical, not exactly a genius intervention and one the likes of Edelman wanted to implement years and years ago. Again, in fairness, the likes of Gazidis and Fox did insist and drive it through. But in terms of on the pitch, Kroenke is quite comfortable with us staying exactly where we are, there's no incentive for him to invest (from a strictly business POV why should he? It'd cost a lot of money to turn is into champions for example and the financial realisation he'd get from that, compared to investing nothing and staying in 4th is a no brainer business wise). Kroenke will probably do ok business wise and make a nice whack out of us and we'll continue to be a good business (which we were anyway before he arrived). But the on pitch realisation of his tenure is likely to be very limited in my estimation. Basically we'll stay pretty much where we are with little ambition to go forward and Kroenke will make a mint. Not a disaster for the club, sure, but you can see why it doesn't fire the imagination.
Little Dutch
"awaits predictable, "you just want a sugar daddy to lob money at it all" response*
Little Dutch
i have personal opinions on Sugar, and vicarious personal exposure to the man and I've read some of his pieces on football and it's clear that he's a dinosaur who has absolutely no knowledge on football whatsoever. Yes, beneficiary, apologies. How does that prove your point? All it does is prove that he's fantastically astute in the transfer market - and we don't make any outlays on players unless we know the money's coming in - this is at detriment to the team you see on the pitch unfortunately. I'm not trying to make this some sort of personal gripe on this site, i really, really am massively concerned for the future of Arsenal with Kroenke at the top - if you don't buy that, then fine, it's up to you - but someone who's here purely for the money, at a sports club? Doesn't sit right. What you're saying is 'for him to make money the club has to be successful' - something which, in this unique climate of Wenger's miracle working / PL & CL Cash Cow, I simply think isn't true.
shewore
I'm sure that you weren't expecting that retort from me LD and I'm not sure it's FG's style either so I'll assume it was a pre-emptive defensive strike - not entirely unlike some others branding those they disagree with as AKB's :) The fact is that, with the possible exception of Norris, whose investment was essentially in land and buildings which he recovered, Arsenal have never had owners who have put money into the club so quite why you would expect Kroenke to behave any differently than Arsenal owners have behaved for many decades isn't clear. The fact is that Arsenal have always been a self sustaining club and with prudent management will always remain so. As for 'beneficiary' it simply proves my point about your confusion shewore. So Sugar's opinion is invalid simply because you don't like him? Not the most impressive counter argument I've heard but I wasn't expecting anything more considered. For Kroenke to make a worthwhile return yes the club has to be successful on an enduring basis. As long as he continues to show that he understands that I don't think anyone need lie awake at night worrying about him.
Amos.
After years of reading wonderful exchanges by all the regulars and successful attempts at keeping myself in check, I thought I should now join the discussion. Well, I would rather share some highlights of an article in the New York Times (by Jere Longman) on Kroenke on the eve of his becoming the majority owner. A quote from David Stern, the National Basketball Association [N.B.A.] commissioner [Kreonke] is “as knowledgeable a person as there is … willing to do old things in a new way.” And other pieces from the article … “Mr. Kroenke’s interest in soccer was apparently piqued by another billionaire entrepreneur, Phil Anschutz, from whom be bought the Rapids in 2003.” “In Arsenal and the Nuggets [N.B.A], Mr. Kroenke has positions in the world’s two most popular sports, though it remains unclear whether he is a fan of soccer or intrigued primarily by the global business opportunity.” “Arsenal has not marketed itself internationally with the same eagerness as the other three big English soccer clubs --- The club would be expected to become more aggressive under Kroenke’s stewardship.” “Though some Arsenal fans worry a new owner will saddle the club with debt and curb the signing of players, that has not been Mr. Kroenke’s style, sports finance experts say.” “The Avalanche won the Stanley Cup in 2001 [Hockey] under his guidance and the Rams won the Super Bowl after the 1999 season.” “Mr. Kroenke and his wife were both listed among the top 117 richest Americans by Forbes in 2009 --- she with an estimated worth of $2.9 billion, he with $2.7 billion.” And now from me: we should relax a bit about Kroenke. NYArse
NYArse
They won a cup in 2001? Forgive me for not being enthused ...
shewore
That's what I meant. I didn't say I wanted Kroenke to put money in. Why should he? It's not for me to demand he does that with his cash. But I would definitely like us to actually use the resources we have and that we worked so hard to get so we can make a better fist of competing than we do. We shouldn't be in a mad scramble for 4th trailing Spurs and Everton. With what we have, we ought to be comfortably 4th and on the fringes of the title race.
