In recent days, people demanding Stan Kroenke (and KSE) inject cash into Arsenal to buy players has increased.
Over the years we have been supporters of the likes of the We Care Do You? collective and Black Scarf Movement.
We have been highly critical of the way Stan Kroenke has owned the club. He allowed the club to drift under the guidance of Ivan Gazidis and failed to hold Arsene Wenger and Gazidis accountable which contributed to our demise.
But we also understand business, and do not expect KSE to put their hands in their pocket and inject hundreds of millions into the club to buy players.
A self-sustaining model is still the right way forward. We do not want to be in heavily debt to an owner just for the sake of buying a couple of players.
KSE are right to not be injecting millions into Arsenal to buy players.
“Do better with what we have”
Since 2016, Arsenal have invested heavily in new players:
2016/17 – £101.77million
2017/18 – £137.5m
2018/19 – £72.1m
2019/20 – £144.3m
That is £455million spent across the last 4 seasons; an average of £113m.
The problem at Arsenal is not that we have not spent enough, but that we have bought (and sold) poorly.
Imagine being a CEO going to an owner asking for a cash injection to buy players. The first question the owner will ask it “why should I inject cash in to buy players when you have spent the clubs money so poorly”.
And that would be followed up with “you have 32 players in the first team squad. Sell players you do not need firstly, and then come back to me”.
We have bought poorly in the last 4 years.
Shkodran Mustafi – £36.9m
Lucas Perez – £18m
Henrikh Mkhitaryan – £30.6m (book value in Alexis Sanchez exchange)
Lucas Torreira – £25.8m
Sokratis – £14.4m
That is over £125m squandered on players.
And that does not take into account £72m spent on Nicolas Pepe on the £350,000 a week Mesut Ozil is in
Arsenal have at least half a dozen players they want to sell (Calum Chambers, Mustafi, Torreira, Matteo Guendouzi, Sokratis, Ozil).
These players could generate above £70million in transfer fees and reduce the wage bill by nearly £40million a year.
That is £110m we have in players we do not want.
Arsenal’s biggest issue is not that Stan Kroenke does not invest in the playing side of the club, but we do not spend our own money well enough.
It is like going and spending all your wage over the weekend and then having to beg your mum for bus fare to get to work during the week.
Kroenke is right to demand Arsenal “do better with what we have” before asking for more.
So Arsenal are after Thomas Partey and Houssem Aouar.
The pair would cost the club around £100m in transfers and a further £15m a year in wages.
A further cash injection of £180m from Kroenke would buy both and “pay their wages” for the 5 year deals both would get. But it is a temporary fix.
Even if he fronts the money for the transfers, and left the to finance the wages, it would still be an investment of £100million.
Remember above? We have spent poorly in recent years. We have over £100m in “talent” that we are looking to get rid of.
Why would a business owner invest £100m, when the business has £100m of sellable assets, and has purchased so poorly in recent years?
Kroenke is right not to inject cash into Arsenal’s playing side, which at the minute is a blackhole for money.
KSE have already injected £160m
Earlier in the pandemic, KSE took out a loan that enabled them to loan Arsenal money. In turn Arsenal paid off a huge chunk of the bonds they owed on the stadium, dramatically reducing the debt to the bank.
The terms of the loan from KSE to Arsenal have not been released, but it is likely these will be much more favourable than Arsenal’s repayments to the bank.
What the loan also allows is some flexibility.
Arsenal had to repay the loan to the bank each month, each year. Defaulting would dramatically damage Arsenal’s credit rating.
With the money now owed to KSE, a decision could be made that Arsenal do not start repaying the loan until 2021 or 2022. This would free up over £20million a year in Arsenal’s finances, reducing the pressure on Vinai Venkatesham and Edu to make further cuts in both the playing and non-playing sides of Arsenal.
Keep the powder dry
Arsenal are set to lose publish an estimated loss of £44m for the 2019/20 season. For 2020/21, it will be £80m. It could end up as high as £120m if teams play the entire season behind closed doors.
Add the £3m loss made in 2018/19, Arsenal could be close to losing £200m over 3 years. That is huge.
If KSE were to inject further funds into Arsenal, it would make more sense that those funds are used to manage Arsenal’s debt and offset the huge losses we are set to make, rather than buy Partey and Aouar.
An owner should only be injecting funds in a business when that business is struggling financially. A good owner will finances the debt allowing the business to continue trading and rebuild.
With everything going on in the world, everyone’s finances are going to be stretched, whether you are a day labourer or a billionaire.
It is more sensible that Kroenke keeps his powder dry, and only injects cash to help offset losses, rather than inject cash to sign 2 new players.
We appreciate Kroenke is not everyone’s cup of tea, and that he let the Gazidis / Wenger show go on too long. But we also understand business.
Arsenal’s management need to do better with the money the club generates. Need to buy and sell better. Stop offering contracts that are over market value.
Also you do not want to be too much in debt to an owner.
It is all well and good demanding he injects cash to buy players, but what then if he puts a high interest on that loan and begins to take money out of the club?
Finance from Kroenke should be a last resort, used to help with club operations, not to sign players.
Arsenal were established 131 years ago. We do not last another 131 years by getting heavily in debt buying a couple of players during a recession
If Arsenal lose £200m across 3 years, Kroenke will need to inject cash just to keep the club running.
Lets focus on the long term future of Arsenal, not a short term injection of cash to buy a couple of players