The era of bad deals is over as the club decide to go it alone by appointing another senior executive.
Information has been made available to me that in 18 months time, the commercial revenue stream will be massively improved due to the expiry of an awful business deal at the club. It is especially shocking when it is considered that in the past ten years, the club has brokered deals capable of making the club one of the richest (based on income), in world football – if not the richest.
This deal is believed to have been originally brokered by former managing director Keith Edelman, the man who agreed the deal to sell 10.05% of the club to Grenada Media and secured a groundbreaking sponsorship deal with Emirates Airlines to enable the club to move forward with the plans to build the new stadium, hence why its called ‘the Emirates’.
However, for all the brilliance of getting that deal together – which at the time was extraordinarily rare in football business – he also agreed some years later to effectively outsource one of the main commercial revenue streams, retail. Limiting the profit drastically.
Retail basically covers anything with an Arsenal emblem on it, replica shirts, branded clothing, scarfs etc.
The club gave over the rights to each and every one of their stores (including the Armoury), to George Davies, a retail mogul. Due to this they do not earn 100% profit on all the sales in these stores, in fact they earn a very small amount, but they are tied to this deal for another 18 months, after that a new retail director will take over the reigns and if everything goes to plan, significantly increase the revenue from that particular strand of the commercial business at the club.
George Davies founded a sports retail business in 1995, named S’porter Retail, it is currently unclear whether it is under the name of this company he runs the Arsenal retail stores.
The retail director, I can reveal, has already been appointed and will take over as the current deal with George Davies finishes. Plans are already being drawn up to carry everything forward and make the most of this revenue stream. Three more senior directors will follow suit to take over the head of marketing role, the head of global partnership development and a new business development analyst will also be appointed, these roles have been created by Ivan Gazidis and new-ish chief commercial officer, Tom Fox. This was confirmed in a statement released by the club earlier this year when Angus Kinnear was promoted.
The way the arrangement currently works is that the George Davies owned company buys and sources the products and then pays Arsenal a percentage after. The club have been missing out on millions, enough to have brought Mark Schwarzer many times over!
This graphic from the brilliant Swiss Ramble website, shows just how much Arsenal lack on the commercial front:
Given that much of Arsenal’s future income is planned to come through commercial revenue, the expiry of the Edelman deal and appointment of a new retail director is big news. He, along with Tom Tox and Ivan Gazidis will oversee the growth in what is really the clubs future profit, the money that – providing we are not taken over – will fund transfers, wages and overall development of the club and stadia.
Just last week the club announced stunning financial results and despite the record profit, the future of the club is still a work in progress and it just goes to show how much work is going on behind the scenes to secure the club for the future generations of Arsenal fans.
The club still are looking to expand their commercial revenue stateside (nudge nudge, Walmart), and hit the Asian market where Man United have been so successful in recent years – could this also be why Arsenal looked at Keisuke Honda so closely in the past?
For any readers of this that may doubt the importance of this appointment in the grand scheme of things, look at this: Real Madrid managed to effectively pay off the £80 million fee they paid Man United for Cristiano Ronaldo in his first season through shirt and memorabilia sales – that is how powerful that side of football business is and how it can influence player purchases and wages.
With the financial mess many clubs find themselves in right now, Arsenal really are an oasis of hope in a landscape that looks all too gloomy.
Things look very bright indeed for the future, a trophy now would do nicely though.
Update. Nick Peel has been revealed to be the new retail director. This story has made the Guardian’s Digger column.