Match Preview: Norwich City vs Arsenal F.C.


So, off to Carrow Road to play out of form Norwich City after this incredibly dull interlull and I must say, I think this is the perfect team to be playing against after the break. A team that we should be able to punish and blow out the international break cobwebs against provided our team turns up on the day. So let’s look at what we can expect to see from this one.

Norwich are currently 19th on the table and have shipped more goals than any team in the league conceding 17 in just 7 games. They typically set up in a 4-4-1-1 formation similar to our own and prefer a short passing game, usually attacking down the right wing through the combination play of Jackson and Snodgrass before crossing the ball into the box often to try and create chances and smother the goalbox clearances. They are a team that is not shy about shooting and have scored a couple of decent range goals, although happily the majority of their efforts fly wide, averaging only about 25-30% of all shots on target, their lead scorer Grant Holt has only 2 so far. The best news for our defense however is that they haven’t scored any goals from set pieces which our team is particularly vulnerable to.

Offensively we can hurt them a lot. Norwich play an offside trap which quite frankly, is suicide against the pace of our team even with Theo Walcott currently injured. Despite their lack of success Norwich are a team that likes to come out and play rather than park the bus and cower in their own half (particularly when playing at home) and this will play into our hands. Our lightning fast counter-attack play should be easily able to give them a torrid time. Norwich are not a physical side and are poor at retaining possession averaging only 42% possession so far and prone to individual errors which also benefits us and I would expect our midfield to completely control the game and dictate play through Arteta and Cazorla. So far this season they have been largely hurt by attacks down the wings so expect to see our potent left wing attack up to it’s usual tricks, the downside of this being that Kieran Gibbs will most likely not feature due to the injury sustained against the brutes of West Ham United.

Formation-wise expect to see Arsenal in their shiny new 4-4-1-1 setup with most of the usual suspects in place. As I mentioned Gibbs is doubtful for this encounter so expect to see Santos at Left Back provided he’s not booked for speeding on the way to the stadium(take the bus mate).  Let us hope he can provide the attacking sting that Gibbs has given us recently. Koscielny like-wise may be recovering from the small knock he took while on international duty and coupled with his dip in form in his last two matches, he’s unlikely to feature in this one. With Szczesny still injured Mannone will continue as first choice Keeper and with Diaby still out the third midfield position is up for grabs. Norwich are rather poor at preventing shots from range so I’d like to see the combination of Arteta, Cazorla and either Ramsey or Chamberlain (2 players not afraid to shoot) to give us an extra scoring option if the opponent is proving stubborn, however Wenger may choose to put his faith in Coquelin instead. Also, owing to Giroud’s excellent efforts for France (sticking it to Spain) and the fact that Norwich are weak at winning aerial duels I’d like to see him given the nod at Centre Forward to muscle up on their defence and dominate the opposition’s goalbox. Gervinho has been excellent in the Center Forward role but with Walcott not on the subs bench I’d like to see him start at Right Wing. Lastly, I’m sure I’m not the only one who would LOVE to see Jack Wilshere given 10 minutes or so towards the end of the match if his fitness is up to it.

Norwich City Danger Men: Jackson, Snodgrass and Holt.

Result Prediction: Conservative because of the interlull: 1-3 Arsenal. More goals and defensive shutout if our team plays well.

Expected lineup: 4-4-1-1 formation – Mannone, Santos, Vermaelen, Mertesacker, Jenkinson, Podolski, Arteta, Ramsey, Gervinho, Cazorla, Giroud.

Conclusion: This is a game we should win and win well. I will be doing a post-match breakdown of the game after the weekend, till then let’s get behind the team. COME ON YOU GUNNERS!

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A decade of profits (with make-up)

Recently Peter Hill-Wood has told the media that Arsenal Football Club has made a  profit of more than £35 million. While this is all nice I don’t think many fans of the club realise that this means that the last time the club has made a loss was in 2002, when the club recorded a £22 million loss. In other words: Arsenal have been through a decade of profit and have amassed a  stunning £248 million over the course of the past 10 years of which 77% (£191 million) was made in the last 5 years. Arsenal is not the first club to achieve a decade of profits as Bayern Münich has entered their 19th consecutive season recording a profit.

