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Is Arsene Wenger more a great bookkeeper - than a CEO?

14th Dec 2012
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It is common knowledge that Arsene Wenger, the manager of Arsenal football club, has a degree in economics and likes to be referred to as "Le Professeur". He is to Arsenal what Steve Jobs was to Apple - the de facto CEO - who has indelibly stamped his mark on Arsenal both as a football club and brand over the last 16 years.

For the first 10 years of Wenger’s reign Arsenal’s star shone very brightly - a combination of scintillating style of play, a superior fitness regime, technically gifted players and fighting spirit - made them every neutrals favourite team.

Fast forward to 2012 and it is clear that Arsenal’s brand USP has now become commoditised – even Swansea and Norwich can beat Arsenal at its own game.  6 years without a trophy is the most tangible sign of this decline to dullness.

But, parallel with this footballing decline it seems that Wenger wishes to be increasingly judged by his economic or business acumen, rather than his football management skills. After all he is no longer able to compete with the Mourinho’s or Ferguson’s in pure footballing terms.

Wenger’s legacy now appears to be all about running a sound business model. Which means that brand Arsenal’s frugality, profits and cash pile are the trophies Wenger now craves most of all.

The question I want to raise is; despite the signs of profit and business liquidity – is there a case for saying that Wenger has actually diminished, not enhanced, the overall brand value of the club - due to the business decisions he has taken in the last few years?

Consider the case for this proposition:

Most business success is closely related to underlying profitability of that business.

Profit in turn is dependent on revenue.

Maximising revenue, or certainly gross margin, opportunities must therefore be a goal of all successful CEOs.

A typical football club has 5 primary sources of revenue – and hence margin maximising opportunities:

·      Ticket sales

·      Broadcasting revenue

·      Commercial (sponsorship) revenue

·      Player sales

·      Prize money

Having a successful team, or product, is the crucial element in driving the revenue streams and hence profitability of the football business model.

The single most visible manifestation of Wenger’s business decision making is his dogged – some would say stubborn - desire not to give into exorbitant player wage demands or succumbing to ever inflated fees for super stars.

This means he has missed out on certain purchases because of price – that could have made a difference at crucial times (Gary Cahill in the January 2011 window springs to mind).

Whilst being forced to sell key players whose wages demands are out of line (Ashley Cole is a celebrated case – and Theo Walcott could be another).

This means he has saved Arsenal loads of money in the short run – but at the expense of forming a team capable of winning trophies.

An argument can be thus made for saying that Wenger’s poor judgment, in this crucial area of team building, has paradoxically had an adverse and direct impact on all 5 of the primary revenue areas.

So, it could be thus said that both as a business and football club the Arsenal brand has suffered due to Wenger’s recent stewardship.

There is a virtuous circle in football that looks something like this:

Because Wenger is famously miserly, frugal or stubborn – call it what you want - in box 1 - he has forgone the chance to even start the virtuous circle really going in the last few years.

So crucially, a non-cup winning team is unable to maximise the revenue stream from; prize money, commercial sponsorship, broadcast revenue, tickets and even player sales.

In business and football, it’s goals that count – so here are those all important scores:

Prize money – Chelsea €60m: Arsenal €28m

Proof that winning cups is good for the brand and the bank balance.

Chelsea earned €60m from winning the Champions League in 2012.

That’s €32m more than Arsenal - who didn’t even make it to the quarterfinals.

Commercial revenue - Man Utd £103m: Arsenal £46m

A successful team and brand will attract more lucrative sponsorship and merchandise contracts. Man Utd has 28 different sponsors – the top one being Chevrolet – which is worth a whopping $80m per year. Contrast that with Arsenal who has just signed a new deal with Emirates at a paltry £30m per year.

£57m a year less in sponsorship revenue is a big deal – forgone.

Player sales – Man Utd £80m: Arsenal £81m (but for 3 players!)

Football failure has lead to Arsenal’s stars constantly wanting to leave. Yes Wenger made a profit from the sale of Nasri, Fabregas and Van Persi – but these were all distress sales. Simply put, the £80m Man United got for Ronaldo from Real Madrid almost equalled the total sum earned from the sales of Arsenal’s 3 superstars Van Persie (£27m), Fabregas (£30m), Nasri (£24m).

In conventional business terms Wenger did not maximise the potential revenue he could have got for his prize assets – his players.

As the Arsenal brand gets more tarnished, in the absence of trophies and big stars, the margin achievable from each revenue stream will obviously fall. Empty seats at the Emirates are a visible sign of this happening already.

Wenger’s approach to business seems to be; “watch the pennies and the pounds look after themselves”.

However in a dynamic business sector, such as football, this cautious approach can be dysfunctional.

