Gazidis Q&A – Emirates, Nike, signings, salaries and silverware

As has been well documented, Arsenal signed a new deal with Emirates this afternoon which will see the club earn £150 million over the next five years. Free money you say? Lovely.

Well not quite, in return our players will continue to wear Emirates on their match shirts and training gear and, being gentlemen, we’ve also thrown in an extension to the naming rights of the stadium which will continue to be known as the Emirates until 2028.

Arseblog News was lucky enough to be present at this afternoon’s press conference ‘unveiling’ and also the question and answer session with CEO Ivan Gazidis, CCO Tom Fox and Emirates Senior Vice President Boutros Boutros which followed. This is a transcript of what was said in the latter.

It’s long. You’ve been warned…

(Apologies to the members of the press who were present, it was tough to distinguish who asked what questions while doing the write-up so I’ve not personally attributed questions)

Boutros, did the fact that Emirates already own the Stadium naming rights give you the upper hand in negotiations?

Boutros Boutros [BB]: When you commit, you commit to a club. For Emirates, like with everything else, it was a case of, ‘do we move to another club or not?’ For us loyalty is important; loyalty to our customers and loyalty to our club. We knew we could renew or not renew, it wasn’t a case of playing hard with the club because we knew it would be difficult to change the name [of the stadium]. When we [Arsenal] moved from Highbury we were warned and told ‘people will not forgive you, everybody knows it as Highbury.’ But the public and the fans they realise that the money we put in helped Arsenal finish the new stadium on time and to bring the revenues up. We witnessed in Australia other properties have changed name and the press gets used to it quickly. They do it so quickly between one brand and another; in England it’s different people, but I believe the colour of Emirates is red, the colour of Arsenal is red, the name of Emirates, the association by that time [2021]…you can’t split it. If it splits I’m sure Arsenal will find somebody else.

Arsenal have not been spending the money they earn, or so it appears. Do you want them to start buying and competing for the best players so they win a trophy in this stadium?

BB: We are good at managing an airline, we don’t manage clubs. We would love to see the club doing better of course and to continue doing better. Most important for us is to continue with the club. We commit to a club which we know in ten years time will be there [at the top]. Through the years Arsenal have proved and demonstrated that they are a strong player. They managed to maintain and expand their fan base and this is what is important for us. There is only one winner, only one can win, but you can always work hard to be in the top five and they’ve done that. I don’t see too many clubs playing 13, 14 years in the Champions League.

In that time there has been 30 major trophies Arsenal could have won…

BB: We would love to see them winning, but as I said we’re good at managing airlines, we can’t tell them how to run their club.

Is it frustrating that you don’t have a trophy to parade around your fleet of planes and around the Middle East?

BB: It’s not frustrating, but as I said we’d love to see them winning, just like the fans would. Do the fans switch to another club? No they don’t. At the end of the day, you either commit to the club or not. If you do that you have to accept the result. That’s sports.

Ivan, are you starting to think there’s a curse on this stadium given the trophy cabinet hasn’t seen any silverware since you built it?

Ivan Gazidis [IG]:  We could spend time revisiting that question again and again or again or we can look forward. We as a club always look forward. I think the stadium move has been an incredibly and I think we’re a different football club today than we would have been without that brave and bold move. I think the magnitude of this deal speaks to the direction that we’re heading. I’m looking forward with real confidence and optimism about what we’re able to achieve over the next five years. Absolutely it has to include winning trophies.

The deal is for £150 million, can you strip down the figures for us regarding the training kit and stadium naming rights?

IG: We haven’t separated it out in that way. It’s very difficult to place a value on the [stadium] naming rights for example. It’s not a substantial part of the deal. The deal is, in the same way as the last one was, for [Emirates to sponsor] the shirt front and training kit. I hope it’s obvious that that represents a great commitment from Emirates on their part.

You said earlier [in the press conference] you didn’t want to clutter up the training kit with sponsors which is different to Manchester United. You’ve set up your commercial strategy similar to them, and we’re told you’ve people looking for deals, but they’ve gone down that route with their training kit…

IG: I don’t think the fact we’ve developed our commercial capability means that we have the same approach and same strategy as Manchester United…and nor am I critical of their strategy and direction. We’ve set up a strategy which is right for us that we think delivers value to our partners. We’re a club who wants to have long-term partners that delivers value to our partners so that they feel confident and comfortable renewing with us. This deal is the biggest possible statement you could make. The commercial changes we’ve made within the club have enabled us to give real value to our strongest partners. The fact that Emirates, a company who knows us very well for many years, have renewed for another long term is a real statement about the type of relationships we want to develop…and not just with Emirates, but with our other partners as well.

