Tag Archives: Manchester

Arsenal commercial partners up to 15 in 2013

For a long time, Manchester United have been held up as the best example of a club bringing in revenue from commercial deals. The club has 34 (at last count) deals with companies which generated £153m for the 12 months leading to June 2013. That was 43% of their total revenue, higher than their television and match-day earnings, which are worth £102m and £109m respectively.

Arsenal have always lacked not only Manchester United, but the rest of Europe when it comes to commercial deals. As our good friend LordHillWood blogged, the Arsenal board ‘dropped the ball‘ when it has come to commercial deals over the last 10 years, as they focused firstly on financing the stadium, and then paying it off. LordHillWood estimates the club has lost:

“20 million for the first half of those 8 years and 35 million for the second half, with 45 in the last year means Arsenal’s boards indifference and possible ignorance through their outdated culture cost the club a fortune.”

A conservative estimate that the club has thrown away £230million in potential commercial deals.

There is however, a bright light at the end of the tunnel. In August 2009, Arsenal hired Tom Fox as Chief Commercial Officer, he had previously work for PepsiCo and Nike as SVP Sports Marketing and Director Asia Pacific/US Sports Marketing respectively.

Whilst he had little effect in his 1st few years – it is unclear whether this was due to him having a different remit, or just not able to win a deal – over 2013, there has been a lot to shout about.

We all know about the new deals with the Emirates (renewed in 2012) and the new Puma kit deal (agreed in 2013 for £30m a year) but since Tom Fox has been with the club, we have seen us sign 13 deals in a 2 year period. Of which 9 are in 2013. Here is a full list of Arsenal’s Commercial Partners:

  • Emirates – 2004 (Renewed 2012)
  • Indest – 2011
  • Carlsberg – 2011
  • Citroen – 2011
  • Airtel – 2012
  • Puma – 2013
  • Gatorade – 2013
  • Bodog – 2013
  • BT Sport – 2013
  • Imperial Bank – 2013
  • India on Track – 2013
  • MBNA – 2013
  • Paddy Power – 2013
  • Sterling Bank – 2013
  • Telkomsel – 2013

The value of these deals is not known. There tend to be 3 types of commercial deals set up by the club:

  1. Sponsorship: A company (eg Emirates or Citroen) paying to have its name on something
  2. Commission: A company (eg Banks or bookmakers) agreeing to ‘brand’ an item, such as a credit card to increase that items popularity, with the club receiving a commission on all sales
  3. Provider: A company (eg Drinks providers or network providers) agreeing to provide a service which benefits Arsenal, such as providing the players energy drinks, or being the preferred beer supplier, where Arsenal get something out of it, but also get a bit of commission on sales

It is likely some are for very little money, but more the provision of services, such as the Gatorade one (rumours are we get around £250,000 flat fee, a percentage of sales and do not pay for the players drinks). We will only know the true value of the entire package once the accounts for 2013/14 come out which should show a huge increase in commercial activity.

With 10 deals in 2013 (including the Puma one) hopefully Tom Fox and his team can replicate this in 2014 and we can see the commercial gap closing between Arsenal and Manchester United. A sponsorship deal for the training ground and training kit is one place where Manchester United received £15m a year which we have currently not tapped. Although there might be clauses in the Puma contract which includes them sponsoring the training kit.

The only question left to ask is where this extra commercial deal will go? Will it halt the rise in ticket prices? Probably not. The fact we have a 3% rise for next season despite TV revenue dramatically increasing means that new commercial money is unlikely to see a freeze, let a lone a reduction, in ticket prices. It is more than likely new monies will go towards closing the £60m wage gap between Arsenal and Manchester City. Buy better players, and making the rich young men at the club rich.

But without fans where would the club be ? and where will it end ? £100+ for a lower tier ticket….

Keenos

 

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Mansour’s millions the difference for Manchester City

Looking at this mornings league table, Arsenal still sit top of the league. 2 points ahead of Chelsea, 3 points ahead of Manchester City. There is still plenty of reasons to be optimistic about our title chances.

Yes, we might have conceded 6 against Manchester City, but it was one of those freak games where every shot on target went in. There were 13 shots on target in the entire game, and 9 goals. City had a converted 6 of their 7 shots on target. It was a freak result.

City deserved to run out winners, despite Arsenal having 2 goals chalked off incorrectly and being denied a blatant penalty. To point to those 3 referring decision as the reason Arsenal lost would be in denial of the overall performance. City seemingly being able to go forward and score highlights why they are averaging over 4 goals a game at home and have now scored in 58 consecutive games at the Etihad Stadium. Their home form in the league this season reads: Played 8, Won 8, Scored 35, Conceded 5. That last one was Conceded 2 before yesterday. With home form like that, City have to be everyone’s favourites for the title.