Just a quick glance at the above figure might give the illusion that the club is heading in the right direction, but the devil lives in the details so lets take a closer look at this years profit. To clarify the sales of Robin van Persie and Alex Song are not recorded in the 2012 profits since the end of the fiscal years is not on the same day as new years. So the 2012 accounts have the sales of Nasri, Fabrégas, and Clichy in them but not Van Persie, and Song.

Breaking down the £191 million

We are extremely dependant on 2 things: Players sales, and property development. Without the £2,5 million profit from property developments and the £65,5 million profit from player sales we would have made a sizeable loss of £31 million in 2012. In fact player sales have accounted for 80-90% (about £160-170 million) of our profits in the last 5 years. What this means is that the club has become reliant on player sales to maintain sustainability. Have you ever felt in the past 5 years that the Arsenal squad is a player or two away from title contention? Well this is the reason why. Although the sales of each player can be individually explained (Fabregas wanted to go back to Barcelona; Song had bad discipline) we should take a step back and take a look at the trend that has occurred in the past years: Arsenal has slowly turned into a competitive selling club! (My definition of competitive here is qualifying to the UEFA Champions League)

Now not everything is gloomy: We are still capable of staying competitive on the pitch (thanks to smart investment due to scouting) but title contention is highly improbable. Also thanks to our sustainability we won’t have to walk down the road of Malága, Milan, and Inter who had to part ways from their experienced, expensive players. Heck even Manchaster City was more restrained on the transfer market! The fact that we are run on a sustainable business model means that we will (most probably) always have funds to invest in the squad; however our title contention will be decided, to a large extent, by the lack of transfer dealings by our competitors.

The profit with make-up

Have you ever had a girlfriend who looked stunning with make-up on but once she took it off she wasn’t as hot? Well if not you are soon going to find out what that feels like: Our £35 million profit hides our inefficiency in generating revenue growth. In fact if we exclude property development we have generated a negative operating profit. Of course with property development included we are still making an operating profit but if the current trend keeps up we wont be doing so for long as the Highbury Square property is almost completely sold. The fact that turnover has dropped to £7,7 million from last years £30,3 million in the property segment reflects this. The rise in overall staff costs  from £124,4 million to £143,3 million had an impact on our operating profit as well. This rise in our wage bill can be attributed to our late signings last season. The good news is that the club has learnt from its mistake and concluded its deals well before transfer deadline day. The bad news is that our wage bill (and operating expenses) has grown at a faster rate than our revenue.

Deloitte Money League
(£ mil)
2011 Rev 2010 Rev
1 Real Madrid 433 359.1
2 Barcelona 407 325.9
3 Manchester United 331.4 286.4
4 Bayern Münich 290.3 264.5
5 Arsenal 226.8 224.4
6 Chelsea 225.6 209.5
7 AC Milan 212.3 199.8
8 Internazionale 190.9 184.1
9 Liverpool 183.6 184.5
10 Schalke 04 182.8 139.8
Exchange rate: £1 = € 1.1073 (30-June-2011)

Since I mentioned revenue it is time to look at our biggest weakness: Weak revenue growth due to sub-par commercial revenue. If we look at our revenue we are in the financial elite of Europe standing firm on 5th place with a revenue of £225,4 million last year (Deloitte numbers are not exactly the reported figures of Arsenal due to exchange rates changing). In fact it was reported in May 31 that our revenues have increased to £235,3 million from £225,4 million. which is only surpassed by Manchester Uniteds £320 million in the Premier League. While this might seem impressive Arsenal has only managed to increase their revenue by £10 million in 3 years while Manchester Untied was capable of achieving a £42 million revenue growth in the same time frame.