How are you different to Manchester United?

IG: Our strategy is based around developing Arsenal’s name and brand around the world. We’re still in a growth phase; it’s very largely based in terms of outreach and not just with the first team tours. There’s a strong digital strategy, we have 60 million visitors to our website every year, 12 million followers on Facebook, 2 million followers on Twitter, 1 million on Weibo in China alone – this hasn’t just happened it has been the result of a lot of effort and purpose within the club and it’s the kind of base foundation which partners look for. I think the club is consistent in upholding its values of responsible management and also, although people talk of our deficiencies in terms of performance, it is remarkably consistent in performing on the pitch. Emirates, and indeed any partner, can work with us knowing we’ll be at the top of the game now or ten years from now and 20 years from now. That is very, very powerful because partners look for consistency and they want to know that the club that they are partnering with is going to represent them the way they want. I do not talk at all about Manchester United’s strategy, this is our strategy.

The figures are impressive, but how much longer can you afford to go without a trophy?

IG: We want to win a trophy every single year and we want to win a trophy this year. I can’t state an ambition more clearly than that. Clearly the landscape is challenging for us. We’ve chosen a path which is not easy and we get criticised for it, even though I think it’s a little unjust, but we’re not satisfied where we are and we’re trying to push forward. We’re doing that with a very well articulated strategy. I think everybody understands it, even if they don’t agree. The stategy is that we stand on our own two feet and the advantages of that are that we don’t have to rely on anybody for success. It means we can look forward and plan with confidence for the future. I can say with confidence to Boutros and any potential partner that we’ll be at the top of the game as we look forward. I don’t pretend that it’s not without challenges. Obviously we’re competing against clubs that seem to have unlimited budgets. I don’t think it would be a sensible strategy to try and outspend them so we’ve adopted a different path; one we’re walking with confidence because it appeals to very many people including our partners.

Ivan, there can’t be any guarantee that Arsenal are going to stay at the top?

IG: There are no guarantees in football. Nobody can state with confidence anything in football, but I do think we’re developing the right strategic plan for our club. Whether we can deliver on that is going to depend on how well we execute the plan.

Executing things on the pitch drives everything else surely?

IG: Absolutely, it’s a virtuous circle; that’s our model in a nutshell. It’s all about success on the pitch which drives commercial revenues and commercial revenues enhance our ability to reinvest on the pitch. Hopefully if we execute our [off-field] plans it drives success on the pitch. That’s the virtuous circle model we’re driving. As far as your focus on the fact we’ve not won trophies, and I don’t criticise you for that it’s justifiable because we want to win as well, it’s also true to say, as Boutros has emphasised a number of times, we have remained at the top of the game. We’ve just qualified for the thirteenth time in a row for the knockout stages of the Champions League. I’m not sure there’s any other team in Europe who’ve done that, there may be nobody.

There is. Real Madrid…

IG: That’s a tremendously consistent level of success. I don’t pretend I’m satisfied with that. I don’t think Arsene is and I don’t think our players are. We want to do better, of course we do. I also take issue with the characterisation that we’re struggling on the competitive side because we’re consistently at the top. If we want to get better it’s this type of relationship [with Emirates] that will help us push forward and give the fans what they want.

Do you feel under pressure to spend?

IG: There’s clearly pressure to spend. The bigger pressure is doing it in a way that pushes the club forward. It’s very easy to spend a lot of money and not get a lot of benefit from that on the pitch. We have a manager who I think has done an outstanding job through a difficult period over the last ten years. He’s done an outstanding job. He’s the person we rely on as to when and how we invest this money. He will do an outstanding job with that, I’ve absolutely no doubt.

Over the last few years there’s been a pattern of one or two top players leaving. Do you think with this extra money that will stop now? People are already looking at next summer and worrying about Walcott and Sagna and worried about it happening again. Can you stop that?

IG: I think each situation and each player’s situation is slightly different so it’s actually quite difficult to generalise. What I will say is it gives us more resources to make smart decisions. I don’t think that necessarily means that every single player ends up extending their deal. There are a variety of different reasons as to why players don’t do that and there are limits to what any club would or should be agreeing to in terms of renewal terms. That’s part of the negotiating process, there are many players, not just at Arsenal, who approach the end of their contracts. If you had no player approaching the end of their contract that essentially means you’re agreeing to all the terms that are put in front of you. That’s not prudent management if you have a limited budget. If you have an unlimited budget that’s fine. If you have a limited budget you actually have to make some hard decisions along the way. That’s challenging.

