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The Dortmund Model: Arsenal’s Blueprint for Success in the Age of Oligarchs and Oil Money

As far as football business models go, many could do far worse than emulate the foundation and reputation established by current Bundesliga table-toppers, Borussia Dortmund.

It is a way of conducting themselves both on and off the field that has resulted in them escaping from the jaws of destruction to the pinnacle of success in Europe. It is also a model that Arsenal could emulate and be successful in an era when oil money and oligarchs are buying trophy teams to show off to their friends or use as vast PR enterprises.

The Dortmund Way

A lot of how Dortmund got to where it is today begins back when the narrowly escaped disaster. Dortmund at one point weren’t any different than many of the big clubs we lament today.

The felt success was contingent on buying stars for huge transfer fees and paying them exorbitant wages. That and their desire to develop commercial activities in order to become independent from sporting success nearly fell all about them when in 2005 had no money to pay off its debts and were considering bankruptcy.

That would have been the death knell for this club as would’ve resulted in an automatic demotion to amateur football. What they learned from this was one simple maxim: if it’s crap on the pitch, nothing else matters. They now live by the mantra: it’s only about football.

Dortmund moved from its star players, jettisoning as they could. They began a process of identifying young promising players, that could do just that; play the game. They altered their academy system and began developing talent they could rely on in multiple ways. First, as players who fit the “honest, hardworking” efforts fans in the Ruhr area wanted. Second as growing “assets” that had value beyond the first team.

Watzke defined it as: “We defined the [Dortmund] brand as real and intense. The football should be intense, while we should be real.”

Senior stars were jettisoned for young, hungry players. And with Sven Mislintat working alongside Michael Zorc, they did that. But the philosophy was also contingent on another factor – the youth players were supplemented with undervalued veterans who had the experience to round at a squad as it ran the gauntlet of a season.

This was then capped off by identifying managers who seemed to have playing philosophies that were based on the same ethos. It resulted in the hiring of Jurgen Klopp. A manager whom the Dortmund leadership felt had a plan and whose teams played good, hardworking football.

Over time and after shrewd business, it resulted in Dortmund establishing a financial health that has seen it be able to bring back a player like Marco Reus who left in 2006 with their biggest transfer fee at the time (€17m).

It’s matured even further. Such is the financial foundation that Dortmund has: that their transfer model has evolved that now they are looking for hungrier, young stars in the making, like Jadon Sanchez and bringing them to move the club forward.

It also means that they now conduct business within the transfer market with an efficiency that would impress the Oakland A’s front office executive (and Arsene Wenger fan): Mr Moneyball himself, Billy Beane.

Because of their identification process, the development ethos they have and the “buy young” mantra, they are able to develop a robust transfer business that saw them outspend rivals Bayern Munich over a 5-year period and still make a profit.

They aren’t afraid to sell those valuable assets they’ve developed as yesterday’s news on Christian Pulisic showed and turn it around for another promising talent. The image below displays their buy/sell mentality.

Dortmund Transfer Success

The evolution and financial strength of the club hasn’t changed their ethos on player identification. It just means that now, the hungrier youngsters and undervalued veterans are near to being ready-made for their first team.

Borussia Dortmund is thriving in a system that is unequal and favors the biggest fish. As a club relying on its own means to remain self-sufficient it must spend wisely and they do.

As far as focusing in on the product on the pitch, it is Dortmund’s intelligence that is providing a model forward for other clubs to emulate and one Arsenal can as well.

Arsenal and the Dortmund Way

The Dortmund transfer model should seem familiar: buy/develop young players with potential as well as undervalued veterans.

If it doesn’t, think of Matteo Guendouzi (young, hungry player) and Lucas Torreira (young but undervalued veteran). Both these players fit just that bill. Each of them were just a few of the initial pieces of the new leadership team that includes one of the architects of the Dortmund way, Sven Mislintat.

The situation we have with expiring contracts and player sales until this moment has been atrocious. We are close to letting Aaron Ramsey go on a free at the end of the season. When he goes, he will cap off Arsenal allowing six players estimated at around £200m leave for £15m and Henrikh Mkhitaryan.