The biggest defect of Arsenal is its commercial revenue. The reason behind this is the Emirates Stadium: Arsenal had to tie itself down in long term deals to finance the Emirates stadium. The good news is that the Arsenal Board recognises this, hence the Asia tour which attracted commercial partners; however we are still lagging behind Manchester United in this area who are capable of attracting a lot more secondary commercial partners than Arsenal do. However we should not look at this and claim the Asia tour was useless as it is one of the factors behind our £10 million Revenue growth in the past 3 years.

However as Milton Friedman has already said “there ain’t such a thing as a free lunch” and just like everything the Asia tour has costs associated with them. The biggest of these is that the team does not have as much time to gel, not to mention possible injuries. These might not seem like  financial costs but they have an effect on performance on the pitch. And performance on the pitch will have a huge impact on profitability and commercial attractiveness. Long story short: Our Asia tour can attract commercial partners and have an uplift on our revenue growth but such a tour will have an impact on team chemistry come the first week of the league.

The promised land of 2014. The year our shirt deals expire. Many people expect our commercial revenue problems to be solved that year simply because both our shirt  sponsorship and shirt producing deals are pathetically bad and improving on them is a must. The board recognises this: Gazidis has claimed that “in terms of the financial impact, it will be as significant a step forward as the stadium was in 2005”, but if Arsenal FC truly want it to have as huge of an impact as the Emirates Stadium was than the commercial team and Tom Fox have their work cut out for them.

Now many fans will possibly lean back and say: “Who cares. Financial Fair Play is around the corner” and while this is true we must understand that FFP will benefit the teams with the highest revenue, as these are the teams that can spend most on their squad. As I have tried to convey Arsenal has limited to no revenue growth and if it wants to be a leading powerhouse in FFP, solving this is a priority.

What this all means

The point of this analysis is to show the reader how dependant Arsenal is on player sales. It does not need to be this way though. If Arsenal want to be title contenders then revenue growth and operating profit have to be tackled by the Arsenal board. Revenue growth can be achieved by increasing commercial revenue, since Arsenal is behind the curve in this area. The shirt deals will expire in 2014 (the promised land) and the new deals will lessen our dependence on player sales if negotiated correctly.Tackling operational loss making is tougher as it need wage re-structuring. That means the team has to try and renegotiate its wages and try and get rid off “deadwood”. We have seen Arsenal doing the latter by shipping Bendtner, Park, and Denilson out on a loan deal thus decreasing its wage bill but getting rid of unwanted players is imperative to Arsenals success. If neither of the issues are tackled then we will see more reports of profits… with make-up.

15 FAQs that are related to the Board

This is a blogpost I made earlier at GoonersUnite back in January 2012. However since some parts are still relevant I decided to publish it here as well. The post was about certain Frequently Asked Questions me and a couple of others had to constantly answer on the football forum: footytube. Most of the graphs are from the swissramble and if you haven’t you should definitely check his  blog out. Anyways enough words have been wasted on explaining the post so without further ado here is the post itself.

Q1. Why is our home support so silent/weak?

Some might think its due to lack of attendance, however the Emirates has almost always been filled. Even this year against Shrewsbury in the Carling Cup we had a healthy attendance of 46,539. However the high attendance figures shadow the real reason behind a silent home support as it does not highlight the composition of the support. To illustrate what we mean just look at the Arsenal home support  and the Arsenal away support.

The massive difference in the composition of fans is majorly due to ticket pricing policies (both season ticket pricing and match day ticket pricing) by Arsenal FC. Arsenal have the most expensive match day and season tickets in the Premier League which leads to many fans who cannot afford to go to each game (or to the extra expensive home game) to attend away games. We have seen many times that Arsenal fans “borrowed” the oppositions stadium for the match day. Ironically the opposite is the case for our home ground.However recently Arsenal has joined Aston Villa in an effort to push through plans to create safe standing places. Standing places were made illegal in any stadium due to the Taylor inquiry which was the inquiry into the reason why the Hillsborough disaster happened. The plans to push through safe standing places is a rather brave one given that it was in the Premier League that such an incident happened, however given modern technology we should be able to achieve safe standing places (one should also resist the temptation to sell more tickets than actual standing places but if the project does go through extra attention should be given to the accounts of the teams that have standing places by the FA/UEFA). In my opinion standing places would help make the Emirates a fiercer environment (assuming the board does not make its prices too high)

Q2. Did Arsenal need to raise ticket prices?

