A Lack of Leadership in the Boardroom Audit Part 4

 Ahead of a heavy fixture schedule of crucial Premier League, FA Cup and European Champions League matches Arsenal were very short of competent defensive resources and results duly suffered after the 2013 transfer window closed.  Despite Champions League qualification being at risk, Mr Monreal was the only addition to the first team squad, on the last day (due to Mr Santos's lack of competences).  This repeated the events of January 2012 and January 2011 (which lead to the defeat by Birmingham City in the Carling Cup Final), as was noted in a previous audit.[39]

 Monsieur Wenger had decided that he already had sufficient quality to overhaul Tottenham and Everton. Despite results appearing to be to the contrary, he insisted, and it is worth repeating, “This squad is top, top level. We have to learn to trust these players again and to keep faith in them […] I think there is a lot to come out of this team”.  Monsieur Wenger was vindicated by the subsequent final 10 match run.  Similarly, ahead of the new season - and before having signed Mr Özil, – he reiterated his faith, “I believe my squad have a special bond and that they are on their way upwards, they are not over the hill, they will get better. I am confident we will be stronger next season.”  So far this season, the improvements and form of many individuals and the team as a whole have vindicated him again.[40] 

 Nevertheless, eighteen days before the summer transfer market ended, Monsieur Wenger admitted that added transfer competition had caused difficulties.

 We are not scared about spending the money but we want the right players. The transfer market is a worry nowadays and it has always been basically, with every transfer market you could write a book, and a very interesting one. So it is a worry, I don't deny that.  It is maybe more difficult nowadays because there are more quality spenders on the market, especially in France, they have come on the market as well and bought at a very high level, so it is difficult.[41]

 The failures in the summer transfer window to substantially strengthen a squad that Monsieur Wenger subsequently admitted was too small for the challenges ahead (not least the toughest Champions League qualifying group) repeated familiar failings.  Arsenal's strength of offensive midfield / wide player resources have enabled them to cope admirably with a remarkable series of injuries that would have challenged any club.  However, there are significant weaknesses elsewhere in the squad and there is  an absence of cover for three key players:  the physicality and leadership of Messrs Mertesacker and Flamini and the all-round skills of Mr Giroud in leading the line.

 For example, an excellent win 2 - 1 away at Marseille in the Champions League proper in September, registered an all-time Club record of ten straight away victories, dating back to the win at Bayern.  Mr Giroud had survived an injury scare and started – to the relief of Monsieur Wenger.  "He is the player at the moment that would be very difficult [to replace]".  Mr Giroud admitted his own concerns, “we have a quality squad but I’m a bit scared about the numbers we have in the squad. We will face problems because of the numbers in our squad but we’ll do everything we can to rival the big clubs.” 

 Thankfully, for Arsenal, forward substitutions were not needed.  The new signing, the young, inexperienced forward Yaya Sanogo problems with injuries continued.  Mr Bendtner was abroad and not fit enough to join Club training. Mr Giroud’s back up was Chuba Akpom, a 17-year-old from Arsenal’s academy sqaud who was joined by Ryo Miyaichi, a 20 year old winger signed from Chukyodai Chukyo High School in Japan in 2011 who is also yet to start a Premier League match for Arsenal.  Asked about the size of his first team squad and the injury problems, Monsieur Wenger said “Of course I am concerned because we now play for two months every three or four days, it’s important we get players back. You can’t play the next two months with the squad we have at the moment.”[42]

 The obvious question is why the Club has not managed to invest more in recent transfer windows – not least the summer one, given the escalation of Arsenal’s financial firepower? As the Arsenal Supporters Trust recently stated,

The AST believes that the available cash the club has to spend is circa £70m […]  We therefore believe that subject to the requirement to hold some cash back in the business the club has funds in the region of £80m to invest in players in the next two transfer windows. There is also capacity to spend an additional £15m pa or more on player wages and remain within the 60% ratio to turnover.  2014/15 will see revenues move above £300m (reaching historic Bayern Munich levels) giving the club the opportunity to run a wage bill of £180m. Arsenal could afford to add a further three world class players on the same scale as Mesut Ozil without breaching the 60% ratio wage bill ceiling.[43]

 Whilst shortly later, obviously, welcoming the Ozil signing, the Arsenal Supporters Trust called on owner Mr Kroenke to review the Club’s senior management structure and "appoint an independent expert to conduct a review of all football functions at Arsenal. Clearly the interaction between our scouting, negotiating and player purchasing processes are failing and need urgent improvement.”[44]

