Arsene Wenger faces being left with just £10m to rebuild Arsenal

Concern: skipper Robin van Persie's future at Arsenal is in doubt with the club failing to perform this season
11 April 2012

Arsenal have long been used as a template for money management in football but fears were growing today that the club could fall foul of UEFA's Financial Fair Play regulations if they fail to qualify for the Champions League.

The Gunners are set to announce profits of around £55million when they publish their half-yearly accounts before the end of the month, which the club insist is available for Arsene Wenger to strengthen the squad.

But the Arsenal Supporters' Trust have conducted a detailed assessment of the situation and believe that it would cost the club around £45m should they finish outside the top four. That would leave Wenger around £10m to spend, raising the possibility Arsenal would have to sell players before they could buy big in the summer.

It has been suggested that the Gunners' lack of activity in last month's transfer window was partly motivated by anxiety over a potential loss of Champions League revenue and the consequential impact on the club's balance sheet.

At a meeting of the AST last night, it was claimed that there "are Financial Fair Play issues that concern our members" with the club run as a break-even business reliant on Champions League income to meet its targets.

UEFA demand clubs post losses no worse than £19.6m a year in the first two-year monitoring period between 2011-2013, falling to an average of £13m over the three years incorporating the following season. For three-year cycles thereafter, the loss allowed will drop to £8.7m per season.

AST projections suggest Arsenal's costs are currently around £180m but with the club's £130m wage bill set to rise, that expenditure could increase to £205m. Income could fall to around £180m without Champions League football and any flattening in domestic revenue from poor team performance would mean a speculative loss of around £25m is a possibility if they fail to sell players, reduce the wage bill or improve commercial operations.

The club's property developments and profits on player trading have been significant factors and although there is another £35m expected to come from the Queensland Road and Hornsey Road sites, this amount is likely to be received in the next financial year.

That will provide something of a buffer should the Gunners fail to finish in the top four but the club are banking on improving their commercial contracts - the major shirt sponsorship and kit manufacture deals are up for renewal in 2014 - and cannot afford any diminishment in their standing
in Europe.

Arsenal's majority shareholder, Stan Kroenke, will fly in for a board meeting on Thursday ahead of the release of the club's latest figures for the six-month period ending November 30 last year.

Interaction between Kroenke and the club's supporters has been minimal. The AST, who will ballot its 3,000 members before the end of the season as to whether Wenger should continue as manager, have raised several issues the board will be expected to answer:

What transfer funds are available to Wenger?
No supporter can expect a club to go public with exact amounts but a suspicion remains that Wenger has been denied funds to significantly strengthen the squad. The team's performance this season, although presently fourth in the table, suggests a major overhaul is needed to get them back on track.

Why is the wage bill so bloated?
Arsenal are said to have 71 players on the club's wage bill, which is the fourth highest in the Premier League. Robin van Persie's contract renewal is the principal issue and the club's wage structure denies the Dutchman the opportunity to be rewarded as lucratively as at other clubs.
Johan Djourou's new £50,000-a-week contract exemplifies average players on significant wages. Van Persie is expected to be offered a £100,000-a-week, four-year deal. That is a total outlay of £20m (before a substantial signing-on fee of at least £5m) but the club will struggle to go much higher because others are over-paid. Van Persie, though, could get far more elsewhere.

Who is responsible for the malaise?
As the AST report asks: "There is clear inefficiency in wage spend evidenced by poor performance on the pitch and the number of players the club have either on loan or deemed not good enough to play in the first team."

Surely there can be no ticket price increase again?
The 6.5 per cent rise including VAT angered supporters. It is understood that ticket pricing for next season is on the agenda and the announcement of any further rise with the cheapest season ticket already at £951 is surely unfathomable. It is believed that around 400 season tickets are only used once a season at Emirates Stadium.

Re-assess the business model to give Alisher Usmanov greater involvement?
"It was only during the summer of 2009 that a rights issue proposal to give the manager additional firepower was rejected by the board as "not necessary". Would the same decision be made again?" asked the AST report.

Usmanov is edging closer to a 30 per cent holding yet is regarded as an outsider despite having cash ready to invest. If the business model is producing results that could falter under FFP scrutiny, is it not time for a change?

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