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There is a so-called Swiss Ramble (SR) on Twitter, boasting of a globetrotting career in finance, who has achieved some notoriety lamenting the state of Arsenal\u2019s finances.\u00a0 Seven or so months ago he published a series of tweets that were particularly scathing of Stan Kroenke, lambasting him for not investing his personal money in Arsenal. This \u00a0prompted me to write an article for \u00a0The Cable<\/a> expressing my disagreement with SR and his ilk who think Stan Kroenke is obliged to use his own money to make them feel good about the club they claim to support.<\/p>\n About two weeks ago SR was at it again. He published another thread of tweets claiming to analyze Arsenal\u2019s finances. It was doom laden and played very well with the perpetually unhappy segment of the Arsenal fan base, with Mainstream Media and, of course, with our rivals from opposing clubs. They loved every word he posted.<\/p>\n In my opinion, it was another dishonest assessment of Arsenal\u2019s finances and I called him out on Twitter. He didn\u2019t refute any of the points I raised. Instead he chose to block me and many others who were equally critical. It perfectly illustrates what is so fraudulent about this self-styled globe-trotting financial guru. \u00a0In a world where it is common to have analysts publicly advocate diametrically opposing opinions about a set of financials, SR is proud to boast that he is \u201cMr Blocky\u201d.\u00a0 Is there anything more unprofessional?<\/p>\n Financial Analysis Is Not Binary<\/strong><\/p>\n Many with a passing interest in finance might be tempted to think that financial analysis is a binary issue. For example, numbers are either up or down, good or bad. That is definitely not true and it is the reason why a business will announce positive results and Stock Market traders will mark the share price of that business down or vice versa. While financial ratios are quantitative and can either be up, down or flat; the analysis of those ratios is qualitative and the underlying issue can be interpreted in more ways than one.<\/p>\n To serve whatever agenda he has, SR is effectively putting a negative spin on the \u00a0\u00a0\u201cplain as daylight\u201d numbers from Arsenal\u2019s financial statement as of May 31, 2018. Those statements are a matter of public record and I have posted the links at the end of the article. By the way, SR’s analysis can be put together by an intern using freely available online tools like https:\/\/www.readyratios.com\/features\/<\/a><\/p>\n Below I provide an alternate interpretation to SR\u2019s doom and gloom.<\/p>\n Still\u00a0 generating profits<\/strong><\/p>\n Arsenal made a profit before tax of \u00a370.2m and a profit after tax of \u00a356.5m. The club paid Her Majesty Government corporation tax of \u00a313.6m on its profit.\u00a0\u00a0Only a loser will see these figures and believe there is something wrong with it.<\/p>\n Looking at the 2018 Money League, it is striking to see that #AFC<\/a><\/em> had the worst revenue performance of all the clubs in the Top 20, falling by \u00a330m compared to the previous year. In stark contrast, there was strong YoY growth at #LFC<\/a><\/em> \u00a391m, #CFC<\/a><\/em> \u00a380m, #THFC<\/a><\/em> \u00a374m and #MCFC<\/a><\/em> \u00a350m.<\/em><\/p><\/blockquote>\n How can you compare Arsenal\u2019s profits as a Champion League playing side with Arsenal in the Europa League? How can you compare Liverpool and Tottenham\u2019s windfall from playing in the Champions League with Arsenal\u2019s financial returns from the lesser European competition? These are the same people who were tired of the Wenger\u2019s routine qualification for Champions League. They claimed it was boring and longed to be out of it for a few seasons. In Wenger\u2019s last two years they got their wish and Arsenal failed to qualify but the financials now show inferior profits to our rivals. How dare SR and his ilk now complain about the consequences of their own stupidity?