I think over time we’ve made good decisions, certainly not perfect decisions regarding our player pool, but very good decisions. The reason I say that is because if you step back and look at our performances against our overall transfer and wage spend in the last ten to fifteen years we’ve outperformed every single year. It’s possible to do it for a few years in a row and fall away because you put money into players that in the short-term give you performance but over the longer term will not. To be able to do it consistently over a long period of time is very challenging in a competitive market place and I think we’ve done a good job.

Do I think we’re perfect? Absolutely not, we’ve made lots of mistakes along the way. But overall we do an outstanding job and that’s largely credit to Arsene Wenger and his responsible management of the budget. I also would say that it’s down to the relationship we have with Arsene. Because we have a long-term relationship with Arsene it frees him to think about not just the short-term, but also the long-term health of the club. He always puts the club first. It’s not just about money, he’ll invest in young players. It’s an investment you pay for, but it’s an investment he’s made consistently over time. I question whether Jack Wilshere would be the player he is today if Arsene hadn’t invested in him, invested playing time in Jack. That’s also a kind of investment which isn’t just about money.You take a hit in the short term but over the longer term has proved to be very efficient for this club.

10 years ago this club was vying with Manchester United at the top of the game in England, but certainly wasn’t vying at the top of the game in Europe. I think the club and the board of directors, many of whom are still around, took an ambitious decision to build a new stadium. They executed that decision with excellence on budget and on time and here we are now. The major commercial deals helped us to build the stadium and are now coming towards their expiration and we’ll now see uplift in value and this tremendous investment from Emirates represents the final step in that move. While we haven’t achieved the success, in terms of trophies in the last few years, in the meantime the club is now ranked fifth or sixth in UEFA’s latest rankings. We’re moving forward, significantly, really dramatically and financially. That’s a very impressive step forward by the club and a lot of patience and a lot of strategic thought and discipline. We’ve been buffeted along the way and criticised along the way and we’ve held firm and stuck to our path. We’re looking forward with real optimism.

Ivan, you personally came under a lot of fire not only at the AGM but also from the travelling fans at Old Trafford. Do you feel this deal vindicates your strategy?

IG: I don’t think this deal is about me. We’ve got a fantastic team at this football club and we’ve a lot of people who work passionately for this club who care about this club as much as the fans. The fans don’t have a monopoly on caring about the club. The people who work here care about it and live and die by our results as much as they [the fans] do. I think this deal validates the strategy we’ve embarked on; to develop our internal capabilities. Partnerships like this don’t happen just because you want them to. You can’t just name your price, you have to deliver value and be able to prove it to partners. We’ve embarked on a path which is difficult to explain externally but which has really transformed our ability to deliver value to partners. The touring internationally, the stuff with IT, our CRM systems…I could go on and on about the capability transformations. A deal like this doesn’t just happen, it takes hard work.

But given that hard work, were you hurt by the personal criticism?

IG: I don’t take those criticisms personally, we know the path we’re on, we know what we’re trying to achieve and I’m convinced we’ll deliver.

What’s the latest with the Nike deal?

IG: We’ve had a really good relationship with Nike, the same as we’ve had with Emirates and it comes up [for renewal] in 2014. We’re in those discussions at the moment, but I won’t have anything to say on that until we have something to announce.

You mentioned Jack Wilshere earlier and investing in youth, but look at Cesc Fabregas, how can you nurture loyalty from the players?

IG: There are no guarantees in football, what we can do is develop a really solid financial platform for the club that gives us the ability to compete for top players, both those we want to bring in and those we want to keep. It has been challenging but we’re now coming towards the end of the stadium move and we’ll be able to be more financially competitive. That will enable us to push forward on the field. Nobody is satisfied with where we are, the whole purpose of all the things we have around us including this very stadium is to push us forward. We talk of the club’s values and one of the strong values, which goes back to the 1930s and even before then, is to look forward and not be satisfied standing still. I think we can compete for the best talent.

Can you pay bigger salaries?

IG: We can pay bigger salaries and I think we can invest more in transfer fees. How we make those decisions will be based on the decisions of a manager who over the years has been absolutely outstanding. There’s nobody I would want to be thinking about those decisions more than Arsene Wenger.

You mentioned in the press conference that some of the money would be front loaded. Can you tell us when and how much you’ll have to spend?

IG: We’ve got a lot of money coming in. I’m not sure…Tom [Fox] are we quantifying that?

Tom Fox: [shakes head no…not a big talker Tom]

IG: I don’t think we’re going to quantify that but you’ll see it ultimately in next year’s financial results. We do have cash coming in. Emirates were very good in the discussions about the deal. We wanted to be able to invest in the team a little bit more now so we’ll have that capability by the summer. As I said in the summer just passed, we’ve kept some powder dry so we’ve got the ability to invest if the manager finds the right opportunities in January.