Today was the Arsenal AGM, a huge opportunity for the supporters to ask questions of the management. And the debate today was one of the more refined ones in recent memory, as the AGM passed without major incident.
Several pertinent questions were raised, including about the future of Arsene Wenger, the price of tickets and, most importantly, about the decision to not purchase an extra defender during the summer transfer window. Chief Executive Ivan Gazidis and Chairman Sir Chips Keswick fielded these questions and provided detailed answers, especially about the defender issue. Gazidis also took the time to clarify that Arsenal were not hoarding cash and their financial situation was ‘very complicated’.
The club’s latest financial results for the six months ending May 31 revealed a cash balance of £207.9m, prompting criticism among many supporters over the club’s failure to strengthen certain areas of the team. This criticism intensified after the recent spate of injuries, which has left Wenger with the prospect of playing left-back Nacho Monreal as a centre back in Saturday’s game against Hull. This is what Gazidis had to say:
There is quite a lot of inaccurate and superficial analysis about the cash that we have available for investment in the squad. That leads to stories we are hoarding a vast cash balance and that is simply not the case.
There are obvious reasons why we don’t broadcast to the world what our player spending position is. But the position is much more complex than is broadly understood. I am certainly pleased and proud that we have a good cash balance and that is a sign of a club in good financial health and has the resources to meet its obligations.
However, it has to be understood that is a high point in the year when season tickets and many sponsorship receipts have already been collected. The vast majority of that cash is already accounted for in various ways.
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First of all, £99m of future spending has to be funded from the cash balance as of May 31, 2014. We have committed a net £53m on new transfers since the May 31 date. We have got liabilities of £29m still to pay on previous transfers and there is a further £17m of performance-related costs that we expect to have to pay. That’s £99m in total. That leaves us with £108.9m left.
The second thing to understand is that we always have to keep a substantial amount of cash in reserve in order to comply with our debt obligations.
Most of the remaining cash is needed to run the club across a full season with all the costs, including player salaries, associated with that. Only after satisfying those obligations — and we also do some complex modelling forward to make sure we can meet our anticipated financial commitments — can we actually understand what is available for investment in the squad.
We do try to keep a reasonable amount of cash available for future investment in the team and we think it is always wise, if possible, to have something in reserve. We don’t publicly disclose that amount because it is commercially and competitively sensitive but I am afraid it is nowhere near the numbers quoted which give you some degree of dissatification.
It is quite untrue to suggest the club is sitting on a huge cash pile that for some unspecified reason, it refuses to use.
Gazidis clearly wanted to put to rest once and for all the allegations that the club were refusing to release available funds for the transfer market. The board has also reportedly approved a further £20m spending budget for Arsene Wenger during the January transfer window to buy cover for the first team. This should go a long way towards appeasing the fans.
The specific issue of Wenger’s decision not to replace Thomas Vermaelen was raised with chairman Sir Chips Keswick to wide applause in the room. This was the Chairman’s response:
Thank you for the question. I don’t think I either have the wish or intention to double-guess what Arsene Wenger wants to do. The board backs him 100 per cent. If he has a plan, we back him. If he doesn’t have a plan, we keep quiet. There is no doubt who calls the shots about football at Arsenal. It is not the chairman, it is not the fans, it is Mr Arsene Wenger.
Another question was regarding the £3m payout to Kroenke Sports and Entertainment, the company of majority shareholder Stan Kroenke. Keswick defended the decision to pay the ‘strategic and advisory fees’, saying:
This fee was proposed by myself and Lord Harris for the wide range of services provided to Arsenal by Kroenke Sports and Entertainment.
KSE are one of the most successful and respected sports organisations in the United States. It is of the utmost importance to us as a club we use them to our best advantage to ensure we keep progressing. There was no competitive tender for these services because they are directly available to us and the tender process was inappropriate. We are entirely satisfied this fee was appropriate.
Arsene Wenger, while he might have the full backing of the board, is getting on in years and some questions were raised as to his future and the future of the club after him:
Rest assured that we follow the situation very carefully. I believe that our great club will always be an attractive venue for the best managers in the world to apply for so I hope and believe that when the time comes, we will be spoilt for choice. That is not complacent and we monitor the situation all the time. I hope when the time does come, we come up with a situation that pleases you.
The managerial question is obviously an important one, as replacing a long term manager like Wenger is daunting task. The example of Manchester United after the retirement of Sir Alex Ferguson is still fresh in everyone’s minds.
Overall, it was a good AGM that cleared up some of the biggest questions in the minds of the supporters and gave them assurance that the club was willing to invest to further improve the squad and that Arsene Wenger has sole charge of those decisions. Come the January transfer window, we will see exactly what the veteran Frenchman plans to do with his authority.