FREE VIDEO: Ivan Gazidis on financial results

The Club has announced its financial results for the year ending May 31, 2010.

For an insight into the latest figures, we spoke to Arsenal's Chief Executive, Ivan Gazidis.

All visitors to Arsenal.com can now watch our FREE interview with Ivan by clicking on the PLAY button in the image above. Below is a transcript of the interview:

The Club has announced our Annual financial results today and the figures look good. What has pleased you about these results?

The profits are very good which is positive, particularly in an environment where football finances are under increased scrutiny all across the world.

I think we can feel positive about the healthy situation we are in. In particular, we have brought down the net debt of the group from nearly £300 million to £135 million, which is a tremendous achievement in this environment and we’re very pleased about that.

The reason these results are important is not for their own sake, it’s because we’re building a foundation, a platform from which we can achieve on field success. All the money we invest goes back into the Club, either to the development of infrastructure or the vast majority of it back into the playing side, where we can continue to make our fans proud and that’s why these results are important.

You mentioned the overall net debt coming down quite significantly, why is that such a big deal?

Well, 18 months ago we were in a position where a number of our property developments were carrying debt. The environment, as we all know from the economy, wasn’t great and we had to re-negotiate some of our debt, work through them and get into a situation where we are selling a property in the current market. So for us to come through all of that and to come out of it with property business that is debt free and is generating profit for the Club is a tremendous achievement and one that we can feel very good about.

Also, even in the current economic climate Emirates Stadium is virtually sold out every single week – what does that say about Arsenal's supporters?

We’ve got fantastic fans with incredible loyalty. I know in some ways it’s been a difficult few years but our renewal rates were very, very strong and in return, I think we’re also listening to our fans closely every year and we are developing the stadium.

Emirates Stadium was not dead and finished the day we played our first game there. It’s an evolving home for our fans and a lot of thought, care and input has been taken in continuing to develop the stadium in a way that reflects the culture, the history and the aspirations of the Club. That’s something that I think our fans have been really engaged in and this has helped cement the bond between the Club and the fans.

So when you talk about the investment in the facilities at the stadium what can we expect?

We’re listening every year. We listened to our fans and brought the Clock back into the stadium and this year we listened to our fans and renamed the stands to evoke more of a personal touch rather than the quadrants we had before.

We’re now in listening mode because there will be more redevelopment during the course of next summer and we want the ideas to be coming from our fans. The best ideas we’ve had about developing our stadium have been from our fans.

We’ve talked about the property side of the business, which has made a big impact on profits. How about the football side of the business, how’s that going?

On the football side of the business, the profit is down from last year and there are a couple of reasons for that.

We played five less games at home and obviously every time we play a game at the stadium, that’s a very significant amount of money. Just because the way the fixtures worked out over the two years we saw a decline in revenue from the games.

The other aspect is on the cost side, where we continue to see upward pressure on player wages. A part of that is because we’ve invested fairly aggressively in our young player pool, and we have secured their long-term future with the Club. This has been a very successful period of investment but it costs money. A part of it is also driven by the external environment in which we operate where player costs continue to go up.

I think it’s also fair to say that because of some step timing in player contracts and also some of the performance targets that are in there we haven’t seen the full cost yet reflected. It’s likely we will see player wages rise again next year.

The financial models of football clubs have been high on the agenda recently. With UEFA’s financial fair play rules coming into effect from 2012, how will this impact on clubs?

The financial fair play initiatives from UEFA have been broadly supported by clubs across Europe because everybody is looking for a way where football can be managed more responsibly with more of a view to its long-term viability, so I welcome the initiatives.

Certainly Arsenal is very well placed because we already operate our Club on those principles of self-sustainability, of less reliance on benefactor owners, more independence for clubs and we feel that this is a healthy way to run a club.

We will be well placed when those principles come through. I would just caution we don’t yet know the full impact and there’s still a lot that remains to be seen but I think it’s certainly a healthy development in the game.

So Arsenal is a Club which is profitable, which begs the question how much of this money will go towards Arsène Wenger and future transfers.

First of all, all of the money we generate goes back into the Club, so no money goes out in the form of dividends and I think we can be pleased about that. A certain proportion of that goes into the development of our infrastructure, so the development and progression of the training ground is there, the progression and the investment in the stadium. We are also investing in our commercial capability.

But again, most of that goes back into the playing side, whether into player contracts or transfer fees. Now that doesn’t mean we can compete at the level of the Manchester Citys of this world in the transfer market, because those types of fees and those types of salaries are not sustainable for any football business. But it still means, I believe, that we can compete with them on the pitch. We do have a policy of building and not buying, and that’s a difficult path to tread sometimes, but as a result of that policy we’re seeing a tremendous number of good young players progressing and developing into the finished article and I think our performance against Spurs on Tuesday night illustrated this.

We had a very young team, an average age of 22 on the field at the start and they really showed their quality. That’s the depth that we now have in the squad and that comes through long-term thinking and long-term building.

Arsenal fans want to see the business run properly, they read about profits and they are impressed by this, but they are also frustrated with the lack of trophies in the past five years. Do you understand their frustrations?

I don’t only understand it, I share it. It’s tremendous emotions that everybody at the Club goes through. We’re all fans and those frustrations are deeply, deeply shared.

We’ve been embarked on this journey and it’s involved a real focus, a real path to walk of building for success rather than being able to simply go out and buy it. That’s not easy to do and I think what Arsène has done very successfully is to build a Club that we can all be proud of.

We can all be proud of the way the Club is run. We can be proud of the types of players and the type of football that we play, but there is something missing and we’re all acutely aware of that.

Let’s talk about Arsène Wenger, he signed a new contract in August taking him to 2014, what are the chances of him staying beyond that?

One of the things Arsène always talks about is just focusing on the next goal, so right now it’s West Brom this weekend and it will be one step at a time as we go through the adventures of the next four years.

I think we can be very successful during that period of time. I can’t predict and I don’t think Arsène can predict where we will all collectively be four years from now, but I’m certainly hopeful that we will be reaping some of the rewards for the patience that we have had and that Arsène will still have the appetite and the health for the game to stay on - but that’s a long way into the future.

Let’s finish with matters on the pitch, it’s going well at the moment.

It’s been a good start to the season and we continue to see our young players progressing and developing into the finished article. I think the new additions have really added something to the team, both on and off the field, in terms of attitude and leadership and they have also added strength to the squad. We feel optimistic about the season, there’s a long way to go, but it’s been a positive start.

 

[Friday, September 24, 2010]

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