<\/p>\n Cash machine<\/strong><\/p>\n Arsenal\u2019s cash in the bank\u00a0increased by \u00a351m to \u00a3231m. There is no sane person who should see this as a sign of doom or gloom under any circumstances. Liverpool\u2019s cash position for the same period was \u00a310m. Tottenham Hotspur\u2019s cash decreased by over \u00a3100m in the same period. Yet Swiss Ramble is busy trumpeting both clubs as having better finances than Arsenal. Feel free to review both Liverpool and Tottenham\u2019s finances using the links at the end of the article.<\/p>\n Rising Net Worth<\/strong><\/p>\n Furthermore, if you are inclined to focus on the accounting net worth or value of Arsenal as measured by what is referred to as Shareholders\u2019 funds, this increased by \u00a356m from the previous year. If you are Mr. Kroenke will you be complaining about Arsenal\u2019s finances the way SR is bleating about it?<\/p>\n When Kroenke first bought his shares in 2007, the club was worth between \u00a3512m (Usmanov price of \u00a375m for 14.65%) and \u00a3650m (Kroenke price of \u00a365m for 9.9% + 50% of Arsenal Broadband); now the club is worth \u00a31.8b. No wonder Stan has coughed out \u00a3560m to buy out Alisher Usmanov. While SR thinks Arsenal is going down the pan, Kroenke is going-in all the way. There is a reason why Stan is the billionaire versus SR being on Twitter analyzing numbers.<\/p>\n SR\u2019s negative opinion illustrates my point that very often in finance different analysts often have diametrically opposite interpretations of the same numbers. Stan, his advisers and bankers clearly didn\u2019t rely on SR\u2019s years of negative analysis \u00a0before deciding to spunk down half a billion pounds to become 100% of owner of the club.<\/p>\n Operating Loss<\/strong><\/p>\n SR has predicted a massive loss for Arsenal in the 2018\/19 year.<\/p>\n In fact, given that there were no major player sales in 2018\/19 (only Perez, Campbell and Akpom), it is highly likely that #AFC<\/a><\/em> will report a large loss before tax for last season \u2013 the first time the club will have slipped into the red since 2002.<\/em><\/p><\/blockquote>\n I am willing to donate \u00a3100 to his favorite charity if Arsenal posts anything close to a significant loss. In return I challenge him to donate \u00a3100 pounds to a charity of my choosing should he be wrong . Seeing as he is the expert, he should be willing to accept this challenge.<\/p>\n In flogging Arsenal\u2019s \u00a342m operating loss to death SR identified the negatives but failed to counterbalance them with the positives. He went all out about the club being unlikely to replicate the player sales from the 2017\/18 year and the fact the club no longer had a big property portfolio. What he failed to tell his gullible readers was that the exceptional player sales in 2017\/18 had a cost of \u00a319m and the property sales also had a cost of \u00a39m. If we do not have a big property portfolio to sell or loads of players to sell, we won\u2019t have these huge costs of c\u00a328m resulting in the operational loss. In addition, the club paid a one-off sum of \u00a317m to the departing coaching staff. As we all know, no coaching staff was fired in 2018\/19 so this figure will not recur. Also this season, we progressed to the final of the Europa League. By my calculation and looking at the additional payment Marseille earned from doing a similar thing last season, Arsenal will gain an extra \u00a35m for getting to the final. All of a sudden, \u00a342m operational loss is now \u00a38m operational profit.<\/p>\n Despite the noise made about the inability of the club to replicate\u00a0\u00a3120m of player sales in subsequent years, for Arsenal to progress financially it does not need similar levels of player trading. Those particular sales only served to increase overall profit after tax by \u00a321m. With Europa League final appearance, that \u00a321m gap has been partially plugged. Also the Visit Rwanda \u00a310m per annum deal started in the 2018 \/19 season. Other deals that have started in 2018\/19 are Skol Brewery, Banque Du Caire, Zoom Video Communications, VBET, Aconis and upgraded the partnership with Konami.