It is not just on the pitch that Arsenal Football Club is the envy of its rivals. Top of the Premiership and playing the sort of attacking football that beleaguered London rivals Chelsea can only dream of, Arsenal is now the country’s richest club, having last week reported a turnover of £200.8m for the year to May 31 – up 46% on the previous 12 months.
The results were Arsenal’s first since moving from Highbury to the 60,000-seater Emirates Stadium and came just as Roman Abramovich-owned Chelsea sacked its charismatic manager, Jose Mourinho. By contrast, Arsenal boss Arsene Wenger has been in charge for 11 years and has just signed a contract that will keep him at the club until at least 2011.
Arsenal is also the only one of the so-called Big Four clubs – the others being Manchester United, Chelsea and Liverpool – not under foreign ownership. Despite mounting takeover speculation after a sizeable investment by Russian billionaire Alisher Usmanov, its board has vowed not to sell.
But while that stability appears to be paying dividends on the pitch, it is the move to the new stadium that has been the biggest driver of commercial growth. Highbury had 48 boxes and 400 corporate seats but the Emirates Stadium has 150 boxes and a massive 6,700 seats for corporate guests. That, as well as the increased capacity, has boosted matchday income from £750,000 to £3m a game.
The North London club had been languishing behind Manchester United, the biggest club in the UK for many years, until it moved to its new home. Its North-west rival has long had the biggest club stadium in the country in Old Trafford, which now boasts a capacity of more than 76,000.
Tim Crow, chief executive of specialist marketing consultancy Karen Earl, says the deal with Emirates helped close the gap. “The bottom line is that revenues are up because of the branding on shirts and the stadium,” he adds.
However, some observers question whether the deal will be so good in the long term. They believe Emirates got a bargain because of the length of the partnership and that, commercially, Arsenal will be left trailing behind its rivals, who will be able to negotiate more lucrative sponsorship deals. Global head of football at Octagon, Phil Carling – a former Arsenal marketing director – says: “For three or four years it looks like a great deal for Arsenal. In eight years’ time it will look like a great deal for Emirates.”
Arsenal commercial director Adrian Ford points out that the deal allowed the club to move to the new stadium. He admits there is a danger that long-term deals will seem like poor value further down the line but argues that the stadium would not have been built without Emirates’ cash.
One sponsorship industry source says the long-term nature of the deal has effectively taken Arsenal off the sponsorship market.
Ford acknowledges that revenue in future years is unlikely to increase as sharply, although next year will see a boost thanks to a £50m share of the UEFA TV rights.
Revenue is generated from three main sources: matchday takings; TV; and sponsorship, licensing and merchandising. Carling says ideally they should contribute about a third each and that Arsenal is close to replicating that model.
Sports marketing expert Dr Simon Chadwick, a management lecturer at Birkbeck, University of London, says the club was very aware of having a “boring Arsenal tag” and that the Emirates deal allowed it to refresh its brand.
That process began four years ago with the redesign of its logo.
Ford says growth areas to target include conferencing and banqueting, and selling merchandise wholesale. The launch of Arsenal TV (MW August 9) is another area of focus and one that will be profitable from the start, thanks to a deal with broadcaster Setanta.
“One way of growing is by winning more stuff,” adds Crow. Winning the Champions League, for example, could make the club up to £20m and attract a new generation of fans.
Developing the Arsenal brand abroad will also be important to any expansion strategy. Crow adds: “One of the challenges they face is growing the brand internationally. When you look at Manchester United, Liverpool and, to a certain extent Chelsea, they have huge fan bases overseas from doing tours in the 1960s, 1970s and 1980s.”
Wenger has generally resisted lucrative overseas tours, leaving the club’s global reputation limited compared with some of its Premiership rivals. Instead, Arsenal has developed a strategy of developing the brand overseas through grassroots football and soccer schools. Ford says Arsenal will also be announcing a new Web and publishing deal in China later this month.
Carling believes it is dangerous to underestimate Arsenal’s approach. “They speak softly and carry a big stick,” he says, “whereas with Manchester United and Chelsea, there’s a lot of talk about the development of remote fan bases.”
Chadwick thinks the club needs to win the Champions League to build overseas support and to make it a truly international brand. He adds that if its aspirations are truly global, it needs more players with global profiles. Research has shown that Chinese fans like watching Chinese players – a trait shared by many Asian nations.
Real Madrid, which has a number of South American players, has built up its fan base in Latin America and become very popular there. Experts also note that Arsenal, unlike Chelsea, has a strong heritage that it can use to build its brand.
The Emirates deal has gone a long way to winning Arsenal a place at world football’s top table, but there is still work to be done. Chadwick says: “It’s a traditional club in a modern setting, and increasingly it is at a crossroads.”
Arsenal Football Club
- Arsenal has reported that income for 2006/07 was up 46% to £200.8m, taking it closer to Real Madrid’s turnover of £202m for 2005/06
- Figures from sports marketing analysts Sport+Markt show the popularity of Arsenal among 15- to 69-year-olds in Britain grew from 8% in June 2004 to 14% in June 2006, second only to Manchester United
- Last week, Russian billionaire Alisher Usmanov increased his stake in the club to 23% at a cost of £6m. He has said he wants to own at least 25% of Arsenal
- Arsene Wenger has extended his contract to 2011 making him the longest-serving manager in Arsenal’s history.