Arsenal and the Vicious Cycle

One point out of the possible 9 so far in January leaves Arsenal 7 points shy of arch rivals Tottenham and the last Champions League spot. Sandwiched between the Merseyside clubs in sixth spot, Wenger needs to do something miraculous to turn the tide at Ashburton Grove. And it looks gloomy all around – woeful current form, razor thin squad and no transfer activity. And moreover, this time there is no England job calling or tax trial for the Tottenham manager to derail Spurs’ challenge for the fourth spot. A wise man would think twice before putting his money on Arsenal to grab fourth place this time around.

Arsenal at the moment seem to be caught in a vicious cycle comprising three elements – failure to win silverware, failure to attract and retain top talent, and falling revenues. So what exactly is the vicious circle being talked about? The textbook definition of a vicious circle goes this way – it is a chain of events that reinforces itself through a feedback loop, producing detrimental results. The cycle will continue until the intervention of an external factor to break the loop. Looking at the results of Arsenal in the past seasons, one does get the feeling that Arsenal are indeed slipping down this downward spiral. Consider this: Arsenal won their last piece of silverware in 2005 when they beat Manchester United in the FA Cup, and have since gone on a trophy drought. During the same period, they have also seen top talents like Robin van Persie, Cesc Fabregas, Samir Nasri leave the club in a bid to win honours elsewhere. And also, the club hasn’t seen its revenues grow considerably in the same period. One mustn’t forget Arsenal are able to turn in the profits year on year largely because of player sales. On the revenue front, rising match day prices have driven the growth in revenues but not major commercial or sponsorship deals. These three elements don’t bode well for Arsenal at all.

A close look clearly shows the three elements are interconnected – failure to win silverware has resulted in an exodus of superstars. With no trophies in the cabinet of late and lack of big name signings, the money from the sponsors has also dried up. That is the first cycle. And how does the loop reinforce itself? With money drying up due to lack of commercial deals, transfer activity is low and the club can only get mediocre players. With mediocre players, you are not going to mount a serious title challenge or win the Champions trophy. With average players, performances would drop and the club faces the threat of eventually dropping out of the top four. Should that happen, it would lead to more dwindling revenues – TV and broadcast revenues would fall, match day attendance would fall, resulting in lower match day revenues. If the club tries to increase ticket prices to boost revenues, one can only expect more empty seats at the Emirates. That is how the chain of events would reinforce itself, throwing the club into a state of peril.

It is time the circle is broken. Easier said than done, but something has to be done else the misery will only add on for the North Londoners. First, a closer look at the vicious cycle, and then a look at what can possibly be done to get out of it.

At the crux of the all problems is Arsenal’s lack of silverware, or in other words, lack of consistency in winning. A good season is not followed by a better season. It has been more of a see saw than an upward rise. If one looks at Arsenal’s previous seasons, the 2007-08 season was a refreshing season – young players playing fearless football and mounting a serious title challenge. The 2008-09 season was very bad for Arsenal, partly due to departure of key players and failure to sign new ones. The next season was decent for Arsenal; with the arrival of Nasri and Alex Song stepping up, they finished third in the 2009-10 season. And from then on it has been a steady decline. The points tally reveals Arsenal’s misery. The disparity between Arsenal and Manchester United can be seen in the past two seasons. One can argue the League has become more competitive. But as a top club, you are expected to finish with an average of two points per match. United don’t seem to have dropped below that threshold (76 points). Sadly for Arsenal, it looks a far-fetched dream. They just have 34 points from 22 games this season. To get to that tally, they will have to pick up 42 points from the remaining 48. Fat chance.

The second element of the vicious circle is player departures. Arsenal have been mocked as a selling club in the past few seasons. And there is a lot of truth in it. Every year there has been a steady outflow of players, and key players at that. To make matters worse, adequate replacements are not brought in. The club has to accept responsibility for this. Had they strengthened the squad in the initial years of Arsenal’s downward spiral, they wouldn’t find themselves in the position they are today. To see the likes of Hleb, Flamini and Gilberto Silva all leave in the summer of 2008, and to sign nobody (oh they signed Amaury Bischoff, didn’t they?) is just poor management. Very appropriately, Arsenal’s points tally took a nosedive in the 2008-09 season. The same mistakes have been repeated, and today, the club finds itself in a position where, even if they are interested in signing a top notch player, the player sees no incentive to come to Arsenal. For instance, why would a Mario Gotze move from Dortmund to Arsenal? Champions League football is no longer a guarantee, and you can’t expect fat pay cheques. The club is forced to go scouting in the French League and Championships and sign average players. And the result is the double whammy of watching the Gervinhos, the Girouds miss chances and shroud at the site of Van Persies and Adebayors churning in goals, week in week out.

And lastly, dwindling revenues. Clearly, a major reason for Arsenal’s increased revenues is driven from the money coming from player sales and increased match day revenues. Both of which have not gone down well with the supporters, and more importantly, both are measures which are not sustainable. The two other avenues for driving revenue growth are broadcast revenues and commercial deals. Champions League football contributes significantly to broadcast revenues. Failure to qualify for it will be a major blow to Arsenal’s revenues. Also, finishing mid table will result in lesser number of games being broadcasted, which translates into a lower share in the revenue pie. As for the commercial deals, brands like to be associated with winning teams. Nobody looks at financial fair play or player development when they sponsor teams. If Arsenal don’t get back to winning ways, it wouldn’t be surprising to see sponsors making a beeline to the exit door.

So what is the external impetus required to break the vicious cycle? Arsenal needs an injection of cash to turn the tide and break the cycle. It is very much akin to the stimulus package prescribed by Keynesian economists to turn around struggling economies today. If the CEO is to be believed, Arsenal are sitting on a huge cash pile. Why they don’t want to spend is just not understandable. If they fail to do so now, they wouldn’t be able to invest it on good talent but will have to waste it on more Gervinhos and Girouds. Externally as well, Arsenal have money to spend. Alisher Usmanov, who holds a close to 30% stake at Arsenal, has publicly made it clear he is ready to infuse much needed cash for the Gunners. This is in stark contrast to the approach taken by Silent Stan, who many fear will stoop down to the extent of taking dividends from the club’s profits. Will the Board rise above politics and induct Usmanov into the Board to steady the Arsenal ship?

With 10 days left in the transfer window, Wenger might not be able to make wholesale changes. But at least the bare minimum will have to be done, like bringing in a striker and a midfielder to ensure Arsenal qualify for the Champions League and have a solid platform to build on next season. If Wenger doesn’t act now, the vicious cycle threatens to pull Arsenal further down to a point of no return to their yesteryear glory.