Ivan Gazidis answers questions from the Arsenal Supporters’ Trust
An account of the Q&A session held in the club’s media centre on Monday evening
By Ian Henry
Ivan Gazidis is an impressive man. He held court for just over an hour with AST members on Monday night. He answered all the questions with a rare candour; I don’t think he ducked any questions, he tried to be as detailed as he could in his answers with giving out “trade secrets” (he wouldn’t tell us what the transfer budget was!) and he did with a frankness and honesty that was, at times, disarming.
Gazidis: Impressive, frank, honest
I didn’t necessarily like everything he said (like many I would have liked to have heard firm commitments about new players, but being honest and realistic, that was never going to happen), but it is clear that we have a man in charge of the club’s operations who thinks strategically. He understands what is and will be required for the club to succeed in the current economic climate and the changing business space in which the club operates. Some background first: he is a South African by birth (he noted that some people think he is American), the son of a former member of the African National Congress whose family was sent into exile. This followed his father having been imprisoned in the old apartheid South Africa. His family settled in Edinburgh, and lived in various places around the UK, including Portsmouth, which where Ivan attended his first game, aged 5. He is a lawyer who, after working in the City of London, was offered the chance to help set up Major League Soccer (MLS) in the USA. He started work on the MLS before the USA ’94 World Cup. He and his colleagues drew up the blueprint for an all-new league based on what he referred to as the “Single Entity Model”. This approach is very different to what we know in England; in the MLS, it is the league itself which signs all the players (the MLS is the Single Entity) and teams then choose their players in something akin to a draft. Moreover, there is a salary cap, so no one team can simply outbid the others for the best players. In theory at least this means all teams are equal, irrespective of their location and underlying market, ie potential support. Within this structure, Gazidis explained how he was responsible for all player negotiations and acquisitions. He said the league brought in around 70 international players, especially from South America, a year, as well as negotiating domestic player contracts. As a result he claims to be the person who has handled more transfers than anyone else in the football world. He told of how he conducted telephone negotiations with one Colombian agent who was based in a jail cell. Gazidis was keen to emphasise the robustness of the business model underpinning the MLS, noting how the last two franchises have recently been sold, each for around US$40m. The impression gained from this statement, and from others to do with the role of “cap-ologists” and specialists from other business disciplines in US soccer and sports in general, is that Gazidis will be bring in a great deal of modern management practice and new business discipline to the running of Arsenal. He will also bring the long view to the running of Arsenal, more of which below. He went to say he had been happy in New York running the MLS; but in October last year the chance to run Arsenal came out of the blue, adding that taking over at Arsenal was much more of an emotional decision than a strictly rational one. He claims to have been a major fan of the way Arsenal play from long before his arrival (the over 30s team he played for in Connecticut even played in pirated Arsenal strips!) – clearly Arsene Wenger had made a major impact on Ivan Gazidis from afar. He added that Barcelona was the only other club which played football in the way Arsenal did (and was, I think, the only other club he would have joined). It was the chance to run a club with timeless historic values, but values which he believes have a long-term future relevance and that plays some of the most technical football which convinced him to leave America and come to North London. All in all, I think he started well in his introduction, seeking to demonstrate his commitment and love for the club. He had a reputation of being fan-friendly – he lived up to that one. He was especially keen to emphasise his empathy with and understanding of the fans’ position. I had also been told he was a straight talker – on most issues, I felt he lived up to this reputation as well. On more than one occasion in his talk he said that fourth place and two semi-final places were not good enough. And moreover, he would ensure that everything he worked on from an organisational basis would be orientated toward with helping the first team improve. The introduction over, the floor was opened for questions. Question 1, from our own editor, focused on trying to get a statement on whether it was Wenger or the board who were vetoing large expenditure