Afc - Strategy Assesment of Afc

Wenger Knows?

Over the past 17 years Arsene Wenger, Arsenal Football Club's (AFC) first team coach has transformed the club from a middle table club to a team with a global following and a consistent presence in the top four league standings. Impressively this has been achieved with solid financial performance which helped move to the new "Emirates" stadium with a capacity of 60,000 . Today AFC are supported by strong revenues from the new stadium and are cash rich. However their footballing performance has been hampered by their frugality and failure to retain top players. At the time of writing AFC have gone 7 years without a trophy and are 5th in the league. This essay recommends using the cash rich position to invest in new players and to reform the wage structure to ensure top performers are rewarded.

Arsenal Cash Rich Football Poor

In 2006 Arsenal made an important strategic decision. In order to generate revenue to comparable to their competitors they decided to build a new stadium “The Emirates”. “The Emirates” increased the capacity for Arsenal fans by 50% from 38,000 to 60,000. This proved to be a prudent financial move as Arsenal fans consistently fill the capacity of the stadium. Tickets for the Emirates are the highest in the world and have enabled Arsenal to compete financially with other English clubs as the figure shows below.

Figure - 1

To secure this higher income stream Arsenal had to incur a large capital outlay £430m (The Financial Times, 2013). The capital outlay was mainly financed by debt and this is the basis of the strategic choices faced by Arsenal in 2013. From 2006 Arsenal have kept their spending on players and wages to a minimum using the excess income to repay their debt. They have consistently sold their best players at a premium and replaced them with younger cheaper unproven talent. Their austerity measures have led to “total profits (since 2007) of £195m of which £178m has come from selling players” (The Financial...