Why is Arsenal organising a potential title parade so controversial?

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Morning all from Dubrovnik airport.

I used the lack of midweek Arsenal to disappear for a few days. Dubrovnik is an interesting “city”.

Dubrovnik has been known my list for a while, and plenty of people recommend it to me. But personally I get a little let down.

Staying in the Old Town, the place has felt like an excursion from a cruise ship rather than a city break.

The walled city has fabulous stories to tell, incredible architecture and lots to do. But locals do not really live in it and the place is 95% day trippers, coming in off a cruise ship or local resort, 5% service staff. It has not really felt like a proper city break.

Having been to Oslo, Copenhagen, Athens and Cairo in the last 12 months, Dubrovnik is probably my least favourite due to the lack of locals.

I loved Athens as, like London, there was history round every corner and people just getting on with their normal lives. The bars were lively of evening with a mixture of locals and tourists. The Medina in Marrakech similar.

Dubrovnik was like the Medina, but with no locals. Or like Rome if the Vatican, Colosseum, Ruins and Trevi Fountain were all part of the same complex, surrounded by a wall and no locals.

And as the Old Town of Dubrovnik is basically one big tourist trap, it is also very expensive.

I would recommend Dubrovnik to everyone. But I think the city is best visited as a day trip from elsewhere, or a stop off destination when island hopping, rather than flying to Croatia to specifically walk the walls.

Up next will be Riga and Ljubljana in June.

But this is not a travel blog. It an Arsenal blog. And tomorrow we face Manchester United.

By the time I land, we will know the result of Fulham v Manchester City.

Fulham have had a decent season, and we played them at their peak. But their players are clearly already on the beach, flying kites at the training ground. I can not see anything else other than a Man City win. And that will leave us needing to beat Man U to ensure we take the title race to the last weekend of the season.

We have come in for a bit of mockery of planning a parade despite not yet being guaranteed the title.

Those mocking clearly do not know the time and effort it takes to close many roads in London for a title parade. We can not just rock up Monday afternoon with a bus.

Closing roads takes coordination with local councils, utility companies who may be working in the road and the police. For an example, Remembrance Day parades usually have their applications in for road closures in September, 2 months ahead of 11/11.

Arsenal and Manchester City will both have submitted their application to the council, and the respective councils would have coordinated with the relevant parties and raised a Traffic Management Order to close the road. It is easier to cancel a TMO at late notice than raise one.

Madrid would have done the same, as would Dortmund and Man U. Any club in a major city competing for honours will be preparing to host a parade.

Clubs organising parades is not new. We would have done it ahead of time in 2004 and 2002 and 1998. The only difference now is social media and journalists with column inches to fill.

Of course, in this world where “banter” trumps the truth, we will get mocked by the usual suspect (Paddy Power, TalkSport) who are more interested in clicks than telling the actual story.

That is all from me. As always on these breaks I have burnt the candle at both end. I now look forward to getting home, having a shower, a shit in my own toilet, a curry and getting some sleep.

And who knows, Fulham might give me a nice surprise on landing.

UTA

Keenos

Tottenham’s demise should surprise no one!

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The way they are playing, I do not think it will Tottenham’s “choice” whether they “throw the game” against Manchester City next week.

No wins in 4 has seen the wheels come well and truly off Ange’s might Hotspurs! Who would have guessed that a fella that had only ever managed in fringe leagues would be found out as tactically inept when trying to compete with the big boys.

Ange Postecoglou beats Mikel Arteta to manager of the year at London Football Awards 2024

Ange winning “London Manager of the Year” in February now looks even more laughable.

A reminder that he was awarded Manager of the Year after only being in London for 5-months with his big achievement being that he was named Premier League Manager of the Month 3 times. That is 3 more times than Pep Guardiola has picked up the Manager of the Month award since December 2021!!!!

At the turn of the year, Tottenham were 5th (which made Ange’s award laughable). They were 1-point behind The Arsenal and 3-behind the league leaders Liverpool.

By the time the London Football Awards had taken place, Spurs found themselves 13 points behind Liverpool and 11 behind Arsenal.

Roll on to today and Tottenham are now 23 points behind Arsenal – who now lead the league.

Since being named London Manager of the Year, Ange’s record reads: P 10, W 4, D 1, L 5. The last 10 games form table has them in 10th!

It is funny that Tottenham fans will likely celebrate being thrashed at home to Manchester City, and the narrative will be that they stopped us winning the league. The reality is they are just an awful team and a loss to City will be (at best) 5 defeats in their last 6 games.

Spurs fans should just be grateful that they still have Burnley and Sheffield United to face, otherwise they would have risked falling behind Newcastle and Chelsea.

This week has felt a little bit of the calm before the storm. We do have to park what might happen with Spurs (and Fulham) and just concentrate on ourselves.

Whilst Manchester United are in even worse form than Tottenham, I am still damaged with the memory of Arsene Wenger teams losing to very poor Fergie sides. Old Trafford will never be an easy place to go for us.

Lose and City could win the league at Tottenham. Win and (if results go our way), we could be celebrating the league following a Tottenham win.

But then you remember it is Tottenham. And they will not win. Because they are a shit football team. Managed by a fat Aussie Bastard.

Enjoy your Friday!

Keenos

Understanding book value and its impact on transfer fees

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“Do not talk about spend, talk about net spend.” The reality is, in football, net spend is actually irrelevant. It means nothing.

The over simplistic stats and infographics are spouted by fans unable to comprehend the more complex methods of accounting in football, and media outlets whose target audience is those fans. The concepts of transfer fee amortisation and player book value are the real factors that make a difference.

