Arsenal's ownership structure and financial practices are interesting and
unusual within the context of the Premier League. The club is owned by a
parent company, Arsenal Holdings Ltd, which in turn owns 12 subsidiary
companies, each fulfilling a certain role, for example, operating the Emirates
Stadium, managing operations for domestic and overseas retail and property
development companies dealing with the site of Arsenal's former stadium, Highbury.
The parent companies major shareholder is Stan Kroenke, who owns 66.64%
of the company. The second-largest shareholder is Alisher Usmanov who
owns 30.05%. Kroenke holds an influential position within the club,
both he and his son are members of Arsenal's board of directors of which
there are six in total. Usmanov is not a director,
nor does he have significant influence on the board. The two investors have long
been at odds over the best way to operate Arsenal's finances. Kroenke
institute's the practice of self financing, spending only what the club
makes. Whilst Usmanov believes in what you might call the practice of
prospective finance, spending speculatively in the hope of return.
Both are legitimate practices, though self-financing is less commonly practiced within the Premier League.
Currently the club are financially very healthy
ordinarily this would be a non-issue but due to the fact that the club continues
to waiver in the transfer market, supporters continue to question Kroenke's methods,
and fairly so, to understand the criticism we need to understand the
reasons for Kroenke's approach, the best way to do that is by examining the
history of the Emirates stadium.
In 2004, when Arsenal began financing the development of their new stadium, matchday income was the largest revenue
stream for football clubs, in an attempt to close the wealth gap between Arsenal
and clubs like Manchester United, the club resolved to finance the building of
a larger stadium so as to maximise their earning potential, Arsenal built the
Emirates without any help of state funding or a wealthy benefactor, infact
Kroenke has never put any of his own money into the club. The Emirates stadium
eventually cost £319million, Arsenal financed this largely through a
series of bank loans some longer term bonds and sponsorship teams, i.e stadium naming rights.
The downside of building the stadium was that to keep paying the
lenders each year they needed the funds to do so, the way Arsenal raise these
funds is through players sales. Arsene Wenger guided the club for a decade of selling
their best players in order to afford the cost of their new stadium.
Contrary to popular belief, Arsenal are still in debt, In 2014, the directors
announced a new financial era at the club, stating that they no longer needed
to sell their best players, this was not because they paid off all the stadium
debt but because certain long-term sponsorship deals ended that year and
they increase their cash reserves through a mixture of signing improved
deals and increasing commercial and broadcasting revenues. At the end of May 2015,
Arsenal recorded £233.9 million in debt, it sounds like a lot but
due to their continual income and their £228.2 million in cash reserves
this debt is completely manageable.
However, there were two unpredictable events that occurred during the decade it took Arsenal to
rework their finances.
The first was the meteoric rise in income from commercial and broadcasting
revenues. The Premier League's TV deals have increased exponentially in this period,
as has the products commercial value, this led to Arsenal recording higher
incomes from both their commercial and their broadcasting revenue streams in 2015
and from there matchday income.
They went to sleep in an era in which matchday income was everything and awoke
in an entirely different set of circumstances.
The second is the influx of mega rich owners. Arsenal could not have predicted
Roman Abramovich's take over Chelsea nor the introduction and the subsequent
collapse of the Financial Fair Play rules.
it could be suggested that the long-term financial plan Arsenal instituted in
2004 was designed for a wholly different climate, having said all that, Kroenke's
plan has ostensibly worked.
Despite not being the largest portion of income
there's no argument that it was a worthwhile expenditure for the club to
spend their money on a stadium. Due to Kroenke's sensible financial approach
there are significant cash reserves available
the money is there, but the club haven't spent it, when supporters can see the
glaring weaknesses in the team it's difficult to explain why more effort
hasn't been made to reinforce the squad
johnstone's for 48 billion pounds
Paul Pogba 89 million pounds as transfer these climb you might be asking these
players worth that much money
the simple answer is yes