The difference between the two sides could be seen on the substitutes bench. £129m worth of talent on the bench. Arsenal’s starting line up cost just £97m and cost of their entire match day squad £140. When you take into account that £42.5m of those totals was Mesut Ozil, it shows just how far behind we are in City. Yes, we have money to spend, and should be spending more than it, but City, with their now settled side and spending money like it is going out of fashion, we should not be too downhearted.

When it comes to finance, what Manchester City spend is staggering. They have a wage bill £60m more than Arsenal’s. The majority of their squad is on £100k+ a week. Arsenal meanwhile have just 3 players over this figure. With Arsenal having a reported £100m sitting in the bank, were we to try to compete with Manchester City in terms of wages and transfer fees, this money would not go very far at all. Last year, we made a profit of just £6.7m. A £60m blackhole in wages would see us start to run up massive losses. Manchester City, remember, lost £97m in 2011/12.

Last summer, having finished 2nd to Manchester United in the league, and having made horrendous losses, Manchester City went out and spent £90m. They spent more on defensive midfielder’s than we did on Mesut Ozil. It highlights the financial strength they have that they were able to go out and buy long-term Arsenal target Stevan Jovetic for £22m without really needing him. It was perhaps and example of them signing a player who they do not need just to ensure other Premier League sides signing him.

Now I do not have an issue with Manchester City’s grotesque spending. If a man has billions of plans, who are we to tell him how to spend it. Remember, we did not moan in the late 1990’s when Danny Fiszman was bank rolling us – albeit on a smaller scale – enabling us to build the 1998, and eventually the invincible sides. What the financial difference does show is how much of a challenge winning the Premier League is for Arsenal. With both Manchester City and Chelsea having an endless pot of gold. Arsenal could go and spend the £100m they have sitting their, but Chelsea and Manchester City would then respond by spending £150m. Do we keep chasing them? Do we spend the most we can and still finish 2nd/3rd and say ‘at least we tried’ or do we spend sensibly, on the right players, and hope things, at one point, will become fairer?

The last option is we Alisher Usmanov. He is supposedly willing to put in similar amounts of money into the club as Sheikh Mansour and Roman Abramovich. Do we move to demanding to be bank rolled by an oligarch, with a questionable background, or do we say ‘We are Arsenal, we do things in the right way’. Having a sole owner leaves us in a precarious position. Yes, they could be and Abaramovich or Mansour, but they could also change the name of the club, change the club’s colours, or do anything they want…People have differing opinions, both are valid.

A few final points, Per Mertesacker showing he is the real captain of the side bollocking Mesut Ozil. It is a none story and as Wenger was quoted as saying;

“That is the Germans, they will sort that out between themselves.”

They are probably sitting around Per’s house this morning sharing a bratwurst. The second point is the laughable banner in the Manchester City ground ‘Manchester thanks you Sheikh Mansour’. A sign, perhaps, of a club who’s fans have sold out to modern football.

After 3 games in 6 days, travelling to both Naples and Manchester, Arsenal now have a 9 day break before the Chelsea game. It is time to rest the legs, re group and ensure we come out fighting once more. A defeat to Chelsea could see us truly enter a downward spiral, and if Spurs win their next two games, the gap that looked so large just a few games ago will be down to just 2. Let’s back the time.

Keenos

Why did more clubs not take up Newcastle’s ‘Twenty’s Plenty’ offer?

On Tuesday, we began discussion on the pricing scandal at Manchester City. One of the aspects of the article was the Twenty’s Plenty campaign spearheaded by The Football Supporters Federation. On the back of this, Newcastle United offered all clubs in the Premier League a reciprocal pricing agreement where they would charge away fans £20 if their opponents reciprocated the offer.

Of all the other 19 Premier League clubs, only Swansea City and West Bromwich Albion took them up on the offer. A couple of other clubs have done some side agreements, such as Crystal Palace offering to knock £5 off of the Newcastle travelling fans ticket if this was reciprocated, but by and large, the offer by Newcastle was ignored. The question going through my head when reading this was a simple one.

Why?

Everyone says that the reason why a single club is unable to lower ticket prices as they then generate less revenue, and as a consequence, put themselves at a disadvantage to other Premier League clubs. If that rationale is true, why then, would barely any club take up an offer which, if every club took it up, would create a disadvantage not to themselves, but to an opponent. In this case Newcastle United.