Little Dutch
Good contribution NYArse. Much of what you can discover about Kroenke is all positive. He seems to be the sort of investor you'd want to see at Arsenal. Steady, sensible, no sign of looking for or needing a quick buck. No history of leveraged debt and his involvement so far in Arsenal has been positive. Yet you can still have people saying they hate him for no other reason than the basic tendency to hate what they can't understand.
Amos.
We've made third in three of the last 5 season LD. Comfortably in 4th? Maybe if we hadn't suffered as much from the predatory feeding that the new rules are looking to put an end to. On the fringes of a title race? Based on comparative resources over the last 5 years we shouldn't really be thinking of that as a possibility - yet somehow it does seem tantalisingly possible. The resources we have are still there, we haven't frittered them chasing rainbows, and the game is changing.
Amos.
@ LD - Well then, IG drove through plans which would have remained plans, then. That's worth celebrating, surely, and that has moved us on. Kroenke has not made any money out of Arsenal, and he won't make any out of Arsenal when he sells his shares. You're conflating the idea of taking money out of the club with making money from shares in the club. Kroenke believes in, and got involved in Arsenal because of its self-sustaining business model. It's illogical to berate him for not putting money into the club - none of the shareholders do, regardless of whether they hold thousands of shares or one share. If you don't want him to invest, why complain that he has no incentive to? All the profit from the business goes to football, not to any of the board or any shareholder, and AW makes the investment decisions about the football club, not SK. Our performance on the pitch isn't SK's responsibility, it's down to AW, his staff and the squad. Regarding what we have achieved for our resources, Tom Watt said on Fans' forum that The Blizzard assessed managers each year and on their criteria Arsene has overperformed every year except 2001/2002. Where we "should" be is in a lower division - that is what usually happens to clubs who build a stadium without assistance. Guillem Balague said the other day that people should regard it as miraculous that we have built a stadium and stayed competitive. I'm not saying that we shouldn't want trophies but it pains me that Arsenal fans don't appreciate what we have got, and I don't just mean Wenger.
FunGunner
@ shewore - Spurs have bought some good players over the years, but how is spending much more than we have to produce less success a reason to admire? Why is spending money before you have it, or spending money you don't have, a good thing? And for what? To be in our shadow.
FunGunner
Interesting, yet curious exchanges, in reaction to the article and agreement reached by EPL clubs to curb excessive spending. We have always taken pride in the self sustaining model of our club and largely, expressed a choice of Kroenke over Usmanov for just the reason that he agrees with the club's philosophy while his pedigree showed commercial(isation) business acumen. Now, that a spending control regime is closer, something we know our club has doggedly championed as the way to run football right, it beggars belief that we have opinions as some I have read above. What I look forward to is for the controls to be put in place and well monitored so as to make the playing field more level for all; in which case, the best managed "businesses" will regain or keep their pride of place and be the models for sports businesses. Enough of the sugar daddies' benevolence, which isn't a business model you will find in any literature about managing for success.
Naijagunner
I am not sure Kroenke ever made it, as part of his manifesto, to throw money into the club. What I recall was his belief in allowing the club's subsisting structures work more efficiently, while it was always mooted that the commercial department will be established and strengthened to continuously seek to expand the club's sponsorship outlets and reach. He has done so well enough. On the sporting side, it hasn't been as we have become accustomed to under Wenger, but it sure cant be rated a disaster, either (don't let's start calling names of those with huge spending and nothing to show) as we have had a few close calls on a trophy run. The effect Ramsey's leg break had on the team comes to mind. Until that day, we were on a roll and looked good value for 1st place. As bad as we started last season, there was a point when a solid run may have produced an even better position than 3rd. Then there was the League cup final. Kroenke, surely, didn't ensure we didn't do enough to win just because he is better of financially, if we remain as we are. Obviously, he can only make more money when the club wins things, so how can it be suggested that he is happy to leave the club in a precarious position, each season. That just doesn't sound right, whichever way you spin it.
