By Neil Fry
October 30 2013

PART TWO Management audit.  This section of the audit examines Arsenal’s delivery off-the pitch and its player recruitment activities.

A new player recruitment strategy?

Arsenal’s 2012 - 13 financial year for saw the Club reveal a small profit before tax of £6.7m.  Without the income generated from selling Messrs Van Persie, Song and Vela the accounts would have revealed a loss of £40.3m.  This was consistent with the second period of Monsieur Wenger's reign and the  self-sustainability model of Arsenal breaking even by player sales.[9]  However, with the financial legacy of constructing the new stadium continuing to diminish, a new front-loaded Emirates shirt sponsorship deal, other commercial deals, and the “rationalisation” of the squad at the end of last season, there would now no longer be a reliance on player sales.  Arsenal were entering a new financial era. 

After the FA Cup exit, Chief Executive, Ivan Gazidis, publically declared their great ambition as they were now ready to "compete with any club in the world".  Indeed, he boasted to the media of the "escalation" of Arsenal's "financial firepower" that would allow them to sign players such as even Wayne Rooney (currently earning wages in the region of £250,000 per week from Manchester United, believed to be the highest in the Premier League).  Approximately £70m was to be spent in the summer transfer market, to bolster the existing squad with some top international players.  As the new Chairman, Sir Chips Keswick, noted in the 2012 – 13 Annual Report, “it is clear we are entering an exciting phase of the Club’s evolution.”[10] 

Nevertheless, the starting team against Aston Villa was exactly the same as that which had finished the previous season at Newcastle United.  Arsenal had indicated a desire to sign a world-class forward and, in addition to Wayne Rooney, had made transfer bids for or been linked with three world-class forwards, Messrs Higuan, Benzema and Suárez.  Arsenal had been, wrongly, led to believe that Suarez (despite the problems he presented, not least being suspended for the first six matches of the season for biting an opponent for the second time), had a buy-out clause and would be sold to them for £40,000,001m.  Arsenal appeared to dither over signing Mr Higuan from Real Madrid, once the deal hit complications, and Napoli took full advantage.[11] 

A little known 19 year old forward who had already experienced injury difficulties, Yaya Sanogo, signed from Ligue 2 French club, AJ Auxerre on a free transfer, remained the only forward acquisition.  Headlines such as ‘Arsenal’s disastrous summer has left both team and manager weakened’; ‘Arsenal step up chase for Yohan Cabaye as panic sets in at the Emirates’; and ‘Rejection is more likely for Wenger because he accepts it far too readily’, and worse, followed.[12]  

Three wins within a week in late August, two away, including Fenerbahçe 3 – 0 away in their intimidating Şükrü Saracoğlu Stadium (which maintained Monsieur Wenger’s 100% record in Champions League qualifying ties) ended the media labelled ‘crisis’, following Arsenal's first defeat since 3^rd March.  Ahead of the defeat of Tottenham, Arsenal further added the out-of-contract former player Mathieu Flamini who was training at Arsenal to keep fit.  He immediately added a defensive midfield combativeness and tactical discipline that had been lacking since Invincible Gilberto left the Club.

Case Study:  Tottenham player recruitment strategy implementation

Nevertheless, with a home derby with Tottenham Hotspur looming, one day before the close of the summer transfer window, the Club’s transfer activities came under renewed scrutiny.  BBC analyst Mark Lawrenson compared the summer transfer market strategies of the great North London rivals.

Tottenham have been exceptional and chairman Daniel Levy has got this transfer window business sorted. He knows what he's selling, and he knows exactly what he's buying. The quality of players coming in has been very good and he has not paid over the odds either.  Technical director Franco Baldini may well be one of his best appointments, he is across Europe, speaks a lot of languages and knows what he's doing. He has been instrumental in some of their signings.  Arsenal, on the other hand, don't appear to have any form of transfer policy. What have they been doing for the past three months? […]  It doesn't seem like they have a joined-up way of going after players, they are linked with different names every week. It's a mess.[13]  

Arsenal’s Chief Executive extravagant boasts may have been designed to placate fans and critics of the Club’s lack of both spending and trophy success over eight seasons.  However, it was financially irresponsible in that it was likely to drive up the transfer fees of the Club’s intended purchases.  In contrast, much more local rivals, Tottenham wisely denied that they would be selling their star player, Gareth Bale, to Real Madrid and quietly went about their business.  In addition to the widely acclaimed business acumen of Chairman Daniel Levy, the young manager André Villas-Boas was grateful for the support of the newly appointed Technical Director Franco Baldini.  A former director of football at Roma in 1999, he subsequently assisted Fabio Capello at Real Madrid and England.  As England assistant manager his role involved scouting, managing the supporting staff (e.g. the doctors, physiotherapists, masseurs and kit managers), and generally reducing the manager’s non-coaching burden as much as possible. 

