Thursday, July 9, 2009

We don't need that sort of money

Bart: Okay, we're young, rich, and full of sugar. What do we do?
Milhouse: Let's go crazy, Broadway style!

- Boy Scoutz 'N the Hood, the Simpsons

Unlike Bart and Milhouse, we're not going to go crazy, Broadway style. We're not even going to go crazy Real Madrid style. We're going to sit at home and count our pennies. It turns out that we're not young, rich and full of sugar - we're a club of accountants, not a club of Perezian capitalists.

After all, we're the club that turned down £100 million.

Ivan Gazidis had this to say about the right issue:

"With regard to debt, the conclusion reached is that the Club has a very efficient capital structure with long-term debt on attractive interest rates. We can comfortably afford to meet the annual costs of this debt while at the same time generating surplus funds to invest in the Club. Using permanent capital to pay down debt would not, therefore, radically transform the annual cash flow of the Club."

So, in a few sentences, he's told us that we're not mired in debt, and we DO have the funds to invest in the Club. In fact, we're so comfortable that we don't need a £100 million cash injection to pad out our debt, nor to augment Wenger's transfer budget. Everything's fine as is.

Then again, we couldn't afford £21.5million for Melo, and it seems like we need to sell players to generate funds for further acquisitions. The rest of our transfer season seems to hinge upon getting rid of Senderos and Adebayor. So despite our debt being well-structured and on attractive long-term interest rates, maybe a few £££s wouldn't go astray on the transfer front? Apparently we're after Ever Banega now, and even though he's potentially world-class in Football Manager, I'd rather someone proven in real life.

I realise my stance reeks of short-termism. We have a club with a sustainable financial structure. We're the only club in England that has that. We're not Man Utd or Liverpool, who are both mortgaged to the hilt with bad debt. We're not Chelsea or Man City, who're at the whims of billionaire playboys. We're the Arsenal, and the only way forward for us is to play it safe with regards to our finances. It'll be a tragedy if we muck up and sink the club into a Leeds-style fiasco. And it'll be even worse if we were gobbled up by Usmanov.

But still, a rights issue of £100 million wouldn't hurt. Especially if it's negotiated so that none of the major share-holders increase their stake relative to each other. All it would mean is that Kroenke coughs up £25 million, Usmanov £25 million, Fiszman £10 million, and so forth. And then Wenger would have the cash to buy players who are already right now. Like Melo.

The whole idea that we're so well off that we don't need £100 million, and yet have such a small transfer budget that we need to sell to buy, is inconsistent. Either the Club have the money to service the debt and retain a squad that can challenge for the leage, or we don't. If the Club has that money and isn't spending it, then it's doing us a disservice. If the Club doesn't have that money, surely it should consider alternative methods of raising such funds, such as the rights issue?

This rejection shows the aversion the Board has towards Usmanov. That's acceptable. When the guy walks, storm clouds rumble with apocalyptic gloom. But worryingly, it also shows that Kroenke, Fizsman and co. are happy to spend millions buying out each others' shares, but not so happy to splurge a bit to make Arsenal a better team.

And that's not acceptable, as far as I'm concerned.


Anonymous said...

Nothing wrong in looking at the short term mate, it's what we as supporters want. We're not gonna go to our local bar and say to our Man U supporting mate "yeh you may be the best team now, but in ten years time... Mark my words", You'll end up getting laughed out of the bar.
I could understand some people's concerns about the possibility of us doing a Leeds if we were spending like Real Madrid or even Man City but for fuck sake we haven't spent fuck all for the past four or so years.
Still roll on 16th August eh!


Connolly's agent said...

I'm just gutted the board don't have anything else to say other than they want to preserve the status quo. Even another ten million would've done the Melo deal (and we've got that, surely).

Only a month away, though. We'll wait until then.

ArseNole said...

I actually have Banega playing for my Aston Villa side in FM 09, but he rarely gets anything but cup matches with Michael Bradley and Ramires in front of him.

Connolly's agent said...

I never used Banega, always went for the Frenchies. Now Sankhare, there's a player we could use.