Naijagunner
I find it strange that some Arsenal fans are so suspicious of Kroenke. He hasn't done much wrong and I'd prefer him in charge rather than Usmanov or the owners of any other big club in the premiership. His job is to run the business side of things and he isn't doing a bad job of it so far. Some complain he is a bit too 'silent' but I'd prefer that to a greasy turd like Usmanov costantly mouthing off in transparent attempts at getting supporters on his side. His job is to maximise revenue and reinvest that in the club to increase it's value and he seems to be doing that. Give the guy a chance at least for a few years and then judge him. We haven't won anythinng under him yet but he has only been the majority shareholder for one full season so far. Also why did Fiszman and the rest of the board prefer to sell to him rather than Usmanov? Unfortunately it seems he won't be a good chairman for some until we start competing with City, Chelsea and United in the transfer market or winning things. As for not using the resources we already have LD, is that not AW's choice? Do you want Kroenke to force him to sign players. I don't see how that can be blamed on Kroenke as he hasn't taken any money out of the club or told AW he couldn't spend any money. He has increased our income so if anything AW has more resources thanks to him.
bowiecokemirror
The concern I have with this agreement of the PL clubs is that it is described as "less stringent" than UEFA's FFP rules, which suggests the clubs with rich sugar daddy owners may still find a loophole to circumvent the restrictions. For instance, if the £4- £12m restriction on wage increases (2014 through to2016) only applies to use of increased PL central funds or TV money, doesn't that say clubs are free to increase wages as they please where funds are sourced otherwise? That is, the Sheikh may still increase his pet club's wage bill by more than the restrictions (we know most clubs' wage bill exceeds £52m) if he uses his own resources and not the additional money from TV revenues?
Naijagunner
For it to work, these measures have to be strictly applied with no one left in doubt as to the objectives. It is rather curious that only 13 clubs voted for it withReading abstaining. All the rich owner clubs need to do now is lobby Reading to their side, between now and April, the crunch time for decision making. Even amongst those who voted for, there may be a change of mind before April, no?
Naijagunner
Kroenke sees Arsenal as a commercial exercise, his track record of winning stuff (the whole point of sport) is appalling, his track record of making money looks pretty good tho - let's all embrace him! How committed is he to Arsenal fans as well? About not committed i'd say. "Why should he"? The business minds woild say, well, he is maj owner at a club that is only there cos of its fans - without fans there would be no lemon for him to squeeze. He can roll out Gazidis tho, no biggy there, everyone'll swallow it. "We dont want his sort". Bowie what would you say if Usmanov wanted to freeze ticket prices for 10 years and invest heavily in the team, would you hate him then?
shewore
I thought it was the existing owners of the club, including who decided they didn't want the type of Usmanov and not Bowie. They didn't want Kroenke initially so, for them to have had a change of heart, they must have thought he will positively contribute to the club and uphold its ideals. Allowing "Usmanov invest heavily in the team" wouldn't be, in a manner of speaking, the Arsenal way.
Naijagunner
*including Danny Fiszman*
Naijagunner
You're applying standards to Kroenke that you weren't concerned with about others before him. What was Dein's track record for winning stuff (his businesses had their failures too)? Fiszman's? Bracewell-Smith's?, Hill-Woods? How many trophies had Henry Norris won before he bought Woolwich Arsenal? What would you say if Usmanov increased the Arsenal's debt and it was all owed to him instead of commercial investors? What would you say if, because it's his money he decided which players we should buy and which ones we should keep? Would you love him then? I think you probably would. But how committed to Arsenal as a club would that really show you to be?
Amos.
Naija, despite the PL rules being less stringent than Uefa's the sugar daddy clubs and a few self sustaining clubs will still be bound by Uefa rules so in fact still more tightly controlled than those clubs who aren't immediately in with a chance of CL qualification. The cap on wages should still work as the clubs cannot increase wages other than from revenues they generate while staying within the £105m 3 year losses restriction.
