Date:Tuesday May 27 2014
Among the themes popular with those critical of some of the club's policies over recent years is the claim that as we are sitting on cash reserves it somehow confirms that we have under invested in the team. In most other businesses healthy cash flow would be considered a positive indicator of investment capacity. In football we've persuaded ourselves that the normal rules of business don't apply.
Alan Sugar, as former chairman and an owner of Spurs, once spoke despairingly of the 'prune juice' effect in football finances which prevented their sustained development as cash that came in left just as quickly. To illustrate how this might happen it's worth taking a look at the balance sheet in the interim accounts published last November. You'll see two figures for creditors - one payments due in more than one year of some £250m+ (mainly stadium debt) and another for creditors due in less than a year (mainly relating to season ticket obligations and other operating costs) of £167m. It's this second figure which should be kept in mind when looking at our cash reserves of £143m. While much of this is met from income (including debtors) the idea that cash is static and therefore serves no purpose other than to spend on players is misleading. From our cash reserves net current assets when set against liabilities are £60m.
Healthy cash reserves aren't a weakness in businesses that generate cash and self sustaining clubs like Bayern or ManU also hold good reserves. In 3 of the last 5 years ManU have shown reserves at or above £150m though it had dropped lower before rising again to some £100m in their last accounts. The recent agreement by PL clubs to adopt FFP is designed to try to limit wages and transfer costs sucking increased broadcasting income straight out of the clubs encouraging them to build up reserves. Uefa's own FFP rules, which also limit the amount owed between clubs, are also designed to promote healthy financial practices. There is a growing recognition that in an environment in which money has grown exponentially over the last couple of decades a more robust financial discipline is needed not just to avoid ever greater failures but to promote a fair competitive landscape.
For these reasons, when you hear or see supporters claim that the club is holding lots of cash which 'proves' that they're not interested in investing in the club tell them politely that they're living in the past. It helps provide the flexibility, opportunity and choice we need to compete. Cash reserves are a healthy indicator of our ability to invest on an enduring basis and should be seen as a strength to be celebrated - not a stick Arsenal need be beaten with.
Date:Tuesday May 27 2014
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