on players, or whether in fact the club had no money. Not surprisingly, Gazidis didn’t answer this question explicitly, instead insisting how Wenger knows what is available and works within this budget. Because, the board and Wenger are at one with regard to the strategy being followed by the club, namely the self sustaining model, there was no conflict. Arsenal was or is different to other clubs in that it doesn’t go into debt to fund player purchases and doesn’t have a rich “sugar daddy” like Chelsea or Manchester City. At other points he referred to the financial leveraging which has been applied to Manchester United and Liverpool. Clearly, Ivan Gazidis does not believe these models will last forever. Gazidis went on to explain his view that at most clubs, managers tried to position themselves as fighting for more funds to buy players while the board tried to position themselves as being the ones providing the funds; the situation at Arsenal was different. The board and manager are as one, so there is no contradiction. The manager doesn’t ask the board for more money because he knows what there is and is happy to work within these constraints, although the constraints were not specified. We were not told how much money would be available in the summer (hardly surprising really), but Gazidis did seem to imply that players would be bought in the transfer window. At one point later, he spoke of his plans to apply his laser focus on the performance of the team. He went on to say that we, as fans, had a fairly fundamental decision to make, namely do we accept the Arsenal self-sustaining model? Assuming we did, then the next issue was for the board and manager to spend the available money efficiently. In practice, however, we – the fans – don’t really have to make any decision as such. We have to accept the strategy embarked on by the board. We know that Arsenal will operate according to this self-sustaining model (we can assume therefore that the “offer” from Alisher Usmanov to pay off some of the club’s debt to free up money for player purchases will be rejected). In practice, the message was – “we have a budget, I won’t say what it is, but you can be sure that I will be looking at how this budget is used and I will look for any opportunity to improve the efficiency with regard as to how we spend it.” The issue of efficiency of spending will be covered below. Question 2 raised the issue that given our wage bill is now 50% higher than it was five years ago, was the club getting value for money? In his first disarming reply, Gazidis admitted that he didn’t know. I suspect the real answer is that he doesn’t think Arsenal has been as efficient as he would like. He used this question as the chance to talk about “cap-ologists”, specialist analysts who are employed by NFL teams in the US to look at whether they are maximising the effectiveness of their salary budget which is capped. Clearly he sees Arsenal’s strict budgeting as akin to having its own salary cap and therefore suitable for applying the science of “cap-ology”. It will take sometime for us to see what this really means in practice, but I think we can expect to see Arsenal increasingly run as a serious business. Later on Gazidis talked about learning from the insurance industry regarding how it manages risk – all player contracts carry risk seemed to be his message. I infer that he clearly sees a number of the contracts at Arsenal as risky; I wonder what this means for Rosicky (injured for a year), Adebayor (on a huge contract, but clearly less than committed – my words not Ivan’s) and others. It’s not clear how future contract management will change, but change it will. To me, the most interesting aspect of his talk was the number of times when he made it clear that strategic business management techniques would be applied to Arsenal and a modern, efficient business organisation would be put in place. As much as he was keen to praise the success of the board in having made the transition to the new stadium, there was plenty for Arsenal to do. And Ivan Gazidis was going to do it. To start with, three new senior positions would be filled. Gazidis explained the roles in response to a question from yours truly: • Arsenal doesn’t have an in-house lawyer; as a result, all its legal work is done by Slaughter & May, a top City firm; undoubtedly this meant the club receives a gold-plated service, but the club pays royally for it. Gazidis likened it to using a Rolls-Royce to do the shopping. Clearly appointing an in-house lawyer is an example of Gazidis’ drive for efficiency in action. • Similarly, and this was something which clearly surprised Gazidis, Arsenal – a company with 400+ employees – does not have a Human Resources director. He clearly sees this as a serious issue; whether the appointment of an HR specialist will have much impact on the playing side of things is another matter – but perhaps an HR director will mean job definitions and expectations for the customer-facing