Amos.
Worth noting that pressure for the PL to adopt FFP rules hasn't come only from PL clubs but from government too. They produced a report at the end of January suggesting that they enact legislation to effect football governance if the PL didn't act. As HMRC are often among the biggest losers when clubs go into administration there's obviously a public interest stake here. The next focus is the Football Creditors Rule which prioritises payments to players, mangers and clubs if a club collapses. Not so controversial in terms of players and managers because employees tend to be prioritised anyway but the important part is payment to other clubs. This is usually transfer fees which are paid over a 4 or 5 year period. Knowing that they're at the same risk as other unsecured creditors may make selling clubs more cautious about extended payment periods hence putting some downward pressure on transfer fees. The football governance report suggested legislating for a ban on this rule 'at the earliest opportunity'. The game is changing. Arsenal may be guilty of playing the long game but it may well prove to be the right decision.
Amos.
What was Dein's record of winning stuff in sport? Try comparing it to Kroenke's now, did Dein suddenly snap up a load of shares to make nothing but profit then? Why mention Chairmen as well... ? Bracewell-Smith, what one? Hiw long has Kroenke been in sports management and what's his trophy return like? Simple question.
shewore
Before he bought into Arsenal Dein's record of winning stuff in sport was nothing like as comparable to Kroenke's record before Kroenke bought into Arsenal. So what point are you trying to make? Should Dein have been dissuaded from becoming an investor because he hadn't won anything previously? At the same time did Dein buy into Arsenal expecting to make a loss or do you think he expected to make a profit on them? He certainly had to make a profit on the shares he sold to Fizsman shortly after buying them in order to bail out his own failed business ventures. Dein bought and sold shares all the time he was with the club and his market trader approach to being a shareholder allowed him to cash in regularly even while he was with the club. I wasn't mentioning Chairmen I was mentioning shareholders. Which one? All of them. How long has Kroenke been in sports management and what's his trophy return like? A good bit better than those of any other shareholder before they bought into Arsenal. Simple answer.
Amos.
Did any of those names have as much majority as Kroenke? You're not comparing apples, their influence was not as great from a shareholder perspective - i ask again, what's hos track record like in delivering succesful sports teams?
shewore
Norris certainly had a greater majority of the shares as did many of the others compared to when Kroenke first bought in. At different times their influence over the club was as great or greater than now. Kroenke has so far built up his shareholdings and hasn't cashed in as Dein did frequently throughout his time with the club. I answer again - Kroenke's track record in delivering successful sports teams is immeasurably better than at the time any other shareholder invested in the club. I ask again - if it wasn't relevant at any other time in our shareholder history why would it be relevant now?
Amos.
To answer your question shewore, I wouldn't want anyone pouring money in to the club. I'd prefer the club to stand its own two feet and grow organically. It really wouldn't mean much to be if just bought success with someone else's money. Do you think Usmanov really cares for the club? He used to be a Manchester United fan didn't he? He would either be doing this because he wants to make a profit or we'd be a plaything to massage his ego. That's not to mention his criminal past and shady dealings. I think we are very fortunate to have a chairman who doesn't leech from the club or interfere with the footballing side of things. I think Arsenal as a club are much bigger than his other sporting purchases so just because he hasn't had a lot of success with his other teams doesn't mean we are doomed to failure. It does mean that he isn't a novice and has a lot of experience running sports teams..
bowiecokemirror
Shewore, I should have provided a primer on US professional leagues. Kroenke’s winning record is not shabby at all by US standards. And that is why the article brought it up. There are strict financial controls and hard salary cap in almost all the professional sports. Although not perfect, the playing field is nearly equal. I live in New York where our local teams have the largest commercial base and huge fan base to boost their revenues. And how do their winning records stack up? The New York Rangers (hockey) won in 1948 and then in 1994 and we are still waiting; the NY Jets won in 1969 and we are still waiting. The Mets in baseball last won in 1986; the Knicks (basketball) also in the 80’s. The only outlier is the Yankees. And that is because in the past the principal owner was happy to pay ‘luxury tax’ to other teams for going over the spending limits. Teams that are winning on consistent basis within the financial framework --- New England Patriots for example --- do so largely because of the ‘quality’ of their manager and the players they attract. And for all that is worth, Bill Belchick, the manager of Patriots, is on record for his admiration of and ‘copying’ Arsenal and Wenger on how to run a team in the 21st century. The point is, when it comes to EPL, our club may be ahead of the times. While nothing is guaranteed, in all probability we are in really good shape.
