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As the clock ticked forward from 1159, chairman Peter Hill-Wood got proceedings under way. Here is a man clearly uncomfortable with a role that has been bestowed upon him as a family duty and probably wishing that he were away in the country pheasant shooting rather than addressing several hundred football fans. After going through the normal AGM motions the stage was handed over to Managing Director Keith Edelman to talk about the finances.
I have no intention of going into the details of the accounts here. The most interesting points to note were that, for the reported year ending 31st May 2003, player costs were a surprisingly high £17.4million. I say surprising because the only purchases were Gilberto and Cygan. However, it would appear that amounts were owing from previous purchases. Turnover increased, mainly from ticket income, European competition and broadcasting revenues and an impressive 73% rise in retail revenues. Impressive until you realise that this was the result of two new kit launches following the change of sponsor.
Having reviewed the finances, Edelman then went on to reiterate the need for the move to a larger stadium from both a financial and fans perspective. He noted that there are currently 34,000 people on the season ticket waiting list and 20,000 for TRS. Allowing for some duplication, a figure of 50,000 is estimated for the number on waiting lists. In addition, 24,000 non-registered persons applied when the club ran an internet registration scheme. Interestingly, he added that there would be more seats at lower prices in the new stadium, the first time such a statement has been forthcoming to my recollection.
Edelman confirmed that the club has so far committed £95m to the Ashburton Grove site, funded by money from Granada and a loan from the bank. As it became clearer as the meeting went on, a considerable amount of the land purchased is excess to requirements. Some has already been sold for £65m, although most of the money has not been paid yet. The remaining land apparently has a value of at least £30m. So from this one could ascertain that, should the project fall through, any funds should be recoverable.
After Edelman's speech, it was time for Hill-Wood to touch on the Old Trafford incident. Reiterating the statement made by the board last week, he only added that lawyers have been appointed and that the club and players have been advised not to comment until after the hearing.
There followed the first questions from the floor. And it was clear that these were the questions in most people's minds, judging by the strong applause they received. Simply, the questioner was concerned about the levels of debt at the club, the cost of the stadium and the debt incurred and ultimately the risk of the club going into administration. The chairman replied that the land costs are known and that the construction of the stadium is on a fixed cost basis, a contract already being agreed with McAlpine. In all the gross cost will be around £400m (£200m stadium, £200m land and infrastructure). Funding will be sought for the whole project with the club receiving the proceeds form the sale of Highbury, which will not take place until after the new stadium is complete. Short term finance is in place. However, the eagerly anticipated long term finance has not yet arrived. Edelman confirmed that any long term funding would be at a fixed rate of interest. Yet no English bank will lend to us and that we are at the mercy of some banks in far flung places. It is also interesting to note that the banks involved do not appear to be far into the process required to lend money and there was a definite air of caution in Edelman's tone.
The floor was then handed to Danny Fiszman for an in depth presentation on the new stadium project. The sole point of this exercise appeared to be to emphasise the complexity of the project. Indeed, when later questioned as to whether there was a Plan B should Ashburton Grove fall through due to lack of funding, the reply was that because Plan A was so complicated, there has been no time to even consider a Plan B.
The key issues from Fiszman's presentation appeared to be the outstanding Compulsory Purchase Orders on 19 businesses, for which a decision is expected by the end of the month. Fiszman did point out that the CPOs would not affect the stadium as they related to some of the excess land and that the land for the stadium is secure.
With the completion of the formal presentations, it was back to questions from the floor. For the sake of segregating the finance section of this report from the sporting one – taking my lead from the Arsenal Holdings PLC structure – I will briefly refer to one superb question from a Mr Myers. His question, delivered directly to Keith Edelman, was that if the MD's job is, as reported, to cut costs and increase revenues i.e. making Away Scheme members pay £20 for the privilege, charging fans for merchandising catalogues and (apparently) making the players fly economy class, why had his own salary been increased from roughly £400,000 to £460,000 per annum? The response was classic. Edelman looked perplexed (as if the Managing Director of a PLC doesn't know his own salary?!) while Hill-Wood strongly rebutted any accusation and stated that he doesn't begrudge the MD a penny.
Finally on the financial side, it was asked whether the money received from the new debentures (£10m from 2000 bonds sold) would go towards new players. The reply was emphatically negative!
And so with the finance issues out of the way, let's get on to the interesting stuff i.e. football related questions from the floor. This, of course, brought Arsene Wenger into play and the manner in which the attendees hung on to his every word was almost tangible.
The first question was regarding Jeffers and Van Bronckhorst and the fact that they cost a combined £15m yet have been loaned. Wenger stated that neither player had managed to break through and that both needed to play. In addition, he admitted that there were financial considerations in terms of reducing the wage bill.
Wenger was asked whether we had actually signed Spanish starlet Cesc Fabregas as has been rumoured. The manager confirmed the Fabregas ‘will join' and described him as an ‘exciting midfielder', as well as informing us that he was born in 1987 (think Littlewoods Cup final against Liverpool, think Charlie Nicholas deflections, think…boy, am I that old!). Questions on the youth policy were particularly prevalent. The first questioned the cost of the academy considering the lack of players who actually come through. The questioner made several references to Rohan Ricketts and the fact that he had broken though in N17, to which Hill-Wood's (surprisingly) witty response was ‘he may be good enough for Tottenham…'
Another attendee wanted to know why youth players did not get picked. Wenger gave a long and detailed explanation. He stated that ‘we do have very good young players' (without naming any). However, he went on, when he arrived the club was ‘under threat' and needed to increase the level of the youths. He claimed that there are 16-20 players who will be good enough for the Premier League but may not necessarily be world class. Wenger tried to explain the jump in level, not in terms of ability but in intensity, citing Jermaine Pennant as an ‘outstanding prospect' who has been loaned out to learn to ‘deliver performances' week in and week out. He agreed that the academy is expensive and that the club fights to get the best players in Europe. However, ultimately one has to accept that although most players will be good enough for other clubs, maybe only 1% will be good enough for Arsenal's first team.
However, during his response, there is one phrase that really stood out and explained Wenger's predicament. It was that although he stated that he was not scared to blood youngsters, it has to be accepted that “you pay for education with points”. In other words, is he brave enough to take the risk?
And so the discussion switched to discipline. One fan voiced how he was incensed by the media coverage, especially after the Old Trafford incident, citing numerous examples of Man Utd players attacking Arsenal players on the pitch. While another deplored the clubs disciplinary record especially regarding retaliation and arguing with referees (cue booing and shouting down from the floor!). Wenger responded by saying that he was trying to maintain the ‘fighting spirit' that was already at Arsenal when he arrived, while adding style and flair. He explained that this was a difficult balance to achieve and didn't deny that the players need to control themselves better on occasions. He then went on a tirade against the media who, he claimed, are trying to drag us down and make no comment of our disciplinary improvement over the last two years. He reiterated, “we are not a dirty side”.
Then followed a gentleman wearing a garish multi-coloured bow-tie who, in spite of the fact that there were numerous people wanting to ask questions, was allowed to state his undying love for the board and all they do and stand for – for a second time during the limited proceedings.
At this point Peter Hill-Wood could obviously smell the roasting pheasant (one he killed earlier?) and with the normal disregard for those who follow the club, the meeting came to an abrupt halt.
As someone who, for a living, meets company management with a view to investing, one can only say that this was as unimpressive a management as I have come across (I‘m talking board not coaching). Certainly a company that only people with no financial incentive would invest in. And one with numerous questions still to be answered.