No. We were in a healthy position regarding both football and finance so the team did not have a gun to its head when they made this decision. Arsenal already had the 3rd largest match day income behind Real Madrid and Manchester United. Having said that a comparison between season ticket prices is extremely hard as an Arsenal season ticket also includes 7 cup games. Arséne Wenger made a reasonable argument that the 6.5% increase in ticket prices was needed “to increase our income to fight with other clubs” however this could have been achieved in other ways. (see Q3 for more on this)A more logical explanation for the price hike was given by Tom Fox. In the interview Tom Fox outlined that after seeing a 40000 waiting list for season tickets “you think you are not charging enough for tickets”. Factor in that in football a price increase has the least drawbacks as the teams “customers” have a fierce brand loyalty. After all we don’t expect an Arsenal fan to suddenly switch to Tottenham due to the price differential.

Q3. Apart from increasing ticket prices what other ways could have Arsenal increased their income?

Most Certainly. One way (which is utilised by the likes of Manchester United and Barcelona) is to actually win competitions. However we should note that progressing as far as possible in the Champions League should be a priority over a Domestic Cup. After that would our priority should be to qualify for next seasons Champions League. (if we look at the amount of funds receivable rather than the amount of gloryhunters). However for Arsenal to actually be able to compete in the UCL they would have to hold onto the talent they produce/polish and not force Arséne Wenger to rebuild a semi-good team every 3-4 seasons but for that to happen Wenger desperately needs the help of the board.

Alternatively to winning more the board could quite possibly renegotiate some sponsorship deals. If we look at our books it is painfully obvious that we are behind the curve when it comes to commercial revenue. From this figure we can see that due to the boards unwillingness to renegotiate these deals we are missing out on approximately 30-40 million pounds of revenue EVERY SEASON. Out of all the sponsorships though Arsenal is doing the worst in shirt sponsorship and kit supplier deals where even Tottenham are doing better.

Q4. Why is commercial revenue so low?

AFC needed to tie itself down into long term deals to provide cash upfront for stadium financing because we got no subsidy from the government. The board was aware that in the long run this could possibly leave us behind the curve when it comes to commercial revenue but in order to build the Emirates they were willing to take this risk. This was a strategic decision made by the board which left us with sub-par commercial deals in the short run but a stadium in the long run (I’ll let the reader decide whether the board made the right decision)

Q5. Is the club doing anything about increasing commercial revenue?

Yes the board were actually renegotiating the shirt sponsorship deal but this is not enough when you have the likes of Stan Kroenke in the room and Alisher Usmanov knocking on the door. I’m fairly certain that one of these gentleman would be more than kind to buy-out some of the commercial contracts and help us negotiate new and better sponsorship deals which would help the clubs already slowing revenue growth.

Q6. How is our Emirates debt looking like?

The Emirates project cost us 470million pounds of which 260 million was a special loan package. According to the annual AFC financial report our property debt (the debt on the Highbury square apartment complex) has been repaid so that leaves us with a gross debt of around 250-260million pounds which consists of:

-the long term bonds on the emirates (lets call these mortgages) which account for around 230 mil
-debentures held by supporters which account for about 30 millionIf we deduct these cash balances we are left with a net debt of around 90 million. I would like to express at this point that since“Our property business is debt-free, any new sales of property do accumulate cash, which is very positive for the future.” (Ivan Gazidis). It is true that only 16 of the original Highbury apartments remain unsold, but in 2012 20-21 additional units will be added.