NYArse
Thanks for that clarification, Amos. I held the view that the £105m Loss scenario just required the owner to back up/guarantee the losses with assets. Clearly, there will be tighter controls, even for the sake of morals.
Naijagunner
Thanks for that clarification, Amos. I held the view that the £105m Loss scenario just required the owner to back up/guarantee the losses with assets. Clearly, there will be tighter controls, even if only on the grounds of morality. Clubs that have run under self-imposed restrictions will find it easier to adapt to the rules, you'd expect.
Naijagunner
I think one of the reasons behind the Government report was concern about football clubs being used for money-laundering.
FunGunner
BCM, you're right the resources use is more down to the manager and that's a view I've always held strongly. I was playing devil's advocate a bit and trying to put over the concerns a lot of fans have over Kroenke's ownership. Personally, I'm totally indifferent to him. I consider his ownership as anaemic. I'm currently reading David Conn's book 'Richer Than God' which is principally about Manchester City, but has some really good stuff about football ownership and how it has changed to promote naked self interest in ownership structures. The roots of the FA are amateur and, up until 1992, the F.A. actually did a good job of protecting clubs from directors and board members drawing anything more than salary from football club.s But most clubs bypassed article 14 in the FA rules by floating as plc's. The authorities in football have always looked to protect the idea of clubs as precisely that, clubs, rather than businesses. Kroenke is part of a new breed of owners in the PL era that are here entirely for huge profit and self interest. I can see why that's uninspiring to people, no matter how much of a modern reality it is.
Little Dutch
I'm not sure that Henry Norris could be seen as a great social benefactor. The formation of the PL itself was all about huge profit and self interest. The club owners of 20 years ago, some of whom have cashed in very handsomely, weren't driven by a great desire to ensure football remained a game of the people. I don't think we can pretend that the profit motive is unique to a new breed of owners. If anything a more businesslike, professional approach in a game awash with money that has laboured in coming to terms with its riches is a positive step forward. The government report into football governance does touch upon this relationship between the FA, PL and FL and the distribution of revenues for the greater good of the game at grassroots level even encouraging greater financial support for Supporters Direct.
Amos.
He *****ed Tottenham off, that's socially responsible in my book ;) In fairness to Norris, he ploughed £125k of his own money into making the move to Highbury. One can only speculate as to how much of that he got back. He was probably expecting to get it back and some before being banned from football. But yes, clubs have been business's for a long time, it's just the breakaway expedited that departure incredibly quickly. Now the FA isn't even consulted in most of the matters we are discussing now.
Little Dutch
Norris got at least £125 of it back when he pocketed the sale of the team bus. His notorious misuse of Arsenal funds was partly the reason for his ban. He died rich enough to imagine he didn't lose from his business dealings though. I don't suppose he was greatly different from many other businessmen of the time but if it weren't for his desire to make money then the club we support wouldn't exist in the form it does now. There's nothing to fear from good businessmen provided the rules are strong enough to ensure the gains are fairly spread. Football has been eating itself for too long but there does seem to be political and commercial pressure to reverse the games slide into becoming a billionaire's casino.
Amos.
Tony Attwood over at Untold Arsenal has an interesting piece on the EU's intervention in football transfer fees and anti-competitive practices. The political pressure for football to reform is growing. If it succeeds then you'd have to say that the Arsenal board have been vindicated in sticking to their principles. http://blog.emiratesstadium.info/archives/27242?
Amos.
That is an interesting piece, all new info to me.
Little Dutch
http://www.football365.com/f365-features/8496813/F365-Focus In return, I think this article makes some good points.
