Middle Eastern billions are the last thing Arsenal needs

Emirate's stadium. Image: Henry Kirby
Arsenal's structured debt repayments after constructing the Emirates have left them in a strong financial position. Image: Henry Kirby
Arsenal’s structured debt repayments after constructing the Emirates have left them in a strong financial position. Image: Henry Kirby

Why a £1.5bn takeover would push the Gunners into the wrong kind of red

Sunday saw what many consider to be Arsene Wenger’s weakest ever Arsenal team lose 2-1 at White Hart Lane to a Tottenham side that may well have tipped the balance of footballing power in North London.

Adding fuel to the fire was the Telegraph’s story on a supposed £1.5bn takeover of the Gunners by a Qatar and United Arab Emirates-led consortium, a claim that Arsenal has vehemently rejected.

The ‘bid source’ allegedly revealed that the group plans to bring back “some of the feel of the old North Bank [of the Highbury stadium],” while lowering ticket prices and investing money in new players.

Since the emergence of the rumour, the sports press and Arsenal blogosphere have exploded with conspiracy theories and prognoses of what a potential takeover could mean for the club.

Eight trophyless seasons and embarrassing cup defeats to Bradford and Blackburn this season have led some fans to welcome the idea of a big money takeover, allowing the club to compete with Chelsea and the Manchester sides when it comes to expenditure.

Sky Sports pundit and ex-Sunderland striker Niall Quinn echoed such frustrations during the post-match analysis on Sunday, when he revealed the sobering statistic that Arsenal has sold 18 players who have gone on to collectively win 54 trophies since the Gunners themselves last won silverware, back in 2005.

Combined with the board’s apparent refusal to dip into an impressive £123m cash reserve, and an owner who has been accused of lacking passion for the club by ex-board members, fans’ appetites are becoming increasingly whetted at the thought of a benefactor with a blank cheque.

However attractive the prospect of a record-breaking takeover may seem, the reality is that the only people who stand to benefit from such a takeover are the shareholders of the club.

Owner Stan Kroenke, who bought his 60 per cent stake for £430m in 2011, would make a profit of £400m, were the deal to come to fruition.

Fans have been quick to support the rumoured takeover. Image: Henry Kirby
Fans have been quick to support the rumoured takeover. Image: Henry Kirby

Arsenal’s highly profitable business model leaves them well placed to operate at the highest level when UEFA’s Financial Fair Play rules come into effect after the 2013 – 2014 season.

Under these new rules, clubs that do not at least break even over a given period of time will be refused entry into European competitions, arguably the biggest cash cow for the big sides.

A benefactor model in the mould of Chelsea, Paris Saint Germain and Manchester City would undo this stability, turning Arsenal into yet another club luring world class players in for huge fees, and on unsustainably large contracts.

The lack of financial competitiveness that Arsenal has suffered over the past few seasons was born out of the long term and comparatively low commercial deals that the club tied itself into in order to finance the move to the Emirates Stadium back in 2006.

New commercial deals, including one worth £150m over five years, mean that Arsenal are now firing on all cylinders, financially speaking, and can therefore compete in a way that a sugar daddy benefactor would not be able to improve on significantly, without pushing the club into the red.

However dubious the takeover claims may be, the question must be asked: is Kroenke genuinely in for the long haul, or is he simply an investor who could now cash in for a huge return? His previous investments in sports clubs would suggest that he is involved with Arsenal out of a passion for sport, and his wealth ($4bn) would also suggest that he knows how to turn a sports club around.

On the other hand, for a man with such demonstrable business acumen, accepting the offer would make perfect financial sense.