Before finally announcing the world record transfer fee for the sale of Mr Bale to Madrid, the club broke their transfer record three times during the summer in signing seven players, from £8.5 to £30m, and spending around £110m (which equalled their income from the sale of Mr Bale and four others).  Positionally, they signed:  a centre-back, a defensive mid-fielder, 2 offensive midfielder’s, a winger, a forward and a centre-forward.[14] 

The differences in recruitment were highlighted by the respective benches on derby day 1^st September.  Offensively, Tottenham had Messrs Sigurdsson, Sandro, and Lamela, their new £30m record signing.  All were relatively young (aged 21 to 24) but experienced in top level football in a variety of countries and all internationals (for Iceland, Brazil and Argentina).  The older highly experienced, still current and 54 capped England international, Jermaine Defoe completed their bench. Offensively, Arsenal had the totally inexperienced and untested Messrs Gedion and Zelalem - aged  16 and 18 as plan B.  Arsenal’s answer to Mr Defoe was Yaya Sanogo, the 20 year old free transfer from the French Ligue 2.

The Mr van Persie transfer watershed

Monsieur Wenger has recently admitted that the Club’s sale of Mr van Persie to rivals Manchester United, virtually gifting them the Premier League title, caused great problems.  "We lost van Persie, created a lot of unrest and destabilised the team. But from November to May team showed fantastic mental strength."[15]  The sale appears to have become something of a transfer market watershed that will not be repeated by top Premier League rivals.  Following Arsenal’s bid for Mr Suarez, Liverpool American owner John W Henry stepped into the breach and publicly stated it would be "ludicrous" to sell to a rival, “especially Arsenal”, as potential rivals for a Champions League qualifying place. A last day transfer window bid for Chelsea’s Demba Ba, was similarly rebuffed by their returning manager, Senor Mourinho.  Instead, the former squad player Bendtner, who despite his great self-confidence had struggled, was forced to return to the Arsenal after two unsuccessful loans – before being sent away to remedy his lack of fitness.[16]

The new record transfer

One day after a 1 – 0 home victory against Tottenham, whose multiple signings had yet to integrate into a much changed team, the icing on the cake for Arsenal supporters came shortly before the transfer window closed.  After Real Madrid’s purchase of Mr Bale was confirmed Arsenal shattered, and nearly tripled, their previous £15m transfer record (Andre Arshavin).  Despite the apparent attempts of Mr Levy to use their ‘partnership agreement’ to block it; incredibly, Madrid sold the world class highly successful 49 capped German international attacking midfielder Mr Özil to Arsenal for £42.5m.  His enduring record of top European Leagues level assists unrivalled, many of his fellow star players and former managers were incredulous.  The transfer fee was less than half that of the much less proven, also 24 year old, Mr Bale.[17] 

Perhaps, even more importantly, was the message it sent out to supporters, rival clubs, and future transfer targets.  Having noted the successive departure of the Club’s stellar talent - from Ashley Cole to Robin van Persie - the respected football journalist Amy Lawrence stated,

Occasionally transfers have a ripple effect. The deal represents considerably more than the movement of a player from one club to another, and the crazy maths of the sums involved. In welcoming Mesut Ozil, a genuine global A-lister, Arsenal have made their most significant foray into the transfer market since they bought Dennis Bergkamp.[18]

And as David Dein had said of the (pre-Wenger, manager Bruce Rioch) Club’s subsequent global transformation of image, Bergkamp was the first brick in the wall.  Potentially, as Ms Lawrence noted, “Ozil can be that zeitgeist signing for the post-Highbury generation.”

Player recruitment policy – transfer spend

As the previous report noted, Mr Gazidis's statement that the Club’s disastrous second player recruitment policy remained intact was puzzling.  Investment in players for 2012/13 was approximately £50m with the addition of recent, older well-established, international signings of Messrs Podolski, Giroud, Carzola and Monreal.  The signing of Mr Özil for over £42m well and confirmed its end and was the first fruit of the escalation of financial fire-power.

