A guest post from @TraderChris87 .
I cant stand for his figures so dont shoot the messenger.
A common criticism of the club is that “we have massive cash reserves and we don’t spend it”. Someone on Twitter yesterday said to me that in 2009 we had £72m of “spare cash” that we didn’t spend.
When the financial figures we’re released in September of this year there was uproar at the cash reserves figure announced being around the £200m mark. This did not go down well with some fans who perceived gaps in the squad that needed addressing.
Well yesterday I wrote a post on here in which I said there were a lot of stupid fans “who don’t know the first thing about running a football club or economics.” This is a classic example. £208m in cash reserves were announced but anyone who think that there is anywhere near that figure available for spending on players is a complete moron.
First of all the club have to keep £35m of those reserves available for debt servicing, This was written into the contract of the loans for the Stadium construction. According to the ever reliable Swiss Ramble, we owed £53m in past transfer fees (for example, the Ozil transfer) as we negotiated an installments payments on certain transfers so we needed to keep some in reserve to pay those installments. That already accounts for £88m of those cash reserves. Meaning we were at £120m of “spare cash”. However we were owed around £20m from previous player out goings so lets call it £140m.
However the figures announced were as of the end of May. This means that those figures do not include our transfer fees for the summer just gone, With a net spend between £55m-60m this summer, our “spare cash” is down to £80m.
Another thing that must be taken into consideration is that these figures are announced at a time where the club have just got a large majority of the Season Ticket renewals, which mean this figure will always be highest around the time the figures need to be prepared. This is needed for day to day running of the club and paying wages to players and staff until we get a chunk of TV or Commercial revenue. I cannot find any information for when exactly this gets paid to the club. Even with a conservative estimate of £40m of that (Match day revenue is a third of our turnover and roughly estimating half of that (Total 16.66% of Turnover) is season ticket holders (£50m) and our Wages + Operating cost = £240m (16.66% of which is £40m) going to Operating costs and our wage bill. Leaves us with £40m of “spare cash”
Well we have £40m available….why didn’t we spend it?
Well first of all Arsene has mentioned “technical stability” of the squad on numerous occasions. Which essentially means, adding too many new players into the squad at one time can do more harm than good. With our new signings count at five maybe it was a factor in not signing anybody else. When you look at Tottenham & Liverpool adding 8-9 new players last summer and this summer respectively it is difficult to argue with him.
Another reason as to why we may have not signed anyone else is due to the right players not being available or available for a price worth doing a deal at. For example, a few names being floated around this summer as the answer to our perceived problem in defensive midfield were William Cavarlho, Morgan Schneiderlin and Sami Khedira. William Carvalho, a third party own a significant percentage of him meaning that Sporting wanted an extortionate price for him to make up for the share that the third party would be paid. Morgan Schneiderlin, Southampton refused to sell or even negotiate for. Having just sold several players they wanted to steady the ship and were in a financial position to be able to refuse any advances. Sami Khedira on the other hand, rumors were going around that he was available. However at £20m with a year left on his contract and rumored £140,000 per week wage demands (£7m per year), a five year deal would have been costing us at least £60m in total (Fee, Wages, Bonus’, Agent Fees, Signing on Fees etc). All this for a player that was out from November to May last season with a serious ligament injury and has subsequently been injured for 7 weeks of the season this year so far.
Ultimately, nobody knows who Arsene will decide to buy in January/next summer. All I can say is that I’m sure he’ll make the right decisions. Building a team takes time, not just one transfer window. Sometimes you have to wait for the players you want. We could not have got Ozil or Alexis at any other point other than when we did. Lets face it would you have rather paid £30m last summer for Willian or Lamela or wait a year and get Alexis. I know who I would rather have. So I for one would rather have some “spare cash” than players who were not up to the necessary standard Arsene wanted or to improve on the players we have.
Hope everyone has a good day and enjoys the game tonight. COYG!