Little Dutch
To be honest I think that article makes very few good points LD though in fairness it does set out to be a cynic's guide. Only four clubs have fallen outside the £105m limit in the last 4 years? Isn't that rather the point? Of the four clubs concerned Villa and Liverpool have struggled under the weight of their losses and Chelsea and City excesses have distorted the market. Restricting both those extreme consequences are exactly what the rules should be about. Quite how he has managed to confuse himself over the drawbacks - or shouldn't it be benefits? - of relatively equal distribution of TV rights I'm not sure. The purpose is that everyone benefits to a similar extent not just a select few. That the PL has been rather craven in dealing with the excesses in the game is clear I think. They haven't gone as far as Arsenal and those clubs that have backed us wanted. As a consequence of their reluctance to manage football on anything other than the most avaricious, money led motives both national and european governments are now getting themselves involved in reforming the game. In many ways that's a shame but they won't do it themselves.
Amos.
I think the point he made about voting was a strong one though, that most clubs have voted for their own interests. West Brom and Swansea are very well run clubs that have progressed by being prudent and sensible and they voted against it.
Little Dutch
I'd expect that self interest would come into most clubs thinking when voting on such measures. What is their interest though? Jeremy Peace of West Brom is actively looking for an investor. You could understand if he felt he was likely to be able to sell his interests at a much better price to some cash rich oil magnate if they could play the same game as City and Chelsea than if any investor were compelled to take the long route to club development. Most of Swansea's shares are also in private hands. Much the same thinking possibly guides Al Fayed and Randy Lerner too. Turning the PL into a billionaire's casino might well suit the interests of some individual shareholders anticipating selling their shares at some point in the not too distant future.
Amos.
"Essentially, Premier League owners have been given a sizeable financial boost. They have colluded and decided that they would quite like to avoid passing on this bounty to players, those that create the entertainment deemed so valuable. Therefore, a wage ceiling is introduced to avoid such an inconvenience, allowing money to be retained." = guess whose pocket that's gonna end up in ....
shewore
It's a cynical view written for cynics like you shewore. If football players were bankers we'd be complaining about their exorbitant bonuses. In the perverse world of football, supporters can regret that the money isn't going into players wages, agents fees on any of the other distortions we seem happy to accept in football but few other commercial activities. It's a funny old game.
Amos.
Yes but I don't pay to watch Bankers, and they're not part of the "entertainment" business we've so crassly been lumped in to. Not quite sure what you're saying there, are you saying the commercial activities are what the money's going to be spent on .. ? Not to sit in the bank then - like the other capital we have... ?
shewore
We have capital reserves but we also have net debt. We have the capital reserves to utilise if an opportunity presents itself but the immediate consequence of using our cash reserves is that our net debt increases. Therefore clubs could use the extra income to reduce or eliminate debt providing them with funds to use elsewhere whether that be player development, improved facilities, lower prices, capital investment or commercial development. As with any business it is better for its customers if a club is financially sound and its future secure enough to provide other choices. Certainly whinging articles suggesting extra income should be spent on player wages alone are more crass than the rather more obvious conclusion that football is and should be a business that entertains.
Amos.
That's right, keep the net debt down as much as possible in order to fatten the goose....
shewore
Would you prefer the club to incur more debt then? At least that would bring the bankers you don't watch more into play I guess. But explain precisely how greater debt would help you realise whatever your dream is?
Amos.
Arsenal have a structured repayment plan in place don't they, so no benefit in trying to pay off the loans early - what's the point of it sitting in the bank apart from the net debt to look lower and therefore more attractive to investors? It's a football club, spend it on the team.
shewore
I am sure they have a plan for all debt but you're only thinking of long term debt. There's plenty of short term debt (payable in under a year) too but structured payment plan or not net debt would still increase. Where would the funds come from to renew existing player contracts for example (many require a signing fee and agent fees would need to be paid) if reserves were all spent up? Excepting that it is possible to invest more if the right investment opportunity is there (though only if funds are available) on what basis are you claiming the club, which consistently has the 4th highest player budget spend in the PL and ranks pretty high on gross transfer spend, is not investing in the team?
Amos.
