Why Arsenal Are A Rising Force

In the early 21st century, Arsenal decided that in order to compete with England’s elite clubs they needed to build a larger stadium. So the club decided to leave their Highbury home in favor of pastures new and so the Emirates was born. Six trophyless years on, Arsenal are finally set to reap the benefits of that move and the astounding growth of the Premier League since the early 2000′s. In the next few paragraphs I will explain to you how Arsenal will set about going from top four contenders to title challengers within the next few years.
It seems unlucky in some ways that despite the promise that a new stadium would lead to the club being more prosperous and successful it has seemed to have the opposite effect. There is an explanation for why one of the world biggest football clubs haven’t reaped the rewards from having such a brand new stadium built, and it involves how they got the funds to build such a stadium in the first place.
When the plans for the Emirates were drawn up, Arsenal opted into several sponsorship deals with Middle Eastern company Emirates Airlines, they seemed remarkable at the time but hindsight has left the Gunners regretting the length of the deals. The Stadium sponsorship deal is what grabbed all the headlines, it is why the clubs ground is referred to as ‘the Emirates’ rather than ‘Ashburton Grove’, and when it was announced that the North London side had agreed a deal worth almost £42 Million over 15 years (£2.8M per season) there were gasps. It was a groundbreaking deal at the time, but the length of it has caused Arsenal much distress.
Just seven years after Arsenal announced they had reached a deal with Emirates, Manchester City announced a stadium naming rights deal of their own. They have managed to extract a astonishing £100 Million from Eithad Airways over 10 years (£10M per season), that’s almost 4 times the amount the Gunners receive if you judge it by yearly income. While you have to take into account the fact that the Eithad deal is likely inflated due to City’s middle eastern owners, it still shows how much revenue Arsenal are missing out on from year to year on stadium sponsorship alone.
It’s worth noting that the Gunners are still hoping to renegotiate the stadium deal, but they are unlikely to find a way to increase their income from naming rights until the deal expires in 2021. They look set to remain with their paltry £2.8M a year income from the deal until they can renegotiate it in 9 years time, meanwhile Manchester City bring in £10M per year for their deal. So how much are Arsenal missing out on compared to City’s deal over the next 9 years in total? A massive £64.8 million.
The next sponsorship deal is the shirt sponsor, Arsenal’s deal with Emirates Airlines in 2004 also included shirt sponsorship of £48M (making to total of deal between the North London side and the airline £90M). Fortunately for Arsenal they only agreed to a eight year kit deal, meaning it is up for renewal in 2014. The current arrangement see’s the Gunners bring in £6 million per year however that is significantly less than rivals Liverpool and Manchester United who earn £20 million during the same period. That’s a £14 million difference per year and something the club are hoping to rectify in two summers time.
The clubs kit supplier, Nike, is also tied down till a deal ending in 2014. The stark contrast between what the Gunners earn when compared to their rivals is also easy to spot with regards to the kit deal. £8 million per season is what the club receive from the contract, compare that to the eye-watering £25 million Liverpool get, a club that doesn’t even have Champions League football. The club is hopeful of renewing these deals/attracting new sponsors that will bring them in-line with England’s other top clubs, the increase from the two new kit and shirt deals alone could bring in an extra £28 million.
The club is working hard to attract more secondary sponsors too, and lots of them have already signed new terms at higher premiums. Arsenal also agreed a deal with Airtel this summer and look set to increase their sponsorship income from secondary sources by £10-£15M in the near future, some increases have already been arranged.
It’s not just from sponsorship agreements that Arsenal will see an influx of cash. The new record breaking Premier League deal which was signed last month has seen TV money increase by an extra £20 million from 2013. At present Arsenal struggle to break even, they are roughly losing £5 million per season if you deduct player sales. This loss is largely due to the £15 million the club have to spend on interest payments on the debt they took on during the stadium move, however with the increase in Premier League money Arsenal will find themselves much more self-sufficient once the new deal comes into play.
While an increase of £40 million from sponsorship alone in 2014 is highly likely, when you combine that with the new TV Money Arsenal stand to make £55 million per season from 2014. That’s £55 million that CAN be spent on players since the wage bill is unlikely to rise significantly in the next two years, players are set for new deals but previous high earners such as van Persie and Arshavin are set to leave meaning their wages can now be spread out over the new contracts for other players such as Alex Song and Oxlade-Chamberlain.
Of course that £55 million is the minimum the club could make, there is potential for an even higher income if Arsenal play their cards right and expand their commercial revenue in the same way Manchester United have done. It’s worth noting that the reason expenditure on players could be attributed to the clubs desire to attract better deals in 2014, the club have already spent £38 million this summer on new players and if they can win a trophy or two before sponsor negotiations begin they could be set for an even larger increase in income.
The future looks bright for Arsenal.