Arsenal’s platform for success or plateau of mediocrity?

Guest blog by Hap of 900 Foot Gooner (@900ftGooner)

After the final match of the 2012/13 campaign, Arsenal supporters allowed themselves, if not happiness, pleased relief at achieving a fourth-place finish. I admit to a slightly more positive outlook, perhaps encouraged by my three-year-old daughter’s singing unprompted that Monday, “And the boys from the Arsenal knocked one down!”

The club did its part to perpetuate the vibe. In early June, CEO Ivan Gazidis did the rounds with supporters and the press and said, “This year we are beginning to see something we have been planning for some time – the escalation in our financial firepower.” He went on to suggest that not only could the club afford the transfer fee and wages of the likes of Manchester United’s Wayne Rooney, but “we could do more than that.”

The financials support these assertions: When the next annual results are publicized, the cash stake will probably top £180 million, which would include season ticket renewals and the first payment of the new Emirates shirt sponsorship. With a new kit sponsorship on the horizon, the club’s buying power will have expanded considerably.

Nevertheless, the summer has seen growing discontent among the base as the wealth is not deployed.

This entry takes a step back from the daily dramas and looks at factors suggesting promise and stasis. In most instances, my inclination would be to compose an analytical narrative, tying these observations together into a larger argument. However, because I want this post to start a discussion and not produce a conclusion, I’m ranking the factors by their influence and describing them only briefly.

Ready to start

Here are the developments and forces that point to an era of enhanced competitiveness for the Arsenal:

1. The club’s own financial strength. After the kit deal is finalized, the club will be able to call on at least £65 million in additional annual cash flow from commercial deals, increasing a transfer fund that already stood at £70 million before the two major sponsorships (kit and shirt) materialized.
2. The different level of transfer target. Reliable reports have linked Arsenal with Real Madrid’s Gonzalo Higuain, Liverpool’s Luis Suarez, Everton’s Marouane Fellaini, and other top-notch talent. These would have been out of Arsenal’s price range in recent years and do not depend on the misfortunes of other clubs, such as the financial woes at Malaga that forced the sales of Santi Cazorla and Nacho Monreal.
3. Unrest elsewhere. Four of the Premier League’s top six clubs will have new managers for the 2013/14 season, and the transitions could be fraught for Manchester United’s David Moyes, Manchester City’s Manuel Pelligrini, Chelsea’s Jose Mourinho, and Everton’s Roberto Martinez. Tottenham, alongside Arsenal the only top-six club to keep its 2012/13 manager, faces the real prospect of losing by far its best player. The uncertainties present a major opportunity for Arsenal…
4. …strengthened by the continuity in Arsenal’s management and playing squad. The club will keep everyone it wants to keep this off-season, meaning the additions of the past two years will have experience together under the same footballing philosophy.
5. The winning mentality of this squad. When faced with the gap famed in song and story, this group of players summoned the will and applied the technique to succeed. In the last nine matches of the 2012/13 season, it secured 23 points from 27 available, 15 of those away from home.
6. The exits of unwanted players. At last count, 26 players have left the first-team squad, reserves, and youth since May. These include Andrei Arshavin, Sébastien Squillaci, Denilson, Andre Santos, Vito Mannone, Gervinho, and are soon to add Marouane Chamakh. These departures will free more than £10 million from the annual wage bill. That figure, added to the existing financial strength (point #1 above), primes the club to go after world-class players (point #2).
7. The impact of Financial Fair Play (FFP). I place this last in this ranking because it is the factor least in Arsenal’s control. UEFA will be gathering the second round of reports from clubs and assessing their compliance between October 2013 and March 2014. As this happens, it’s possible that previously spendthrift clubs will slow their acquisitions.

 Stand in the place where you are

Despite these significant advantages, several forces are working to keep the club in place–that is, competing not for trophies but only for a Premier League finish that sends the team to the following year’s Champions League. I would identify those as:

1. The existing distance between Arsenal and the top of the table. The club finished the 2012/13 season 16 points behind Manchester United. Perhaps most telling, the team took just seven points from a possible 30 against the other top-six clubs (W1, D4, L5). This analysis from 7AMkickoff suggests the need to spend at least £100 million in one transfer season to get within smelling distance of the title, given the correlation between the outlay on transfers and wages and the likelihood of success in a season. (See the Play as You Pay blog for an in-depth study of the connection.) Considering the financial and performance gaps, can the seven advantages be decisive?
2. The risk-averse transfer approach. In January, I wrote an entry about the club’s risk calculus in transfers, observing that its decision-makers appear to have elevated mitigating transfer risk to the level of business strategy. That’s short-sighted. It loses track of the potentially huge impact to the Arsenal brand, which could cost far more than the transfer fee and wages of a big signing who doesn’t quite pan out.
3. Lack of experience in transfers at the high level. If Gazidis, manager Arsène Wenger, and their colleagues are backing off their risk aversion–and links to Suarez indicate they are–a significant amount of time has passed since Wenger (then accompanied by former vice chairman David Dein) operated in the upper echelons buying world-class talent from top clubs. Neither Gazidis nor lead negotiator Dick Law has. It’s an unstable environment almost defined by its irrationality. The uninitiated may not have the skills to succeed there.
4. Uncertain enforcement of FFP. Given the timing of clubs’ submissions to UEFA, sanctions will not be possible before late spring 2014, meaning any bans on participation would not be effective until the 2014/15 UEFA competitions. (See this free report from Mondaq for details and analysis.) Some clubs, prominently Paris-Saint Germain and Monaco, have taken the opportunity to spend freely. They appear to be banking on the assumption that UEFA will not penalize them harshly. If that turns out to be the case, Manchester City and Chelsea will resume their mad outlays, if they even slow them in the interim.
5. The composition of the Arsenal Board. The executive leadership of Arsenal PLC consists of six members, all white males whose median age is 72. Not only is its profile unrepresentative of Arsenal’s fanbase, the group’s small size and relatively long service to the club suggest that change, a challenging proposition for most organizations, is doubly difficult at Arsenal. Read the report and recommendations commissioned by the Arsenal Supporters’ Trust for a fuller analysis.

 You know better, but I know him

An additional consideration is important, but I hesitate to identify it as an indicator of opportunity or status quo. That’s the future of the manager.Wenger’s contract runs only through the end of the upcoming season. Many supporters frustrated with the lack of titles will say that as long as he remains in charge of the playing personnel, preparation, and game execution, Arsenal will remain stuck in an unattractive place.

The matter is hardly this simple. Wenger is a lightning rod because he is the club’s most public face and has been so for a long period of time. He also is an agent, perhaps a very influential one, of a system and not the sole force for good or ill that the more simplistic, personalized analyses would suggest. With or without Wenger, many of the other factors I describe above will still be at work.

Can you read the signs

The next month will be telling, if not decisive, as we assess whether the club is entering a new era of opportunity or is embarking on more of the same. A successful transfer season, driven by softening the risk aversion and characterized by top-notch acquisitions, will show that the club is ready and able to use the financial resources at its disposal. It’s a tremendous amount of pressure, intensified by the absence of activity thus far.

Although the club’s leadership has brought this pressure on itself through decisions and communications, I have to think there’s a plan to capitalize on the opportunity. It would be unusual for a sensible group like this to endure the constrained years since the stadium construction only to balk when the constraints are off. Unusual, but not impossible. How’s that for Arsenal-like decisiveness?