Arsenal football club is a business valued at over a billion dollars. It employs over 400 people and has been making a tidy profit for the last couple of years. There are over 60 professional players and more than 40 employees that make up the training staff. The whole business is run day to day by one person – Arsene Wenger. He has complete control of the business. He controls the players and coaches the company signs, as well as negotiates their salaries. In any other business this would not and could not happen. However to the fans, Arsenal is not a Company but a football club.

So what is Arsenal?

To me Arsenal is a place I go to watch football. Arsenal is my football team. The team is made up of eleven players, and all I am interested in is the games they play and the performance of the team. I buy tickets, shirts and other merchandise. I am not a shareholder, and I am not bothered in the slightest around the Financial performance of the club. All I want is simple – to win trophies.

When did we turn from club to company?

Arsenal have always been a company, they have had shareholders and have had to work under Financial constraints. However the main focus of the club has been silverware and the performance of the team. The Premier League with its vast revenue streams has changed all of this. The TV money being provided has lead to the wage bill increasing season after season. The Champions League provides even more revenue, and it feels like Arsenal need to be in it. Since David Dein has left Arsenal the ownership of player negotiations has moved from the board to the club manager. In my eyes this is when the club changed direction. By providing the manager the responsibility of picking players, agree the players wages, and the players fees the manager has too much control.

What is the role of the manager?

Let’s start at the beginning. The manager, in our case Arsene Wenger is the team manager. He manages the first eleven. We have other managers for the reserves and youth teams, so his remit is pretty clear – manage the players or the squad of players for the first team.

Ivan Gazidis is the CEO of Arsenal. He is the manager of the Company (Arsenal). He sits on the board and he is the main man. He then delegates responsibility to other members of the board and his management team.

S W Wisely is the CFO of Arsenal. Strangely, even though he is the CFO of Arsenal he does not sit on the board. The CFO – Chief Finance Officer, should be the person in charge of the purse strings within the club/ company, yet there is no place on the board for him. Therefore any decisions he makes need to be approved by the board.

What seems to happen?

From the outside looking in, it seems that Mr. Wenger has complete control of the club. In the latest AST meeting with Ivan Gazidis this was made even clearer. Mr Gazidis, clearly stated that Mr. Wenger was unsackable. This is a very bizarre statement, every employee should be treated equally. Further to this Gazidis seems to take instructions from Wenger about how much to pay for players, contract lengths etc. It would seem normal for a player to go to the board and ask for players. This happens at most club, but where Arsenal seem to be different is Wenger’s insistence to control everything. As fans we have heard from Wenger that we were close to signing a number of players only for wage demands or player fees to be seen as too high. Again this will happen in most clubs, but where we are different again is that it is Wenger making these decisions not Gazidis or Mr. Wisely.

Who were Enron?

Enron in 2001 was seen as a successful energy company in America. It was worth nearly $60 billion and had seen a dramatic growth over the previous few years. After closer inspection it was found that whilst the Company had published positive accounting figures they were a sham. The Company had made poor decisions and was in more debt that had been realised. The Company ended up in administration, and with it brought down “Arthur Andersen” one of the biggest accounting firms in the world. I am not saying for one moment, Arsenal is being run poorly, and beneath the published accounts is a disaster waiting to happen. The focus of Enron’s downfall was the ability by a Company to give a small group of individuals too much power. By having too much power, they made incorrect decisions. One of the outcomes of the saga are the new rules that a business should abide by. The one relating to Arsenal, focuses on something called “Segregation of Duties”. To summarise, this stops individuals from having too much power within a Company, and recommends that decision making is shared.

Back to Arsenal

It seems clear that Arsenal could be in conflict of “Segregation of Duties”. By providing Wenger the authority to control the full remit of the club puts a strain on him. Let’s remember he is not getting any younger, and the perils of football management can be seen by looking at one of his close friends Houllier. It is clear that when reflecting on how a club like Manchester United break out their Segregation of Duties, you never hear Ferguson talk about player transfer fees. It is clear the Glazers are fully in charge of the transfer budget and react based on the information that is provided by Ferguson.

Further to this, it feels as if Wenger tries to take responsibility of the transfer budget, and rather than focus on the best players for the club, the focus seems to be more on the profit the club can make. If Wenger went to the board and provided names that were over priced in the board’s view then the player should be ruled out, however the decision as to the value of the player based on the funds available should be made by the board and not the club manager. It could be, that no-one within the current board has the necessary judgement to agree transfer fees and rather than rely on Wenger to perform that role, they should either take this responsibility or appoint someone who is capable of doing this.

Do your own thing

It is clear that the club is well run and from a Financial perspective we are doing well. However by removing the burden of player negotiations from Wenger and moving it to Gazidis or Wisely, or a new individual would seem a more sensible approach. At the end of the last season it became evident that Wenger was under a fair amount of stress. The results had not gone in way, and we quickly exited the four competitions we were in.

It seems that most club managers provide a list of players and positions that they would like filled, and then leave the board to bring the players to the club. It is common for the manager to be involved to entice the player, but having the final decision on the amount the transfer would cost is a step too far and one that needs to be removed from Mr. Wenger’s current remit. By allowing Wenger to focus on just team issues, should benefit the performance of the team, as Wenger will be able to provide his full attention to team matters and not those around player salaries and potential transfers.

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