KSE right NOT to inject cash into Arsenal to buy players

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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.

Buying players

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

Keenos

Arsenal have “11 new players” from this time last year

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“This time last year we needed 9 new players. We have only added Willian and Gabriel to the squad since then”.

I read that yesterday on Twitter and it got me thinking (dangerous I know).

Arsenal have had some criticism from certain quarters for only adding 2 players to their first team squad team “this time last year” but the reality is somewhat different.

Willian and Gabriel are new signings confirmed this summer. But they have not been the only signings confirmed by Arsenal.

The club also made the loan deals of Pablo Mari and Cedric Soares permanent.

“But they were at the club last year” the moaners moan.

Yes, yes they were. But they were not here this time last year, and having both picked up injuries, only played 4 games between them for The Arsenal in 2019/20.

No matter which way you spin it, Mari and Cedric are new signings that were not here this time last year.

Likewise William Saliba was not here this time last year.

Yes, he was signed last summer, but he remained in France on loan with Saint-Étienne. He was not available to Arsenal this time last year.

So that is Arsenal up to 5 additional players that were not available at this point last season,

Another out on loan was Eddie Nketiah.

This time last year, we would not have had a striker on the bench to come on for Alexandre Lacazette with 15 minutes to go and score the winner against West Ham.

We started games with Nicolas Pepe, Pierre-Emerick Aubameyang and Lacazette. If that did not work we did not have an option to bring on.

I am sure one of the “9 new players” that we needed last season included a back up striker for Lacazette. Nketiah is basically a £20million new signing. Someone who was not available for selection this time last year

The development of both Bukayo Saka and Gabriel Martinelli is also key.

Arsenal fans a year ago would have been worried about the lack of options on the left wing. “All we have is Aubameyang, who is a striker anyway” they moaned. They would not have taken into account 17-year-old Saka and the new signing from Brazil who was bought for the U23s.

By this time last year, Martinelli had played just 6 minutes of football for Arsenal, coming off the bench against Newcastle. He would not be seen again in the Premier League until October.

Likewise Bukayo Saka was not in contention this time last year.

The season previous (2018/19) he was very much a reserve team player, spending most of his time in the Premier League 2 for the U23s.

He had 1 senior start to his name, in a Europa League dead rubber against Qarabag. His sole Premier League game was a 7 minute cameo against Fulham.

This time last year, nobody could have foreseen Saka’s rise from U23 player to Arsenal’s first team.

If we are talking about needing “9 new players from this time last year” Saka and Martinelli are certainly 2 of those.

What sums up both players meteoric rise is that a year ago today, Transfermarkt valued them at £6.2m and £7.2m respectively. Today they are valued at £31.5m and £22.5m. Both have stepped up from U23 to first team.

Cedric, Gabriel, Saliba, Mari, Willian, Saka, Nketiah and Martinelli.

8 players who were not in consideration as first team squad members this time last year. All now set to be important players for 2020/21.

Now if only we can get another 1 or 2 over the line, that will be 9 or 10 new players compared to this time next year.

And that is without even mentioning Mo Elneny (out on loan), Emile Smith Rowe (out on loan) and Joe Willock (U23).

Keenos

Arsenal will have to wait “until January” before selling central defenders

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“Arsenal have 8 centre backs, we need to sell” has been written countless times over the summer.

As it stands, Arsenal have not sold a single one, with only Konstantinos Mavropanos leaving on loan to VfB Stuttgart in Germany – and he was not one of the “Magnificent Eight”.

So what is happening at the club with regards to our central defender situation?

Gabriel Magalhães was signed from Lille over the summer and William Saliba returned from his season long loan at Saint-Étienne, whilst David Luiz signed a new contract.

Arsenal also made the loan deal of Pablo Mari permanent.

A few people have questioned why Arsenal signed Pablo Mari, and then later went on to sign Gabriel, which pushed Mari down to 4th choice centre back – a role Rob Holding, Calum Chambers, Sokratis and Shkodran Mustafi could all have played.

Hindsight is a wonderful thing.

When Arsenal signed Mari, Gabriel was not on the radar as a transfer this summer.

Arsenal would have been scouting the Brazilian, but with a move likely next summer – so Arsenal agreed a deal for Mari back in January with Flamengo.

Gabriel then came available and Edu clearly felt the club could not afford to miss out on such a prestigious talent – even if it meant having one defender too many.

And that is how we came to sign both Gabriel and Mari.

Luiz, Gabriel, Saliba and Mari looked set to make up Arsenal’s defensive options with Rob Holding, Calum Chambers, Sokratis and Shkodran Mustafi all no longer required but none have yet exited stage left. The question is why?

A loan deal seemed to be agreed taking Holding to Newcastle, but the transfer quickly died and Holding found himself starting the first game of the season against Fulham.

Despite having 7 central defenders, Arsenal did not have a single one on the bench. This highlights why no one has left. They are all injured.

David Luiz picked up a knock prior to the Fulham game, but has now returned, whilst William Saliba was lacking in match sharpness having not played since March. A few games with the U23s might be needed for the Frenchman.

Those two joined Pablo Mari on the sidelines who is still recovering from damaging his ankle ligaments back in June. Mari is back in full training but it will be a couple of weeks before he is fully fit.

Without Luiz and Saliba in the short term, and Mari in the mid-term, Arsenal did the sensible thing and pulled the rug on the transfer of Holding to Newcastle. He was needed in Islington.

Holding still has a role to play at Arsenal albeit as 4th or 5th choice centre back.

If he remains at Arsenal this season, he will be back up to Luiz, Gabriel, Saliba and Mari; with the potential to replace Luiz as 4th choice next summer. It all comes down to whether he wants to be a bit-part player at Arsenal, or play week in week out at someone like Newcastle.

For now Arsenal can not afford to lose Holding.

Keeping Holding means they can afford to lose Sokratis.

Sokratis is another who is currently injured.

The club said he sustained a “mild strain to right calf in training”, with an of returning to full training “within the next week”.

You feel once he has recovered, his deal to Napoli will go through.

That leaves Calum Chambers and Shkodran Mustafi.

The problem Arsenal face with the pair is they are both injured, with neither expected back in full training until October.

By the time they are “match fit” it will probably be November.

Injuries mean that they are not available to play (obviously) but also unlikely to be sold.

This puts Arsenal in a situation where we have 5 centre backs (Luiz, Gabriel, Saliba, Mari & Holding), and have an additional 2 that are not fully fit, who can not be sold.

So whilst selling Sokratis will take us down to 7 central defenders, only 3 are fit for selection for West Ham and 2 are not going to be full fit for at least another 6 weeks.

This will result in Arsenal not selling Chambers and Mustafi, and potentially not even registering the later.

Arsenal will then look to loan (or sell) the pair in January.

Mustafi, whose contract expires at the end of the season, could end up making a similar move to Cedric Soares.

A team might decide to pick him up on loan for 5 months, with the pre-contract agreement already in place to make the move permanent in June. A move like that would suit Arsenal, Mustafi and the club loaning him.

Likewise, we might see Chambers move out on loan in January, with an option to buy at the end of the season.

A similar deal could be done for Rob Holding if Pablo Mari has returned to full fitness, with Arsenal then having the option of Chambers, Holding or Mavropanos to return from loan and replace Luiz in 2021.

It might feel like Arsenal have a lot of centre backs at the club right now, but the reality is somewhat different.

Holding will stay, Sokratis will be sold, and not much else can realistically happen until January.

Keenos