Ivan Merc
April-2011 is an unusual month for Arsenal Football Club. The club has posted a financial loss for the first time since moving to their new stadium. The team has not won a league game since 23rd of February. The Arsenal Supporters’ Trust have expressed “considerable disappointment” over the recent results for the first time in its history.
The fans are fighting with each other at their own stadium and some of them giving up their season ticket this summer. The manager loses composure in his press conference and tells to the whole world that the process is more important than result.
If it is not the time for change – what is it? What else must happen to galvanize the wind of change? Empty seats? The failure to qualify for the Champions League?
It will come. No doubt. The simple business logic is prompting this – if you continue to make the wrong moves then things become worse and worse.
Not surprisingly the air is full of rumours. One of them is that David Dein returns and Arsene will find the plot. The Magic Wand – David Dein. People live by stereotypes and they like simple solutions, but…
David Dein was horribly kicked out of the club by Fiszman, Hill-Wood & Co. after he offered control of the board to attract Kroenke to buy the club’s shares. In less than a year Dein was kicked out and Kronke was invited to become a director. Do you believe Dein has forgotten this?
Then Dein sold his stake to Usmanov and provoked the war between Fiszman & Co and Usmanov. Do you believe Fiszman has forgotten this? And you seriously think they will ever work together? Besides, you never step into the same river twice.
And also – Dein’s (or anybody’s) implementing the current club structure will never get the result needed. As the entire AFC structure is organised wrongly with the wrong motivation. AFC today is like a huge boil that can’t be treated by lotion.
The Board is 7 people. ALL 7 represent the 46% of shares. Ok, maybe more if they have an agreement with enough minority shareholders, but anyway at least 43% of shares do NOT have even voice on the board. It means that the current directors are courtiers dancing to Fiszman & Co’s flute.
These courtiers can NOT manage the manager. And that is why the club now posts financial losses.
The team has a significant amount of hugely overpaid losers who could never even ask this size of salary in any other club. During the last five years the manager’s spend on net transfers/wages is 92% of Man United’s spending. It has achieved no trophies which has in turn prevented commercial revenue growth. The reason for lack of commercial revenue is NOT the old long-term agreements with the sponsors. The real reason is lack of pitch-success.
The Arsenal fan-base in 2009 was around 27 million people according to Emirates Group. Man United’s fan-base is reportedly around 330 million. In order to keep competing as a global brand you need the growing fan-base. Because even if foreign fans pay nothing directly to the club, they are the huge part of TV audience and therefore they are the base for current lucrative TV contracts.
So you can continue to pay Denilson £60K a week without fatal financial consequences only if you are in the highest level of the global sport marketing zone. But to reach this level you must get Denilson out. And not only him.
In March 2010 chief commercial officer (CCO) Tom Fox told AST (an account of the meeting can be downloaded from this page) that “he doubted he could convince Arsene Wenger that the club was ready to exploit the benefits of touring in a commercial sense, so he would not feel comfortable approaching the manager with this idea.” And also that “the club lagged its competitors in terms of what we brought in through sponsorship.” And that “to increase sponsorship income, a new way of thinking was required.”
As you remember the manager told us recently that club will not go to Japan in the summer. I don’t even ask – why we don’t go. And why Bayern Munich has already declared it will play a charity match in Japan while Arsenal are still thinking about going (by the way Bayern has the highest commercial revenue in the world, four times higher than Arsenal’s.)
I ask – why the person who is telling this is the manager? Not the CEO, not the CCO, but the manager? Because manager runs not only the team, but he runs the CEO, runs the CCO and finally runs the club?
One of the minority shareholders (who rebelled against the new season ticket price increases but after Gazidis’ phone call immediately became a member of the CEO’s personal fan club) wrote in his blog that “The problem is of course that Arsenal is attempting to compete with the likes of Manchester City and Chelsea who have uber-wealthy sugar daddy owners… UEFA administration will have the necessary wit and big brass ones to face down the serial over-spenders amongst the Champions League’s biggest regular qualifiers.”
This is the object lesson of current way of thinking.
My vision of the new way of thinking consists of two parts:
1. The club must have normal structure and normal management.
Board must represent ALL shareholders proportionally and must make the most important decisions.
The CEO must run the club and manage ALL employees on a daily basis.
The manager must run the team.
The AST must be AST but not ABST (Arsenal Board Supporters’ Trust) and must tell the unpleasant truth to the Board and the club’s chief managers.