employees (box office, Club Level in general and others) will be improved and we will see an improvement in these areas. • And thirdly, Gazidis is looking for “very smart” people capable of strategic thought; at first I thought he wanted one person, but I wouldn’t be surprised to see more than one arrival here. He wants to develop a comprehensive, long-term strategic business plan developed for Arsenal. He claimed that few clubs have this, but wants Arsenal to be a trail-blazer here. In some ways it is surprising that football clubs have grown to be such large entities without strategic plans in place – Gazidis wasn’t sure he had all the answers yet, which is why he was still in listening and learning mode and why he wanted some “smart people” alongside him; of course we could take this to be an implicit criticism of the quality of the people in the club, but perhaps that is unfair. Clearly he wants to take the club forward in a different way (we have to assume the directors want this too!) and he will bring in people from outside football to help him to do this. It was interesting that at this point he emphasised that one of the roles of the strategic planner would be to look at the how the player pool was managed. This could be interesting! Gazidis went on to praise the way in which the club had made the move to the new stadium, making it clear that – having seen a number of MLS clubs move to their own purpose-built stadia and the amount of work this involved – he saw the club’s success in having done this as a major credit. At the same time, he emphasised that this had meant that a great deal of the club’s efforts in recent years had been on the short term; there had been a corresponding lack of long term focus. This would clearly change. Other specific topics which were raised included: • Was there pressure on Wenger to buy more players? Here the answer was interesting as we got confirmation that Gazidis is clearly behind the strategy of Arsene Wenger. For Gazidis, THE most important decision for the club was the choice of manager of the first team; having made that decision, the club had to let the manager manage, choose who he wanted in his support team and which players he wanted to buy and sell. Imposing an assistant on the manager or buying players for the manager without him asking for them wouldn’t work. Moreover, we could infer that this won’t happen at Arsenal. The board won’t impose a new no.2. to work alongside Wenger; and there were already plenty of people within the club who (constructively) questioned Arsene’s methods and decisions. Moreover, we were told, Arsene Wenger was someone very open to new ideas. Hearing this, I wondered how far the degree of open-ness in this area will be apparent in the coming months. • Would the club welcome investment from fans in a kind of “charitable donation”? Yes, in theory, but Gazidis doubted how much money would be raised in such a way, although he did not expound on why he believed this be the case. • Why are Arsenal’s shares traded so heavily and why do people want to be large shareholders when there is no dividend paid? Here Gazidis was keen to emphasise that there were no plans to pay dividends and he did not believe the major shareholders were expecting this to change. He pointed out how in the NFL that it was, effectively, impossible to lose money (because of the salary cap essentially) and therefore owners could both take dividends and see capital growth in the value of the clubs they owned when they came to sell. The situation was, in general, different here in England, and the inference was that Gazidis hadn’t fully understood the different motivations for club owners. • Did he support the Arsenal Supporters’ Trust plans to launch a share-save scheme? He wasn’t against it, the club wasn’t against it, there were some complex legal issues, but it’s nothing that the club would resist. So, for those of who would like to own our little bit of Arsenal, let us hope something happens soon. • UEFA’s proposals re club finances; Gazidis said he had just been appointed to a UEFA task force on this; he wasn’t really sure that it was up to UEFA to pronounce on financial regulation of clubs, believing this should be a matter for individual countries. Interestingly he told us that only in Sweden and Germany did the clubs, collectively, in the leading league in those countries, actually make money. In all other countries, they lost money. On more than one occasion, he made the observation that if something doesn’t seem as though it can continue forever, then it won’t. Again, the inference was clear – clubs who don’t have a self-sustaining model will not be able to continue to be loss-making, and those who continue to spend in excess of their revenues will not be able to do so. At some point, the chickens will come home to roost. Arsenal will not, however, expose themselves to such risk. • What was happening re Club Level and Box renewals? Here we were told that there would