Had every club have taken up Newcastle United’s offer, they would all be down a similar amount in revenue, that being the difference between the usual ticket price and the £20. Meanwhile Newcastle would be down 19 times that. So if clubs are refusing to budge on ticket prices due to putting themselves at a disadvantage, why would they not take up this offer? Greed.

Greed can be the only answer. Whilst clubs all pay lip services to giving fans a better service and more competitive prices (‘we would if we could’ is the often justification), when it comes down to it, they refuse to budge.

£20 for an away ticket to go to Newcastle would have been more than reasonable. In fact, I would say it is cheap. With an £80 train to Newcastle still required you are still looking at an Arsenal away fan spending £100 to get from London Kings Cross to Newcastle. Incidental, despite Manchester City charging us £58, my cheap rail (£31) means that the Manchester City trip is actually cheaper. Anyway, I digress. £20 would have been a good deal for fans. But then the brain cogs start turning.

Why can Arsenal, for example, reciprocate the Twenty’s Plenty agreement with Newcastle, but then not offer the same to Sunderland, Southampton or Swansea. Why can they not get an agreement that Twenty’s Plenty with Cardiff and Crystal Palace? The fact is, they would have no justification to not come up with similar agreements throughout the Premier League.

One reciprocal agreement would have raised the questions of more. More would have created more. And before you know it, all Premier League clubs have decided that Twenty’s Plenty for all away fans. One deal would have unravelled the cartel, the price fixing, amongst Premier League sides.

You see, they all agree to keep prices high, everyone has to pay that high price. One club makes the Twenty’s Plenty offer, the cartel then has a decision. Either all adopt it, or all boycott it. They decided the latter. Premier League clubs act as a cartel. All agreeing to keep prices high to ensure profits are maximised.  They are no different to energy companies or supermarkets. All of whom fix prices to ensure it is the customer that loses out. They do it for greed.

Greed is the only justifiable reasoning for all clubs not jumping all over Newcastle’s Twenty’s Plenty offer. The joke is, how little the greed actually makes Premier League sides.

Arsenal has the second largest away capacity in the Premier League, after Manchester United. The maximum amount of tickets an away side can claim in the Premier League is 3,000 (although the area can be expanded to 4,500 behind the goal for cup games). Now Arsenal announced earlier this season that:

“There will be five ‘A’ Category, eight ‘B’ Category and six ‘C’ category matches in the Premier League across the season.”

Now a little bit of mathematics shows that the 5 Cat A games will generate £310 per seat. the Cat B ones £284 per seat, and the Cat C games £153. A total of £747 for all 19 Premier League games. Now divide this by the 19 games gives you an average of £39 per seat.

Now if you are still with me (and not bored or in the process of taking off your socks to check my maths), the difference between £39 and £20 is £19 (I did that one without my calculator), that works out as £361 per seat over the 19 league games. Now for the magic.

£361 multiplied by the 3,000 seats is £1,083,000. That is how much Arsenal would lose if they offered every Premier League side an away ticket for £20.

£1,083,000

That is the cost of a Premier Leagues greed. Taking into account that, as we mentioned, Arsenal have the 2nd largest ground, and amongst the highest ticket prices, it is unlikely that anyone will have a bigger loss then Arsenal. £1,083,000 is the price of a football clubs greed.

Now it might seem a large number to some of you. However, when you take into account that in 2013, the turnover of Arsenal Football Club was £242,800,000, a little over £1m is no longer that big a number. It would be 0.4% of our turnover. The greed of Arsenal, and other clubs, is so minuscule it is unexplainable. £1,083,000 for a football club is nothing, especially when the new TV deal, in this season, will see the BOTTOM clubs income rise by around £22 million. The greed is unexplainable. But then again, the greedy always want more.

What the clubs are clearly worried about is the Pandora’s Box that Twenty’s Plenty could open. If they can offer away fans tickets for £20, why can they not offer home fans? And they the ball of string will begin to unravel. By boycotting Newcastle’s offer, they ensure that away fans do not get a better deal, and as a consequence, ensure that home fans continue to pay a premium.

If that box were to open, how much would it cost Arsenal? Well their match day revenue is around £100m (give or take), were they to offer tickets for £20 to all 60,000 supporters over a 28 game seasons (taking into account average amount of cup games) Arsenal would see a revenue drop from £100m to £33.6m. Around a £60,000,000 drop (although this does not factor in the coporate seats). Now that is the greed!

All I know is that Arsenal Football Club would not miss £1,083,000 if they agreed with every club in the Premier League tickets for £20, however, as a regular away fan an extra £361 (approximately) in my pocket over a season would make a BIG difference.

Keenos