Arsenal News

In the aftermath of the two defeats against Man U and Chelsea there are the inevitable calls from change and an uprising from those who feel all is not right at Arsenal – not least because we get these calls even with Arsenal are winning.

But I’d like to put forward something else: an examination of alternatives.

In doing this I am developing the notion that has come up a couple of times before – that football has moved through three generations.  What I would like to do is ask anyone who doesn’t think the current arrangement is right to tell me either

a) what is wrong with the analysis below or

b) which of the alternatives they want.

Alternative a: Football 1.0

This is the old regime – in which a single person (who might be quite well off but is not in the realms of the billionaire class) puts money into the club and doesn’t really expect to get it back.  Henry Norris did this to Arsenal, and set the club up as one of the greats, allowing it to become self-sufficient.

It is an approach that is used by lower league clubs, but for EPL clubs now seems to have gone beyond its sell-by date.

The upside is that you are seen as a saint in your neck of the woods until results go bad and then you are seen as the person who is dragging the club down into the mire and the locals call for your head.

The downside is that you don’t get your money back in most cases, and since the person putting the money in has limited funds, it is not sustainable.

Alternative b: Football 2.0

This is the current approach of Aston Villa, Bolton Wanderers, and I rather suspect Everton (although I don’t have the inside story on that club).  I imagine there are many others following this route.

Here the single owner carries on in the old 1.0 tradition, but puts in more and more money.  However (and this is what makes the whole approach so attractive to the clever owner) in return for the investment the owner becomes the preferred creditor of the club, and makes sure he gets a good interest on the loan.

This is a very good business proposition, for several reasons.

First, it is easy to manipulate this position so that your supporters see you as a saint, selflessly putting a fortune into the club to make it big time.

Second, by securing your loan against assets you can be sure that if the club goes bust on you, you get to own the ground etc, and you can then sell it off to another person, or you can use it to build houses on.  You can, if you wish, even sell it to a supermarket.

The upside is that the club can keep going and look like it is striving upwards – in short it is an easy way to con the supporters who keep paying your the money.

The downside is that in the end the club might not be able to afford the interest on all the loans you have made.  It is important to pull out before the “lending event horizon” is hit – when the loans to the club exceed the value of the club.

Alternative c: Football 2.5

This is the Manchester U and Liverpool approach and is generally hated by the supporters of those clubs (although because it can bring footballing success for a while the anger against the system is not all-encompassing).

The system is simple: you buy the club and then use the club’s own money to pay yourself back for the buy-out.  Additionally you take a huge fee for “directors’ fees” and “management fees” and you can give mega loans to your children or lovers, by putting them all on the board too.

The upside is that if you are lucky you can sell the club at a profit to another Football 2.5 con man, or you can sell on to a Football 2.6 buyer.

The downside is that there is a debt event horizon and once that is reached like the black hole after which it is named, you can’t escape.  In Manchester’s case the horizon is the date when the new bonds mature because they must be paid back on that date.  If the market is poor or belief in the ability of the club to pay its way out of debt disappears no one buys the bonds and the club collapses and goes into administration or receivership.

The upside of that is that the people who caused the chaos walk away with a profit, and as I mentioned, during the financial decline it is possible to have success.

Alternative d: Football 2.6

Here the owner of the club is of the nature of Abramovich, with wealth beyond understanding, that can be poured into the club.

The upside is that with that sort of money you can buy your way to any trophy you fancy – unless John Terry can’t kick a penalty or you choose Mark Hughes as your manager.

The downside is that the owner might not be all he is cracked up to be (see Portsmouth’s endless activity this season) or might get bored, or might get arrested (Man City might remember this with a previous owner), or he might get shot (I don’t wish that on anyone), or there might be some nasty court cases lurking around (Mr Abramovich has one or two).  If the owner goes, as one day he must, then all hell breaks loose.

Chelsea have tried hard to get out of this but have failed – each time they set a new deadline for breaking even, there is no movement towards it, and it is just possible that UEFA will get its act together and stop indebted clubs from playing the Champs League.

But even if a club bribes its way through UEFA everything still depends on one man’s finances.

Alternative e: Football 3.0

This is the Arsenal approach as of now.   The upside is that you can recruit lots of young players – either at 11 from your own youth set up, or at 16 from overseas.  The Arsenal 11 year olds who came together seven years ago are now coming through for the first time, and we can see the upside there.

But the biggest bonus of all is that the club is solvent.  While other clubs are all dependent on one person, or a set of banks, the Football 3.0 team is not.

The downside of this is that clubs which do have endless resources either because they don’t care about tomorrow and will let the debt grow until it goes bang (Liverpool and Man U) or because they will spend anything (Chelsea and Man City) can beat the 3.0 clubs to the championship because they can buy in more and more players.

But for 3.0 the future is secure.  With this methodology you can be sure your club will survive… with the earlier models you can’t

Conclusion

For me the question is – instant gratification or long term survival.

Do we risk everything for one more title, or do we bide our time, until the crazy finances of Football 2 pass on, those clubs vanish, and we are still here?

I have commented on the Making the Arsenal blog a number of times that when we look at football of 100 years ago, we see the same names as now in the league table.  That gives a sense that no matter what, the clubs go on.

And yet I don’t think there has ever been a moment like this, where so many clubs are using financial techniques that simply cannot last.

What is so odd is that we live in times where just recently we have seen two huge financial collapses (the dot com comic strip, and toxic loans lunacy) and we are looking in the face of a third (football insanity).  We’ve already seen two television companies fall by the wayside (ITV Digital and Setanta).  How much more has to go wrong before people wake up?

Why anyone would choose anything other than Football 3 as a model for the future I can’t understand – but I never , but I would love someone give me a logical reason to choose Football 2 in any of its guises.

(c) Tony Attwood 2010.

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THE WORLD FAMOUS UNTOLD ARSENAL ANNOUNCEMENTS

• Chief Inspector Billy the Dog McGraw on problems at Chelsea click herewith

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• How Chelsea fixed their way into the league click here

• The doings of Henry Norris, click here

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