<\/p>\n #AFC<\/a><\/em> commercial revenue has barely grown at all in the last 3 years, up by just \u00a34m since 2015. In the same period, growth at the other Big Six clubs ranges from \u00a338m to \u00a379m. North London neighbours #THFC<\/a><\/em> have more or less closed the gap to Arsenal.<\/em><\/p><\/blockquote>\n Isn\u2019t it amazing that Arsenal\u2019s woeful commercial department have signed up these many deals in the space of 12 months. Yet SR claims the club is going backwards commercially.\u00a0\u00a0This is the same commercial team who have negotiated a massive shirt deal with Adidas that is worth twice that of Spurs & almost 250% Liverpool’s current deal.<\/p>\n Matchday Income\u00a0<\/strong><\/p>\n SR also came after the club on the issue of reduced growth in match day income over the years.<\/p>\n The move to the Emirates Stadium increased #AFC<\/a><\/em> match day revenue to around \u00a3100m, but there has been little growth since then (good news, as no ticket price increases), while other clubs have been growing this revenue stream through stadium moves or expansion.<\/em><\/p>\n This means that #AFC<\/a><\/em> still enjoy an advantage over their rivals in terms of match day revenue, but this has been steadily eroded, so the difference is now much smaller, especially #LFC<\/a><\/em> \u00a352m to \u00a318m and #THFC<\/a><\/em> \u00a350m to \u00a328m. New club seats will bring in an additional few million<\/em>.<\/p><\/blockquote>\n By my estimation, Arsenal played 38 Premier League matches and 28 other matches (cup competitions and friendlies) making a total of 66 matches. The \u00a31m reduction works out at \u00a315k per match. Why the reduction? Because Arsenal helped its fans watch League Cup competitions for \u00a310, Europa for \u00a315 and FA Cup for less than \u00a320. Additionally they have capped Premier League away matches at \u00a326 by giving Arsenal fans a \u00a34 discount. If the club scrapped this discount, it will immediately make an additional \u00a3216k pa. If the club charged 50% more on League Cup tickets like one of its London rivals or charged 33% more for Europa League matches, we will not be talking about a reduction in match day earnings. This is despite the fact that 2017 \/ 18 was Arsenal\u2019s worst season in recent times.\u00a0\u00a0How can a rational person who claims to have had a globe-trotting finance career think that the club freezing ticket prices for its loyal fans is a bad thing?<\/p>\n In comparing AFC to other clubs, SR is comparing Arsenal match day income on a near static stadium capacity, with prices unchanged for a number of seasons, versus \u00a0clubs who have been dashed a near 100% increase in their capacity (Tottenham at Wembley), a club that has increased its capacity by almost 20% by adding a brand new stand (Liverpool) and a club who has started from a ridiculously low base (City). United has regressed, Chelsea are static and are significantly below Arsenal but guess what, your favorite globe-trotting blogger didn\u2019t tell you that did he?<\/p>\n Conclusion<\/strong><\/p>\n It is self evident that \u00a0Swiss Ramble, despite his claim to objectivity, is just like many mindless Arsenal fans of recent years; in pursuing their anti-Wenger agenda they are getting exactly what they wished for. He did not see consistent Top-4 qualification as a good thing and now, all of a sudden, can\u2019t make the connection between a fairly unspectacular set of financial results and the failure to make Champions League over the past three years. He dumped on the club for his own gain and it\u2019s boomeranged. Now he is trying to wriggle his way out of it by blaming Ivan, Stan, whoever is convenient, never taking responsibility for his own bias and faulty analysis.<\/p>\n He just provided us another example of how to lie with (financial) statistics while hiding from criticism using the block button on Twitter. But according to the old saying you can run but you can’t hide.<\/p>\n Links:<\/strong><\/p>\n https:\/\/www.arsenal.com\/sites\/default\/files\/documents\/Arsenal%20Holdings%20Limited%20-%20Group%20Annual%20Report%20ye%2031-5-18%20final.pdf<\/a><\/p>\n https:\/\/www.tottenhamhotspur.com\/media\/16757\/tottenham-hotspur-limited-30-6-18.pdf<\/a><\/p>\n