Arsenal's Financial Performance
Arsenal’s Financial Performance
Abstract The football industry is a good study in the basics of finance. The economics of the football industry, and the financial statements of football clubs, are fairly simple. But football is a famously difficult business to make money in – the value is mostly captured by the employees. In 2000 Arsenal Football Club faced a strategic challenge. Its legendary Highbury Stadium was too small for one of the world's top 10 football clubs. But the cost of replacing it was potentially onerous and would leave Arsenal little to spend on players for a few seasons, posing an equal threat to Arsenal's survival. The case examines how this choice between people and infrastructure affected financial performance.
This case was prepared by Professor Chris Higson with assistance from Julie Conder. The case study was prepared in 2008 from publicly available information, and revised in 2009, as a basis for class discussion rather than to illustrate either the effective or ineffective handling of an administrative situation.
Copyright © 2009 London Business School. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without written permission of London Business School.
London Business School reference CS 08-009
Football's financial model In financial terms, a big football club is a straightforward business. You need a stadium in which to play, and a training ground. You need a squad of perhaps fifty players and a few hundred other people to coach and manage the team, care for the ground and run the business. Your revenue has three legs: matchday revenues, broadcasting revenues, and commercialization. ‘Matchday’ revenues, principally ticket sales and hospitality, are the traditional source of any sports club’s income. The big football clubs also now share in the proceeds from the global
Abstract The football industry is a good study in the basics of finance. The economics of the football industry, and the financial statements of football clubs, are fairly simple. But football is a famously difficult business to make money in – the value is mostly captured by the employees. In 2000 Arsenal Football Club faced a strategic challenge. Its legendary Highbury Stadium was too small for one of the world's top 10 football clubs. But the cost of replacing it was potentially onerous and would leave Arsenal little to spend on players for a few seasons, posing an equal threat to Arsenal's survival. The case examines how this choice between people and infrastructure affected financial performance.
This case was prepared by Professor Chris Higson with assistance from Julie Conder. The case study was prepared in 2008 from publicly available information, and revised in 2009, as a basis for class discussion rather than to illustrate either the effective or ineffective handling of an administrative situation.
Copyright © 2009 London Business School. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without written permission of London Business School.
London Business School reference CS 08-009
Football's financial model In financial terms, a big football club is a straightforward business. You need a stadium in which to play, and a training ground. You need a squad of perhaps fifty players and a few hundred other people to coach and manage the team, care for the ground and run the business. Your revenue has three legs: matchday revenues, broadcasting revenues, and commercialization. ‘Matchday’ revenues, principally ticket sales and hospitality, are the traditional source of any sports club’s income. The big football clubs also now share in the proceeds from the global