Amortisation

By now we should all know what amortisation is.

It came into the public domain when the media delved deeper to explain how Chelsea were spending so much. But amortisation is not a loophole they discovered or invented. It is something that has existed. It is something that I began blogging about way back in 2018.

For those still not up to speed, amortisation is the common accounting practice of spreading the cost of a players transfer fee over the length of their contract.

A common mistake is people that then mix this up with paying the selling club in instalments. One is how you pay for the player (often used to help cash flow), the other is how to account for their outlay.

The easiest way to give this as an example is a £50m player on a 5-year deal has their transfer fee amortised at £10m a year. If that player then leaves for nothing at the end of their contract, a club has not actually made a book loss on them as their fee has been fully amortised – and the net spend junkies will have it down as a £50m loss.

If a player signs a new contract during their existing contract, the value of the transfer still yet to be amortised is then spread out over the length of the new contract.

So after 2 years, our £50m player has had £20m of value amortised. 2 years at £10m a year. He then signs another 5-year deal. The £30m outstanding is then split over the new 5 years – so £6m a year. With the new deal, the club are saving themselves £4m a year in amortised transfer fees.

Book value

At any point during their time at the club, a player has a book value. And it is based on this book value that you can establish whether a club has made an actual profit or loss on the player.

The book value is very simple. It is the difference between the transfer fee spent on the player, minus what has so far been amortised.

If after 2 years we sell our £50m player, he will have a book value of £30m. That means that any sale over £30m is considered, within the accounts, profit. Anything under £30m is a loss. And this is where we need to be aware of how it works.

When you sell a player, the remaining amortised transfer value must be accounted for in that financial year. So if you sell your £50m player for £20m after 2 years, what you actually show is a £10m loss. And even though you might have bought £20m into the clubs coffers, what has actually happened is the deal has cost you £10m

The £20m that has come in is wiped up by the £30m in remaining amortised transfer fee, and you have a further expenditure of £10m to balance the books.

This is why Arsenal were so reluctant to sell Nicolas Pepe.

At £72m, Pepe was costing us £14.4m a year. After 2 years, we still had £43.2m outstanding for him. That means had we cut our losses and sold him for £20m, we would have had to have submitted a total loss of £23.2m.

Whilst some might think “better to get £20m for him not than lose him for £0m in 3 years”, with PSR / FFP it is actually better to retain the player and not have that additional cost hit your accounts.

Pepe’s existing amortisation and wage costs would have been budgeted for. An additional one off loss would not have been and could have led us to losing more that calendar year than PSR allowed.

The final part on book value is with regards to players who have come through your academy. They have a book value of ZERO.

Their zero book value is not because they are worthless, but because they cost the club nothing in amortised transfer fees. Therefore when you sell them, there is not a fee you need to write off. They will be 100% profit.

And this is why you may see clubs like Chelsea sell the likes of Reece James and Conor Gallagher. The pair are captain and vice-captain, but if Chelsea are struggling to balance the books due to the high amortisation costs, the easiest way they can balance the books is selling someone with a zero book value.

Selling players

Book value is perhaps the most important factor for clubs when they are deciding whether to accept a bid for a player that they no longer require.

As we saw with the Pepe example, there is very little worth in selling a player for less than his book value. It does not provide you with any additional income and actually increases your losses for that year.

And due to book value, it is not as simple as “selling £100m worth of players gives us £100m more to spend”.

Selling someone for £40m might generate you a larger profit than selling someone for £60m. Especially if the first player being sold is an academy graduate and the second player was recruited for a huge fee.

Selling Gallagher for £40m will represent £40m profit in Chelsea’s accounts. Meanwhile, selling Mykhaylo Mudryk for £60m would show a £10m loss (based on what would have been amortised on his £88.5m transfer fee spread over his 8.5 year contract).

So whilst selling Mudryk may see a bigger incoming transfer fee, his sale for £60m would see the club increase the losses in their accounts, whilst selling Gallagher for a lower fee would be 100% profit.

Finally, a look at a real example with Arsenal.

In 2021, Aaron Ramsdale joined Arsenal on a 4-year contract for £24m (rising to £30m with add-ons). That is £6m amortised a year. In 2023, he signed a new deal taking him through to 2026.

At that point, the club would have accounted for 2-years worth of amortised transfer fee. At £6m a year that makes £12m. The remaining £12m would have then been re-spread out over his new 3-year deal at £4m a year.

Now fast forward to present day. We are looking to sell Ramsdale this summer. We would have accounted for £16m of his transfer fee, and have £8m remaining. That means any profit is based on his £8m book value, and not the £24m initial fee.

If we sell Ramsdale for £40m, that will represent a £32m profit in our accounts, even though it would only be a £16m “net profit” based on his initial transfer fee.

Final thoughts

If you have made it this fair, thank you. I know these sort of blogs are a little marmite and do not get the hits that “Arsenal look to sign 6′ 2″ 22 goal striker” headlines do. But I enjoy researching and writing this sort of blog, and will never go down the clickbait route.

Knowledge is power at the end of the day, and if you can have even a small amount of awareness of amortisation and book value, it will allow you to better understand how the club operates, and move you beyond the simplistic view of net spend.

I have a small series of these blogs planned, with the next one being to explore the book value of a dozen players that we might look to move on this summer. Understanding their book value will be key to then work out the impact of selling them will have on our transfer budget.

Thanks again for reading, and as always feedback (positive and negative) will be much appreciated.

Keenos