be some churn, but so far renewals were in line with expectations. I can’t speak for the boxes, but my contacts in Club Level had only just received their renewal requests in recent days, so I do wonder what the real renewal rates have been. Gazidis however was keen to emphasise that there were still waiting lists for both Club Level and Boxes, so he expressed confidence that these areas of the stadium would continue to be full. • How are Highbury Square sales going? Apparently they are holding up, although some buyers were having challenges with there mortgages; the club was renegotiating some of finance here and the club remains confident of making a profit. But Gazidis wasn’t sure when this would be made and how large it would be. Similarly re Queensland Road, he said things were progressing but wasn’t especially loquacious here: in fact he made one of his more telling observations, i.e. that he wasn’t in the property development business and would rather be focused entirely on the football business. • What was the club’s international strategy? Interestingly here Gazidis was keen to differentiate Arsenal from other clubs; he doubted other clubs really had an international strategy and said that an international strategy amounted to a lot more than just playing a few games in another continent or opening an academy in another country. It needed planning. Most clubs were, in his words, “throwing spaghetti against a wall and seeing if it stuck.” Arsenal needed to take a step back and think strategically. This was one area where I was especially pleased by his response. Having seen the ill-fated and unplanned international expansion plans by companies in the automotive industry where I have worked for over 20 years, I know how a lack of strategic thinking can be hugely costly. He repeated how the majority of the club’s turnover derives from Premier League and Champions League football; for which I read a coded message to the fans and, possibly, Arsene Wenger himself – we must do everything to ensure we win our qualifying game in the CL next August. Of course Arsene knows this, but I couldn’t help but wonder if Gazidis will be placing just a little more pressure on Arsene to make sure he has the right players available to get the win we need in August. A global business plan would follow, but Gazidis would be applying his “laser sharp focus to the performance of the team”. Interesting. • Gazidis was reminded that he had said 4th place was not acceptable, or similar words – did he stand by that statement? Yes he did; no one at the club was happy at only finishing 4th and only getting to two semi finals. The right answer, but will the team be strengthened sufficiently to see an improvement? The evening didn’t really help us answer that one. • Will UEFA’s “6+5” rule come into play? Gazidis didn’t think so, as he thought it was illegal. • Will the youngsters stay if we don’t win things? Gazidis said he hadn’t heard many young players saying they wanted to leave. I suppose that is not surprising, given some of the wages some of our least impressive players are rumoured to be on. He also commented on some other press stories which were no more than myths, dismissing the following – Lady Nina opposed his appointment? No she didn’t. He was Stan Kroenke’s appointee? No he wasn’t and indeed he specifically didn’t want Kroenke to know of the board’s having offered him the job. Arsene Wenger is a stubborn man who was not open to new ideas? Certainly not. I was happy to accept his word on the first two, but the third? Well I hope Ivan is right because the evidence, so far, points the other way. I would be delighted to be proved wrong. • And finally what did he think of the Arsenal Ladies team and of women’s football in general? He was fulsome in his praise for Vic Akers and the women’s team. He said there would be some permanent recognition of Vic’s long record of success here. Coming from the US, he was amazed at the lack of appreciation of the quality and entertainment value of the women’s game here. He was really shocked at the absence of senior FA people at the women’s FA Cup Final. So am I, a gross dereliction of duty if that is true. Seriously. And then he finished with an interesting personal observation. He said he didn’t have daughters (both his boys were, he said, big Arsenal fans), but if he did, he would be delighted for them to involved in football and to have the chance to achieve self-worth and develop their confidence in areas unconnected with boys and fashion. Well said. The Arsenal Supporters’ Trust was formed to represent the views of small shareholders and non-shareholding fans to the club’s board on issues of ownership and governance. If you want to find out more visit the Trust website or look at their Wikipedia entry. For details of how to join the Trust and attend events like the Q&A session with Ivan Gazidis, click here.
GOT A COMMENT OR OPINION ON THIS ARTICLE? DISCUSS IT FURTHER HERE
Posted 14th May 2009
|
.jpg)