As with most other business models – spending or investing more in the brand – is actually the right business decision.

A bolder and longer-term vision – in terms of signing and retaining talent - could have thus delivered both a successful winning team and bigger financial rewards for the shareholders.

After all, on Wenger’s wages, he is not paid to be a diligent bookkeeper - but a great CEO – someone who is still capable of taking the business and brand forward.

And winning the game.


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Replies (7)

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By WhichTyler
14th Dec 2012 13:17

One thing missing from your circle...

... which is profit. Without it the circle isn't virtuous, but a drain on whoever is backing it.

Man U are profitable, though very highly geared, but Chelsea and the rest have been losing money hand over fist


this article is mainly about ManU, but the 2010-11 comparison table about 1/3 down is very useful.

I guess your view (apart from the per haps partisan one that Arsene should open his handbag so Arsenal start winning), is that the soccer market is relatively immature and with global markets still to be exploited, there is a big potential gain for those who move first and invest to gain market share.

But with Chelsea's debt/investment approaching £1bn over a long time with no sign of profit (or even sustained success), this is a game for those with deep pockets...

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Replying to Matrix:
By Mano Manoharan
14th Dec 2012 15:20

micro analysis of Wenger's mind

WhichTyler wrote:

I guess your view is that the soccer market is relatively immature and with global markets still to be exploited, there is a big potential gain for those who move first and invest to gain market share.

I suggest Arsenal need to move more dynamically - less cautiously ...

Here's a micro analysis of Wenger's business mindset.

Walcott wants some £20k per week more to stay - that's £1m pa.Wenger says no.Walcott's value in January 'distress' sale £10m (?). Nil in June - thats 6 months later! That's a hell of a steep deprecation!But - value in non-distress terms £20m-£30m...

In pure business/commercial terms this is a no-brainer. Wenger should bite the bullet (and yes have to pay more for other team members).


1. More chance of creating a winning team - with all the revenue benefits I addressed

2. Enhancing/maximising re-sale value of dis gruntled players - including Walcott

Wenger is not, despite his Economics degree, commercially minded...

Agree about profits - but I was simplifying circle and looking at revenue generation - which is the key factor to super profits.

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By Business Owner
14th Dec 2012 15:44

Financial Fair Play

UEFA's Executive Committee unanimously approved a financial fair play concept for the game's well-being in September 2009. The concept has also been supported by the entire football family, with its principal objectives being:

• to introduce more discipline and rationality in club football finances;
• to decrease pressure on salaries and transfer fees and limit inflationary effect;
• to encourage clubs to compete with(in) their revenues;
• to encourage long-term investments in the youth sector and infrastructure;
• to protect the long-term viability of European club football;
• to ensure clubs settle their liabilities on a timely basis. 


It seems that Arsenal are the only club in the Premier League to already comply with these rules, which I understand, are to be imposed from the 2013/14 season.



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Replying to mallardadvice:
By Mano Manoharan
14th Dec 2012 16:00

doesn't excuse poor decision making

Agree with all that you say re fair play rules...

Doesn't excuse or conflict with need to make sound commercial decisions...

In case of Walcott, he wants £20k more per week. Wenger says NO.

Wenger wants to keep him still to end of season - on existing contract

therefore happy to write off £10m value (i.e. if he doesn't sell him in January) over 6 months - because he will be then out of contract and free to move on for £zero fee.

TO SAVE £20k per week for 30 weeks = £600k in additional salary to keep him to July - when he could be then be sold

And probably for more than £10m.

Most CEOs would be gently removed for decision making like that...


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By Business Owner
15th Dec 2012 11:16



I'm not sure it's as simple. Agreed your figures make sense, but I suspect that the negotiations are somewhat more complex.

For a start giving Walcott a raise would result in numerous other players also sticking out for increased wages, resulting in an unaffordable 15%-20% increase in the overall wage bill.

I think Mr Wenger has made it clear that Arsenal are not prepared (or can’t afford) to get onto the bandwagon of paying ridiculous sums to prima donnas. Nor is he prepared to be blackmailed like Ferguson was blackmailed by Rooney.

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16th Dec 2012 22:43


Anyone spot the common theme?

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By redman7
01st Jan 2013 08:58

Could they really do any better
Whilst I do get where you're coming from I have to question whether Arsenal could really hope for anything better than third place in the premiership. Is it really worth them embracing more risk by taking on a higher cost base. I can't see how they can compete with man city currently and man utd to a lesser extent. I think Arsene has ideally positioned the club for the financial fair play rules and I actually have respect for the guy not giving in to higher wages and agent fees and structuring his club with a sound economic business model. I am a Liverpool fan, and if my club where in the position that arsenal are right now I'd actually be very happy.

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