Gross doesn't come close to painting the whole picture, it's interesting that that, and overall budget are the only 2 metrics you use. Net is clearly a massive factor, as it enables us to make this gross spend - i.e. we wouldn't be spending money at all really if it weren't for profits made in the asset stripping. It's interesting that a little while back you were stating we were virtually bankrupt at Highbury - maybe that's the only way to be if you want to be successful?!
shewore
How is focussing on 1 metric better than 2? Player budget spending paints far more of a true picture of the extent of investment than net spending. Net spending is more or less revenue neutral over a period of time. The profits, which are really what's available to invest (net transfer spend is just a headline figure and player trading only shows as part of the annual P&L account) have to be invested in appreciating as well as depreciating assets. If they're only invested in depreciating assets eventually there won't be profits to invest at all. It's true that in 2003 we had run out of money and had to halt the stadium build as well as reducing the wages bill for about the only time in the last decade and a half. Now let's see you try to make the business case for us being more successful had we remained at Highbury if we had not made the decision to invest in revenue generating assets taking full account of all the changes in the game since then.
Amos.
It's not one metric though is it, you can't have a measurement of net spend without using the gross spend, can you ... footballers are footballers, depreciating assets is language that an accountant would use. Do you see Arsenal a business first, and a football club second? It'd be understandable if you wanted to profit from it i'd suppose. If we'd have stayed at Highbury I don't think it's up for debate that we'd have been less successful since we moved - I do of course appreciate that 6/7 years is shortish term. Although not really in football terms.
shewore
While you're considering your dissertation on the business case for remaining at Highbury it might be worth taking account of the fact the profits from property developments (forgetting matchday revenue for the moment) far exceed any headline figure for net transfer spend.
Amos.
What I mean is Wenger wouldn't have had to rely on youth and this youth project wouldn't have happened on such a scale, he wouldn't have broken up one of the best teams Europe's ever seen so brutally (probably), so odds are we would've done a lot better.
shewore
Fantastic, profits for the shareholders who've sold up from selling our spiritual home, really something to shout about.
shewore
The short term impact of financial restrictions was a factor but the team was breaking up anyway. Vieira, Bergkamp, Pires were all past their peak and Henry and Ljungberg would never have been the force they once were. It is doubtful whether they or the club would have been as well placed to have been as successful pro-Abramovich as they were before but it's pretty evident that we as a club are in better shape to compete on an enduring basis because of the investment decisions the club has made. Both your analysis and conclusion are far too superficial.
Amos.
The profits the shareholders make are of no significance or concern to the club unless they plan to issue new shares. The only profits of interest to us are those the business makes because that's all that's available for you to realise whatever dream you have for the club. No profits no dreams. The profits made are just confirmation of great stewardship and business expertise of the club.
Amos.
It may appear superficial and I'm happy to admit that a lot of what I continue to say is based on what appears to be the case, although with Kroenke I genuinely can't stand the fact that someone's here to profit from us purely cos we're a well run business - and has no ambition to make the changes required to really drive home success, only to increase revenues. It couldn't sit more uneasily with me. I understand that it would appear we''ll be the best run club in the land, but I just don't buy that we'll be successful, we'll just be able to consolidate our money making machine status & won't have to worry about those pesky new money types beating us as much as they do.
shewore
For sure we have no chance of being successful if we're not successful as a business. For reasons I've tried to explain many times before Kroenke cannot make money from us unless he makes us a more successful business than when he bought into the club. If this follows the pattern of previous exchanges you'll try to argue that increased TV revenues will make us more successful (though TV revenues have increased regularly for the last 20 years) once again overlooking that all the businesses (clubs) we have to compete with in order to be successful will also be similarly enhanced. If FFP makes it harder for those clubs to spend it all on wages and transfers fees, in other words forced to compete with us on the same basis as we've always operated, our chances of success, while still not guaranteed, aren't likely to be diminished at all while Kroenke, as ManU's investors have always done long before the Glazers came along, can still see a return on their investment. You're looking at this whole issue through the wrong end of a telescope.
Amos.