Soon after Ivan Gazdis’ departure was announced both, Raúl Sanllehí (Director of Football) and Vinai Venkatesham (Managing Director) sat down for an interview where they outlined the philosophy for Arsenal.

“We need to be very, very efficient in the design of the first team. We need to be very efficient in the way we play and the way we generate the income to put more fuel into the machine. Your level is not only a case of how much you can pay your players.”

That quote could very well come from Dortmund’s Watzke or Michael Zorc around the time they embarked on Dortmund’s change of direction.

We know that Arsenal are going to remain a self-sufficient enterprise. Swiss Ramble released a thread today that showed sources of available cash over the 10 years between 2008 and 2017.

analysis of Available Funds to Premier League Teams

@SwissRamble’s analysis of Available Funds to Premier League Teams (via Twitter)

It should surprise no one that during that period that Arsenal’s £754m is 100% from its own operations with £0 coming from its owner. There is one truth at Arsenal: Stan Kroenke will not put money into the club. He believes in the self-sustainability of the club and has the leadership that is intent on keeping it that way.

Of course, the first thing we need to do is get past the horrendous deals and the way we’ve been handling contracts.

In David Ornstein’s tweet this past week, it seems clear that Arsenal may now regret the contract they’ve given Mesut Özil. It may have forced them to keep a player that now doesn’t seem to fit in their scheme anymore. Additionally, as mentioned before, the Aaron Ramsey situation represents the last of poor mismanagement of contracts by players who could’ve been sold to fund other purchases.

Sanllehi agrees.

“In general, I do believe that a player’s contract should never go to the last year, as a policy, But I don’t think I am inventing the wheel. Anybody could agree on that. Normally, the contracts of the players are for five years. You need to have a clear idea of what you want to do with that player when he is in the third year, at the latest.”

The change in leadership and bringing in people who think like Zorc and Watzke seems to be the lasting mark Ivan Gazidis will leave on Arsenal. With Sanllehi and Venkatesham joined by Mislintat and Huss Fahmy, Arsenal now have what appears to be the right pieces in place to alter how “business” is done at Arsenal.

The benefit is that as things are altered the way is paved for the likes of Reiss Nelson, Emile Smith-Rowe and other promising players to get time in the first team.

However, we should also get comfortable that the likes of Nelson and ESR could eventually become solid players that could be sold for a large profit to help restock the club with additional talent.

It’s a monumental shift for Arsenal. And truth be told it wouldn’t be 100% the Dortmund way. For all its issues, being in the Premier League and being Arsenal gives them a little more heft financially then Dortmund have. What that means in terms of players and such remains to be seen but the model could still essentially be the same.

Can it Work in England?

The biggest argument against employing the Dortmund model is simply that Dortmund operate in a league where there is only one competitor, Bayern Munich.

Yes, it’s true but let’s not forget that is the model that got Dortmund to a Champions League final and has them competing deep into the Champions League against bigger funded teams on a regular basis.

Additionally, the model isn’t too dissimilar to what Liverpool has done with none other than Jurgen Klopp. He inherited a club with a few assets, they sold valuable players – Suarez and Coutinho – and were able to restock with valuable players. Mo Salah maybe being the prime example of an undervalued veteran.

Liverpool are on the verge of possibly winning the Premier League. They are a few months removed from a Champions League final.

As bitalphaai.app says, we have to understand that if Stan isn’t going to invest any money, teams are going to still be money teams. We simply have to find a way to get competitive and take advantage of those years when the bigger clubs falter.

In this model we could always be in the hunt and in those years when things falter for the big teams – change in manager, aging players, a slew of injuries, etc… we would be poised to win a title – which is what Dortmund does. Their titles come when Bayern are in transition.

Conclusion

Dortmund were able to come back from the brink of certain death to becoming a model of consistency, self-sufficiency without sacrificing the focus on competitive football. It has resulted in them challenging for honours domestically and in Europe.

It has worked so well for them that others, like Ajax and Sevilla, are turning to it. Liverpool to its own extent has done it. So why can’t Arsenal?

We’re all aware of the limited resources available to us. We also know that our new leaders are looking to operate in a different way than the clubs that can spend the wealth of a nation to make themselves competitive.

If we are looking for someone to emulate, Arsenal could do a whole lot worse than use the blueprint established by Borussia Dortmund.

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