Player recruitment policy – wage spend

As previously noted too, the damaging consequences of the second player recruitment policy were exacerbated by anti-meritocracy socialist wage structure, for which Monssieur Wenger, having been set a budget, was solely responsible.  Problems over this unique policy included non-saleable fringe or non-playing squad players earning high wages – well in excess of their market value - for long periods. 

Arsenal’s wage spend for 2012 – 2013 was up from £143.4m the previous year to £154.5m.  By comparison, for the last season figures were available Tottenham spent just under £100m a year on wages, Liverpool £125m, Chelsea and Manchester United c. £170m and  Manchester City £200m.[19]  Subsequently, Mr Özil has been awarded a reported 5 year contract on a starting salary of £140 - 150K, plus bonuses.  Whilst this also shattered Arsenal’s previous highest wages of around a reported £90 – 100K (Messrs. Podolski and Walcott), it remains very proportionate and far from excessive.  The signing of Mr Özil and apparent attempts to sign Messrs.Higuan, Suárez, Benzema and, particularly, very high earning Rooney seems to have cleared up the apparent senior management confusion over the termination of the socialist wage structure.  Helped by the very welcome economies from wage expenditure on fringe players moved on in the summer, it is forecast that the wage spend will actually drop to £152m next year.[20]  

Part 3 here

References

 [9]  Arsenal Supporters' Trust Newsletter no.104‏, newsletters@arsenaltrust.org

[10]http://www.arsenal.com/assets/_files/documents/sep_13/gun__1380277138_Arsenal_Holdings_plc_-_Annual_.pdf

http://www.telegraph.co.uk/sport/football/teams/arsenal/9876493/Arsenal-back-Arsene-Wenger-with-70m-to-spend-in-summer-as-fans-anger-mounts-after-FA-Cup-exit.htmlhttp://www.theguardian.com/football/2013/jun/06/arsenal-wayne-rooney-arsene-wenger

http://www.theguardian.com/football/2013/jun/22/manchester-united-wayne-rooney

http://www.dailymail.co.uk/sport/article-2403209/Wayne-Rooney-set-rewarded-contract-talks-Manchester-United.html

[11]  http://www1.skysports.com/football/news/11670/8944277/stan-kroenke-admits-arsenal-were-never-going-to-land-liverpool-striker-luis-suarez

http://www.standard.co.uk/sport/football/it-only-took-10-minutes-to-land-arsenal-target-gonzalo-higuain-says-napoli-chief-8851352.html?origin=internalSearch

[12]  http://www.theguardian.com/football/blog/2013/aug/19/arsenal-disastrous-transfer-window-wenger

http://www.theguardian.com/football/2013/aug/19/yohan-cabaye-arsenal-newcastle-united

http://www.independent.co.uk/sport/football/news-and-comment/rejection-is-more-likely-for-arsne-wenger-because-he-accepts-it-far-too-readily-8783005.html

[13]  http://www.bbc.co.uk/sport/0/football/23878289

[14]  http://www.bbc.co.uk/sport/0/football/23538218

http://www.theguardian.com/football/2013/aug/30/tottenham-hotspur-erik-lamela-christian-eriksen

[15]  http://www.telegraph.co.uk/sport/football/teams/arsenal/10385536/Arsenal-manager-Arsene-Wenger-admits-selling-Robin-van-Persie-to-Manchester-United-destabilised-team-last-season.html

[16]  http://www.bbc.co.uk/sport/0/football/23627573

http://www.mirror.co.uk/sport/football/news/demba-bas-move-arsenal-blocked-2246401

http://www.dailymail.co.uk/sport/football/article-2404084/Chelsea-wont-sell-Juan-Mata-Tottenham-Arsenal--Andre-Villas-Boas.html

[17]  http://www.independent.co.uk/sport/football/transfers/transfer-news-tottenham-chairman-daniel-levy-attempted-to-block-arsenal-move-for-mesut-ozil-after-feeling-real-madrid-betrayed-him-8797601.html

http://www.arsenal.com/news/news-archive/german-international-ozil-joins-arsenal

[18]  http://www.theguardian.com/football/2013/sep/02/mesut-ozil-arsenal-emirates-era

[19]http://www.arsenal.com/assets/_files/documents/sep_13/gun__1380277138_Arsenal_Holdings_plc_-_Annual_.pdf

Arsenal Supporters' Trust Newsletter no.104‏, newsletters@arsenaltrust.org

[20]  Arsenal Supporters' Trust Newsletter no.104‏, newsletters@arsenaltrust.org