Now onto debt servicing: If we were to look at the accounts of Arsenal Holdings plc we could make our own estimate of the amount of transfer funds Arséne Wenger potentially has. The Swiss Ramble estimated 53 million pounds in October (since then the board has sat down with our shirt sponsor to try and renegotiate terms so this number should be taken with a pinch of salt). Another reason to not take this number as gospel is because the club has to keep some of this as a reserve for debt servicing (not to mention the uncertainty of season ticket renewals).

Q7. When will our Debt servicing end?

This will probably make some of you angry/sad but “Further significant falls in debt are unlikely in the foreseeable future. The stadium finance bonds have a fixed repayment profile over the next 21 years and we currently expect to make repayments of debt in accordance with that profile.” -Ivan Gazidis (2010)
So we still have to pay debt servicing for another 20 or so years. Theoretically it would be possible to pay back some portion of these debts earlier but the board has shown no signs of such a thing happening.
“The debt that we’re left with is what I would call ‘healthy debt’ – it’s long term, low rates and very affordable for the club.” -Ivan Gazidis
This is not however not necessarily a bad thing since the club is in a financial situation where it can afford such debts (as Gazidis has said)

Q8. What is the 10 year plan? How does it fit in the Arsenal philosophy? (By Cloudst)

The 10 year plan that Mr. Arséne Wenger has for the club can be interpreted in a process of steps. First it was (in my opinion) implemented when the invincible era came to an end. Players like Robin Van Persie and Cesc Fabrégas came into the club in terms of a long term future for the club that would stabilize the team into more success years for the future. Everything had gone to plan our youth academy is also producing some fairly well known players now that hopefully will be more involved in the near future but then the selling off of key players and figures of Thierry Henry and Patrick Vieira had a dramatic repercussion on the first team as the introduction of some of younger players meant that there was no leader in the back room and a figure that had left a dominating presence in midfield which eventually left us to our current trophy drought. Years went by and now standing at 7 years arsenal have been without a trophy but this particularly does not mean the 10 year plan of Arsene Wenger had come as a failure. Arsene Wenger realized now more than ever that he needed the presence of an experienced person in the backroom of the squad to unite the team together and give the younger generation of arsenal players a better understanding of the game (thus enter Mikel Arteta, Per Mertesacker, Yossi Benayoun and Andre Santos). This, by all means, is just the background to the 10 year plan as it has massive links to our stadium debt as well. If you are interested about reading about the 10 year plan just click here as it is outlined clearly by the author.

Q9. So was the youth policy just a necessity? (By Cloudst)

In a sense it makes us unique from the rest of the teams and it has it’s benefits as well as it’s downfall’s. Youth development is not a simple process of 1,2,3 and the player has made it. There’s many factors to how a player shall reach that potential, Theo Walcott is a fantastic example of how such a wonderful talent can be bogged down to early exposure to the first team and the pressures of the media to perform (which came from him being called up to the WC squad at the age of 17!!!!! Much too young for him with too much expectations). There is also the factor of younger bodies of youth products not growing stronger than the body of a mature 27 year football player who’s body is fully grown and matured (which lead younger players to be injured more, which is why we have recently opened up a brand new clinic facility near our training grounds to tackle these problems. These are the negative repercussions of youth development however the positives mostly out weigh the negatives at times for youth development (especially in a stadium debt)

Q10. This is all fair and dandy but why doesn’t Wenger buy proven players like Mata? Why did he let Nasri and Fabrégas leave in one summer?

The board has the say on which transfers go through and which ones don’t. A good example of this is Phil Jones and Chris Smalling who were identified by us but the board refused the extra 2-5 million to authorize the deal to go through. Further proof is the fact that Arsenals money floodgates opened after the memorable 8-2 at Old Trafford. It normally takes weeks to sign 1 (!!!) player let alone 3 (in a matter of days) which suggests that most (if not all) the paperwork was already done prior to the Manchester United game. What was needed was the green light from the board and the final signature of the player(s).

Q11. Gazidis and Hill Wood said that Arsenal can do with missing out on the UCL for one season. is it true?

