Why Wenger and Kroenke are bad businessmen

From Nigel Keng :

Hi Myles,

Great email from John Froud.

Echoes the sentiment that most fans have about Arsenal being run as a business rather than a club and interesting to see the figures to back this up. However there is also plenty of evidence to suggest that neither Wenger or Kroenke are particularly good businessmen or that profitability is their first priority. Lets consider some traits and actions of good business people:

They engage with their stakeholders to get their buy in, they share their vision for the company. Clearly not something that Kroenke is doing.

They reduce unnecessary costs. Wenger has been overpaying players and refusing to shift bad ones for years. This suggests sentimentality rather than someone who puts business ahead of football goals.

They invest in assets which are likely to go up in value. The value of quality players keep on increasing and yet Arsenal don’t invest significant amounts here. Over the last few years Chelsea have done pretty well in the transfer market, buying quality players and selling them on at a profit which has contributed to them being almost self-sufficient and no longer reliant on Roman’s millions.

Likewise when you invest, you still have the asset and so your balance sheet and profitability is not reduced. So when we talk about spending, it’s not really spending, you’re just transferring your assets from cash to players which is still an asset on the balance sheet.

If the market wasn’t appreciating then the player values would be depreciating until the end of their contract at which point they would be worth nothing to the club. The fact that so many of our top players reach the last year of their contracts is another example of bad business. The Ozil and Sanchez examples being the worst, considering their original transfer fees.

They consider benefits of investment and success and look to build a brand. A successful football team attracts sponsors and improved commercial deals, an area Arsenal are failing in compared to other top clubs. This is another area where Chelsea have done very well, helping them be more self-sufficient.

In conclusion I think Arsenal could be a better run business and be a more successful football club at the same time.

Of course when Kroenke refuses to address the fans its impossible to know what his intentions are or if they are in alignment with the fans’ which leaves his intentions open to speculation. Given the lack of success and spending we assume he’s in it for the money. Of course that might be true and perhaps he’s just a bad businessman and hasn’t considered the above. Or perhaps he’s weighed up the risk v reward and seen something that works and the risk of changing this is too great compared to the potential increased reward.

You commented, “But he (Wenger) can’t get away with that much longer. The clock is ticking and his departure will be ugly & acrimonious” Do you know something?

Myles says: 

I knew something in March, April and May.

But not recently.

Arsenal have the owner from hell, as you know.

Never underestimate the ruthless of an American billionaire.

Or the selfishness of a French autocrat who fails but keeps his job .