Contrary to all the nonsense we have been fed by the mainstream media and by Arsenal’s uber bloggers, tweeters and podcasters, the recent transfer window was an unquestionable victory for Arsenal Football Club over the agents and speculators who literally have the Premier League by the bollocks.
One well-known Arsenal blogger described it as “shambolic” literally calling out the manager, CEO and owner as incompetent. This is a man who has never managed a professional football club in his life much less an outfit that has a turnover of over £300 million pounds+ annually. Yet he has the temerity to scold the owner who is a billionaire in his own right and not merely from owning sports franchises.
Where has modesty gone to? How about being reserved and conditional in your criticism of professionals in a business you have absolutely no expertise? Can you imagine a general practitioner criticizing a specialist much less a patient who has written a few blogs on alternative medicine? Words fail me.
Yet his cohorts, like obedient “Pavlovian” dogs, simply ran with the same message, only to a slightly a different tune. Yes, he is entitled to his opinion, but how long can he and the gang maintain credibility when they are repeatedly proven to be wrong. “End of an era” anyone?
In today’s blog I will demonstrate their analysis is flawed and so are their conclusions. Let us get back to basics. Arsenal Football Club has never relied on making transfers to become successful. This is exemplified by a 1925 advertisement for the position of football manager, that is nearly 100 years ago:
“Arsenal Football Club is open to receive applications for the position of TEAM MANAGER. He must be experienced and possess the highest qualifications for the post, both as to ability and personal character. Gentlemen whose sole ability to build up a good side depends on the payment of heavy and exhorbitant transfer fees need not apply.”
Every subsequent manager has publicly admitted that this is a fundamental policy of the club even despite years of lagging behind their more spendthrift rivals. The Arsene Wenger era has been no different. The current manager has consistently exceeded his top-4 rivals for the lowest net transfer spend vs league position. This is despite the explosion in transfer spending since the arrival of Roman Abramovich at Chelsea who according to David Dein “’parked Russian tanks on our lawn, firing £50 notes at us.”
This transfer window was no different and despite the honeyed pleas of agents and their mouthpieces in the media, including bloggers and so called legends of the club, Arsenal stood firm and refused to be fleeced by the parasites hanging unto professional football in general and the PL in particular.
We start from the known fact that markets are used for profit extraction. Any professional in the stock market or its facsimile use the selling of inventory as a method of deriving profits from buyers. Similarly the transfer window is an opportunity for selling clubs, and increasingly for agents and 3rd party owners, to extract profit from willing buyers for players they have a tradable interest. Money is flowing into the market from tv rights and from sugar daddy owners. Many clubs are compelled, often by subjective reasons, to use these cash inflows to acquire new players. The Qataris, for example, given their current economic and political confrontation with the Saudis and other Gulf States, are known to have an interest in raising their pr profile internationally. No wonder they were willing to make a big splash by funding the unprecedented $200 million acquisition by PSG of Neymar from Barcelona. The fact that last season PSG was 2nd in Ligue Une and made the last 8 of the champion’s league would suggest a club far from being uncompetitive. Up to the recent past, conventional wisdom would be they need only one or two modestly priced additions to guarantee an improvement in their standing.
Transfermarkt.co.uk provides sufficient data to indicate how much profit is being derived from the underlying value of the players. I focused on the top 100 transfers (ranked either by value or transfer value) at the end of the window. Not surprisingly, given the massive amounts of money sloshing around, the premier league was at the top in Europe for profit extraction.
Profit Extraction from Top 100 Transfers
|No Traded||Market value||Moving to Lge||Transfer fee||Profit (£millions)||Profit (%)|
|2||18.00||Rusian Premier League||35.10||17.10||95%|
|1||18.00||Chinese Super League||31.23||13.23||74%|
|2||26.10||Portugese Liga Nos||18.00||-8.10||-31%|
|1||14.40||Turkish Süper Lig||3.15||-11.25||-78%|
From a market value of £720.45 million in players traded, selling clubs in combination with agents and other 3rd parties were able to extract £355.23 million in nominal profits from the premier league, nearly 50% return. Which other legitimate market in Britain is generating such a handsome return to traders? No wonder the Raiolas and Mendezes have taken permanent occupation of clubs like United, City and Chelsea who are splashing the cash. Forget the fairytale that the profits generated will circulate and multiply among the lower leagues.
Unlike the English premiership, all other leagues generate substantially less profits for traders. Ligue 1 appears second but this was distorted by the Neymar transfer which generated £109 million in surplus to Barcelona. If it wasn’t for this transaction the French market would have been a negative proposition for selling clubs.
What is most disconcerting is that the top two European leagues in terms of champion’s league dominance, La Liga and the Bundesliga, are not pissing away football money by doing deals way in excess of market value of players traded. Profits were £46.80 and £28.80 respectively. Note how the Germans, the wealthiest country in Europe, are quite stingy, yielding a mere £28.80 million or 13% rate of profit on players traded.
Unlike the Germans, with their sane, sensible approach to transfers, English clubs are pissing away money left, right and center with one notable exception, Arsenal FC.
Profit Extraction from Premier League Clubs
|Club||No Traded||Market value||Transfer fee||Profit (£millions)||Profit (%)|
Not surprisingly, the two sugar-daddy clubs, City and Chelsea are #1 and #2 in handing over substantial profits to selling clubs. Note these figures are for only the top 100 transfers in the window. It is likely that further down the line they and others in the premier league are giving away big money for low value players.
It is striking that the traditional clubs, which compete annually with Arsenal for a position in the top-6 (Chelsea, City, Everton, United, Spurs and Liverpool) have no reservation in forking over excessive money to sellers amounting to nearly 80% of the total profits or £281.46 million that came from the PL. Based on the past 21 years under Arsene Wenger only two, maybe three of these clubs are likely to exceed Arsenal in the final standings. None of these clubs (whether owner, chairman or chief executive) seem able to exercise any discipline or objectivity in player acquisition despite evidence to the contrary.
Conspicuously absent from this excessive consumption is Arsenal which paid a mere £2.7 million surplus for the acquisition of Alexander Lacazette. Arsenal is 3rd only to Swansea and West Brom who through smart pricing and use of the loan system were able to generate value in excess of price from their acquisitions.
This is not to say Arsenal was afraid to pay big money for a special player. It emerged on deadline day the club was willing to pay up to £100 million for Thomas Lemar, a talented midfielder needed to fill a gaping vacancy that currently exists. Arsene Wenger disclosed publicly the deal fell through because the player was not ready for the move but pledged he would, when the opportunity next arise, make another attempt to do the deal.
Meanwhile the financial geniuses who dominate Arsenal twitter, blogs and podcasts post August 31st attacked the club for having the financial discipline and resoluteness to not fall for the agents hyping players of modest value for inflated prices. Adding to the din and hysteria was certain so-called Arsenal legends who seem more interested in giving credence to agent talk than protecting the club’s long term financial strength. It begs the question who is in bed with these agents, whether as friends or business partners. Why would a blogger mock the club for making a £30 million profit on deadline day with the capacity to go back in the market to make a £100 million acquisition in the future?
This smacks of the “voice of Jacob but the hand of Esau.” Trust me, some of the parables of the Old Testament have eternal wisdom.