Why Arsenal need Kroenke to do more than just talk
Silent Stan Kroenke finally broke his silence on Arsenal's troubled start to the season telling the Daily Telegraph in an interview this morning that he has full confidence in manager Arsene Wenger and that he has a long term vision to try and emulate Manchester United's commercial success.
But a look at their latest financial results for the year ended May 31 2011 tells you just how far they have to go.
On the face of it Arsenal Holdings Group's performance is very impressive. Turnover of £255m and a group operating profit of £50.5m.
But this includes the proceeds from the property side of the business associated with the move from Highbury to Emirates back in 2006. These reached their peak in 2010. Strip that out and there is a very different story.
Stan Kroenke agreed a deal to purchase Arsenal in April. Photo: Getty
Yes, unlike Manchester United, Arsenal are paying down their debts and it is a credit to the board's self sustaining model that the club now has net debts of £97m. When you consider they have moved to a new ground and taken a risk on selling off their old home as luxury flats, that is no small achievement.
But the problem is the football operation is now at near to full capacity. Turnover on the football side of the business is up slightly, by £2.5m to £225m.
However wages are increasing year on year and now account for 55% of the club's turnover - high for a club as traditionally prudent as Arsenal. There was a £14m increase in 2010/2011 although these figures don't account for subsequent changes to the wage bill following summer player trading (Major transfers out: Cesc Fabregas, Samir Nasri, Emmanuel Eboue and Gael Clichy. Major transfers in: Mikael Arteta, Yossi Benayoun, Gervinho, Per Mertesacker, Alex Oxlade-Chamberlain, Ju Young Park and Andre Santos).
On top of that there is another £55m in other operating costs which barely changed over the last 12 months.
On the commercial side Arsenal pulled in £33m. This has been much the same ever since the club signed long term deals to 2014 with Nike and Emirates. This provided cash up front to help secure the stadium move but now look under valued compared to deals being done by United and Manchester City.
In commercial terms alone Arsenal are £70m behind United whose global strategy of packaging up their rights and selling them off territory by territory allowed them to break through the £100m barrier for the first time in 2011.
In overall turnover terms they are more than £100m behind.
And yet Arsenal and Wenger do have cash in the bank - according to these accounts, £115m. (That will have changed following the £60m sales of Nasri and Fabregas and the money subsequently invested on new players.)
Arsenal's reluctance to spend big is not only philosophical, designed to remain within the spirits and laws of Uefa's financial fair play. It is also pragmatic. While they could easily afford the transfer fee of a major player, servicing their wages over five years would not be sustained by a business which will soon run out of flats to sell.
This is why many fans are now asking billionaire Kroenke to dig deep and invest some extra money on top of the £500m or so he is committed to spending on buying his 66% stake and controlling position in the club. They fear that soon the financial gap with the rest of the top teams in the Premier League will soon be too big to close.