I definitely would not argue that increased TV revenues would make us more successful, you're betraying your stance on what denotes "success" there Amos. So what if the other clubs get a lot more money as well? It'll still be a lot more money to us, and therefore in the club's coffers. Do the Glazers take dividends? I thought they just extracted fees - what's stopping Kroenke doing that in a little while?
shewore
I don't think I've betrayed anything by forecasting that you would argue that increased TV revenues would make Kroenke more successful in terms of making money. I've argued all along that in order to be a successful football club we have to be a successful business. The significance of other clubs gaining more revenue is that our relative competitive position remains unchanged because everyone's revenues are higher. In order for Kroenke's business to succeed then he has to increase revenues thereby profits faster than his competitors and faster than an inflationary consequence of revenues increasing everywhere else. The Glazers take plenty out but ManU's directors have always paid dividends. Most successful businesses do. I've no doubt that at some point down the line when the business of football is a little more stable that the board will start paying dividends but that will be to all shareholders of course - not just Kroenke. Provided the board have run the business successfully and improved revenues from all sources then they'll be entitled to do so.
Amos.
We'll just have to wait and see, won't we. With a majority owner who collects average to promising sports teams who in the end win naff all, relying on Wenger to work miracles against a back drop of selling our best assets and still keep the value of the club up but not having the right amount of investment to really try and win things - if things carry on like this all we'll see is richer, trophyless owners, and poorer, trophyless supporters.
shewore
That's an appropriately cynical enough view when disregarding the context that NYArse tried to give you and even elbondo provided a little earlier on the nature of competition in US sports. Perhaps the changes in financial limitations and the political involvement at both national and european level might be pushing football in europe in a similar direction but absorbing that might not allow you to indulge solely in cynicism to the extent that you seem to prefer.
Amos.
Yeah it is interesting, and nice to see some context to US sports, so in the States you don't get dominating teams? You can't invest in your team as the players are all distributed? So the only input you can really make is to the commercial & behind the scenes side? Merchandise, infrastructure etc? Well, pretty much all of our infrastructure is sorted (although new training facilities at other clubs are better than ours) and being paid for in a structured way, the team finishes top 4 and with it the virtual trophy of CL places and the subsequent money. we make a profit in the transfer market so you don't need to worry about investing any of your own cash to maintain the team's place....hmm, wonder what he sees in Arsenal?!
shewore
The club has never invested anything other than its own cash in the club - with the possible exception of Norris' investment in land and buildings which he would have made a return on I suspect. Why does anyone buy shares in anything? You'd better hope your pension provider takes much the same view on investment as Kroenke or any other sensible investor would do. Your view of Arsenal and its ownership bears little relationship to the real world. You seem to want Arsenal to operate in some fantasy world but those running the club have to live in the real one.
Amos.
Hard to fathom maybe but believe it or not a lot of shareholders of football clubs, including our own, are in it not purely to extract profit. But anyone that doesn't want to make money out of owning equity in a football club lives in a little fantasy world. What money was invested in the new training ground? Arsenal's wasn't it? What about the new stadium? The bank's, right? What else does he need to do - spend some money on a v expensive marketing team to bring in some readies, that's it.
shewore
Of course those asset investments were made already which is why Kroenke would have paid a lot more for his shares as a consequence of its increased asset value than Norris or Bracewell-Smith or Hill-Wood or Dein or Fiszman or quite a few others did. That's the way it works. You add value to the business and it's capital value increases. As an income investment it has to generate profitable revenues from which to draw an income. Most investors will look for a bit of both but why should any of that concern you other than you don't really understand it? But in all honesty you don't really want to understand it.
Amos.
between glazer & kroenke, i would rather we have glazer. at least the fans are paying less & the team are winning titles. by the time glazer pay off the loan he took to takeover man u, they probably would have won another 15-20 titles. by the time we pay off the stadium, i'll be happy if we even qualify for europa. there is possibility kroenke may just sell the club to someone else who would purchase the club with new debt. shewore, you convinced most of us here & that's what matters
Joe_@**
How are ManU fans paying less under the Glazers? Their season ticket prices have increased by 55% (72% in some cases) since they took over. I'm not sure whether shewore has convinced most of those here or not - or even what it is most are supposedly convinced about - I can understand the cynicism, it comes naturally to some, but there's precious little attempt to understand what has happened and is happening in football.
Amos.
i was making comparison of ticket prices between us and the manc
Joe_@**
 

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