In the post Leicester City presser, Arsene Wenger made some powerful statements in what appears to be a continuing counter-attack against the mainstream media and their ever faithful echo chamber on the interweb who continue to slander and malign him for not “spending” in the transfer window. Speaking of Rob Holding, his most recent signing (note the irony) Wenger remarked that the young man had an “outstanding performance” noting :

“He’s 20 years old, he’s English and it’s a great reason to be happy. As long as players don’t cost a huge amount of money, people don’t give them any qualities.
“We have to be stronger than that and just acknowledge how good he is. “

Yet according to the Sage of Dublin in his pre- and post-Liverpool vituperations, it was “criminal”, it was “unfair” to play Holding in a PL game, it was like throwing a baby into the deep-end and many more over-the-top metaphors. Instead, Wenger should have bought a more expensive defender, especially after Mertsacker’s injury and using the Sage’s logic, he too should have been thrown into the deep-end given that whoever was signed would have absolutely no PL experience, a necessary rite-of-passage for any defender coming from outside of England. I only quote the Sage, despite my past efforts to document his rampant fear-mongering and duplicitous attacks on our manager, because he is the Pied Piper of Arsenal blogs with thousands following like little lemmings repeating and magnifying his many inaccurate prognostications.

How does fear mongering gain such traction despite the consistent success of Arsenal Football Club in the twenty years under Wenger’s management?

• Invincible – unbeaten over a whole season.
• 3-time Premier League champions.
• 6-time FA Cup winner.
• Average league position of 3rd.
• Never fallen below 4th in any year.
• Never failed to qualify for the Champions League.
• Never fallen in league position below Tottenham Hotspur, North London rivals.
• Never outside top 7 in richest clubs worldwide since 2007, average 4th position.

As a part-time stock investor, taking care of my small retirement portfolio, Arsenal would be a perfect long-term investment. According to the Forbes’ list of the most valuable football clubs in nine years the value of the club has more than doubled and so has revenues. Wenger, who is supposedly badly out of touch with the market, has doubled the worth of the club while taking very low risks. Contrast this with the spectacular show of “ambition” by Manchester United who in the past three years spent over £300 million on transfers to achieve another failure to win the League, not only finishing behind Arsenal but for the second time in three years failing to qualify for the champions league.

I deliberately mentioned stock market because that is where I see so many parallels with the coverage of football clubs by the mainstream media and their fellow travelers, the big bloggers. As a student of Thomas Herzfeld and Robert Drach, who wrote an investment guide “High Return, Low-Risk Investment” I long concluded no true stock market professional would have any truck with the nonsense written by the commercial press and bloggers like the Sage. Professional investors recognize the media as having a commercial interest in exploiting the emotions of their readers rather than producing sober data-driven explanation of why stocks rise or fall.

A stock market professional would quickly assess that the football industry and the transfer market in particular is made up of several powerful actors, some of them acting corruptly under the cover of normal business practice, with the aim of extracting maximum profit from the competing clubs. No other market is ripe for profit extraction than the biggest market of all, the Premier League. Great fortunes have been made, (Stand up Mr. Mendes and Mr. Raiola) and great fortunes lost (United, Chelsea and City).

Like any market, the driving force is ultimately greed. In this context “greed” is stripped of all the emotional baggage, and must be seen in the sense of making a profit. All the rational parties would want to profit from the party on the other side of the deal. Unfortunately there are some parties whose “greed” is subsumed by some short term political or public relations objectives (City and Chelsea come to mind). Arsene Wenger is a master of greed, selling Adebayor, Nasri and Kolo Toure to Manchester City at handsome profits when AFC was desperate for the money. On the other hand, he waited in the weeds for a long time when trying to buy Ozil and Cazorla, pouncing when their price fell. Most famously he bought Nicolas Anelka from PSG in 1997 for £500M and sold him to Real Madrid for £22.3MM two years later.

Greed to win the title or to qualify for the champions league often lures clubs into the transfer market to pay inflated prices. To justify these prices the buyers, with cheerleading by the media (Sky Sports deadline day) who often equate price with quality as a way of justifying the deal. In that department Manchester United is the recent gift that never stops giving with the likes of DiMaria, Falcao and Martial failing to justify their astronomical transfer fees. Will Pogba be the exception?

According to Herzfield and Drach, next to greed the most important emotion in professional market positioning is despair. Just as greed can lure clubs into the transfer market at inflated prices despair can compel people to sell at low prices. Wenger is a past master at exploiting this human failing, waiting until the very last day of the transfer window to close a deal as the selling club is desperate for the deal to go over the line (Gabriel and Welbeck come to mind). very often many clubs are desperate to sell to not merely balance the books but more importantly to not default on their bank loans. It leads one to wonder whether AFC have Valencia over the barrel in the Mustafi deal with Arsene Wenger biding his time.

The media has a role in exacerbating these two primary emotions. In the last 10-15 years they were up front and center inciting regular investors to buy internet and housing stocks when the professionals knew full well they were overpriced and already bailing out. I recommend The Big Short on Netflix for a dramatization of how the pros made millions by shorting housing stocks which the media were cheerleading during the recent bubble.

It’s no different at Arsenal. The mainstream media all summer and now John Cross and the Sage of Dublin are whipping up greed in the fanbase with delusions that we can buy high priced players to compete with United, City and Chelsea for the title. If that doesn’t work they resort to fear mongering after every defeat. Sell Walcott, sell Chambers, just to mention the two scapegoats du jour. It is complete drivel when you consider 20-years of absolute consistency by Wenger and the 95% likelihood we will be in the top-four and the admittedly somewhat lower probability of competing for the title.

To be fair the psychological pressure is intense. Club football is a very charged subject and fans want (not need) the emotional satisfaction of winning the title. But whether they like it or not, professional football is a business run by rules that cannot be driven by emotion. It is vital to take advantage of the emotions of other clubs not the other way around. We certainly cannot be driven by the emotive caterwauling of the lame stream media and the likes of our Arsenal bloggers and tweeters.