As I am not an insider to the Arsenal Board I do not fully know if this is true or not. Having said that this seems to be more of a message to the stockholders than the fans (“Don’t worry stockholders your dividends won’t be affected”).This highlights the problem that the board is more concerned and is only accountable to the stockholders and not to the stakeholders (fans) of the club. Not to mention that most fans blame Wenger when a transfer breaks down so the board enjoys a little safety due to this common misconception about football clubs (as an enterprise). This misconception comes from the fact that both FIFA and PES franchises manager mode gives the player almost absolute control over a clubs finances, tactics etc. which is not true in real life football management.Having said that Arsenal has qualified to the Champions League for the past 14 seasons so one can argue that the Club has got accustomed to the funds received from UEFA. If we just look at last season Arsenal received a total of 30 million euros (that was around 26 million pounds) from UEFA for reaching the round of 16 (the season before that Arsenal received 3 million more for going an extra stage). And these figures only capture the funds due to television distribution! We have to also count for extra gate recipients as well as bonus clauses in some sponsorship deals. So if Arsenal would miss out on the Champions League we would be talking about a loss of 37-45 million pounds (I cannot give you an exact figure as I do not know the bonus clauses of the sponsorship deals).

Q12. A Loss of 40 million?! Surely Europa Cup is still better then nothing!

True it is better than nothing but the question is how much better? Is it worth taking seriously (financially)? Both Liverpool and Manchester City received 6 million euros for reaching the round of 16 and the highest pay-out in the Europa Cup was a mere 9 million euros. The question is that if we do end up in the Europa Cup is that 6-9 million worth it to risk first teamers getting injured. I will let the reader decide that (feel free to leave a comment in the comment section as to what your answer is and why you think that way).

Q13. Arséne Wenger and the board. What is their relationship?

Well right now we can witness some sort of dichotomy between the manager and the board. Both PHW and Gazidis have claimed at some point that missing out on the UCL won’t hurt us while Arséne Wenger recently claimed that “We want to be in there, in the top four, and to play in the Champions League. Anything else would not be good enough”. Sure this doesn’t necessarily mean that missing out on the UCL will hurt us but it highlights that Wenger would go all out to grab a top 4 spot while the board would rather get ready for missing out on it. Why the board is okay with Wenger working ‘against’ them? Unfortunately for Arséne Wenger the way the board handles things (not taking risks on the financial sphere) AFC is forced to act like a selling club since the only way profits are achieved is by selling the top talent of the club. And since Wenger is a master of choosing talent while its still rough and undiscovered, the board needs him to achieve profits. Of course this isn’t the only way to generate profits though (For more on this see Question 3).
Apart from the profit Wenger is able to turn on the market there is also the fact that when something bad happens the fans turn on Wenger rather than on the board. So safety is another reason why the board needs Wenger (for more on this see Question 11) although it is not as an important reason as the face that only under a manager like Wenger is the club able to turn a profit.

Q14. Was the relationship between Arséne and the Board always so polar?

Until 2007 there was someone called David Dein who was part of the board and acted like the right hand of Arséne Wenger. The moment Dein left we have seen the manager and the board working in 2 opposite directions and things started falling apart. I will not waste space here to talk about the importance Dein had on Arsenal since there is a page on him on wikipedia that gives a quick and accurate rundown on how influential he was in creating the Arsenal that us gooners are so proud of.

Q15. Is the board really the villain?

I would not go as far as to call the board a villain as their actions are business oriented. I fully understand why the board tied itself down into subpar commercial deals as this was the only way we were able to handle the dent that the Emirates project left on our finances. What I do not agree with is their lack of ambition nowadays where they are not willing to take any risks. How many times have we seen after Dein left (2007) that Arséne built a team just to be deconstructed by the board for profit? I can recall 2 times! 2 times in less then 5 years! This is absolutely outrageous and should be addressed as fast as possible otherwise us gooners should be happy if we even make it into the top 4. It is time to bring Dein back on the Board and if that is not possible then introduce fresh blood (in the board) who have the ambition to make Arsenal a global brand in football and not in finance.