 Benchmark / target setting

 Since work on constructing the new stadium was signed off, as previous audits have noted, the available evidence continued to suggest that Premier League 4^th place and Champions League qualification appeared to remain the Club’s informal and unstated benchmark.  As the country’s most expensive team to watch for home supporters, this was understandably difficult for many paying supporters to accept as they were being asked to subsidise failure, whereas their rivals foreign owners were happy to subsidise success. The Club had repeatedly denied this and insisted that there loftier, trophy winning, aspirations.  After the signing of Mr Ozil, Monsieur Wenger finally admitted,

We had to go through some years when I signed a long-term contract where we had some restricted financial potential … The target was to stay in the Champions League in this period and we managed to do it. We are now in a strong position financially.[45]

 Planning:  Leadership and Board

 Mr Kroenke retains many business and sporting interests in America and, as previous audit's have noted, has expressed his happiness to entrust matters to personnel he has complete faith in.  However, there has been much concern from supporters groups over Mr Kroenke’s commitment to Arsenal.  The Arsenal Supporters Trust commented, "Stan Kroenke does not attend many Arsenal matches nor seem to have the time to devote to the affairs of Arsenal".[46]  Recently, Mr Kroenke has stated that he is generally in London on a monthly basis and spends between 30-40 days a year in England on Arsenal-related matters.

  Back home in the United States, he says he is in continuous contact with Chief Executive Ivan Gazidis and new Chairman Sir Chips Keswick and he can also follow the live streaming of every Premier League game easily.[47]  Nevertheless, the results of an end of season Arsenal Supporters Trust survey revealed that only 11% of members were satisfied with Mr Kroenke’s management of Arsenal and 94% said he has not done enough to explain his vision for the Club.[48]  In the formal offer document during the takeover process of Mr

Kroenke’s company, KSE Inc, in 2011 it was stated: 

Mr Kroenke has made it a priority to meet with supporters and fan groups in formal and informal settings. He recognises that fans are at the heart of the Club. Their opinions and involvement are important to him. Mr Kroenke fully expects himself, the Arsenal Directors and Club executives to continue to engage with supporters for the long-term good of the Club.[49]

Over two years later, no such meetings have been forthcoming since Mr Kroenke assumed ownership.  Four key Arsenal supporters group's, Arsenal Independent Supporters Association, Arsenal Supporters’ Trust, Black Scarf Movement and REDaction have asked Mr Kroenke to finally fulfil his commitment and open up a positive and mutually beneficial dialogue.

The AST recently commissioned two independent reports looking at how Arsenal could strengthen their Boardroom and corporate governance. 93% of their members believe changes are needed.  This includes more senior football managerial experience and some dynamic younger members and greater diversity so that the Arsenal Board represents

the club's playing personnel and supporters.[50]

Mr Kroenke's thoughts on Monsieur Wenger’s new contract and importance to his long-term vision of the Club is interesting for the light it sheds on the leadership of the Club by himself and Arsenal’s Board (auditor's italics).

Arsène knows how we feel, what our philosophy is, what we want to do and I feel like we are totally aligned. I think he wants to do it the exact same way as we do.  I really enjoy Arsène – very smart, very intelligent … He has an absolute view on how he runs that team and the club. He has earned that right. Don’t look for me to interfere with that. I have learnt over the years that sometimes owners try do that and it is not so good. We’ve always said that there are resources available. There are guys who say that we should push Arsène harder to spend. That’s fair enough – there are always lots of opinions but Arsène is an independent thinker and planner. He works very hard at it and has a wonderful record. He was trained in economics.[51]

There is much evidence to support Mr Kroenk’s assertion of damaging interfering Premier League owners.  Recently the owners of Sunderland and Cardiff, Messrs Short and Tan have hit the headlines for questionable leadership, decision-making and corporate governance.  For instance, questions have been raised over Mr Tans radical re-brandings of Cardiff, his sacking of the head of recruitment and immediate replacement by his son's 23 year old friend who was on work experience, his suggesting of substitutions and tactical changes during Premier League matches (despite having no football experience), and by the uncertainty over their highly successful manager's future.[52] 

Nevertheless, notwithstanding Monsieur Wenger's consistent success at qualifying for the Champions League, Mr Kroenke’s assertion that he has a wonderful record is at odds with the total lack of trophy success during the second period of his reign.  The economic and playing wisdom of some of his policies - not least the socialist wage policy and second player recruitment policy - is highly questionable too.  His admission that Monsieur Wenger runs the Club sheds some interesting light on the role of the Chief Executive and his own leadership. 

 Before Arsenal's AGM, on 17 October 2013, the Black Scarf Movement staged a small protest and handed out leaflets highlighting the differences between the running of Arsenal and European champions Bayern Munich, plus copies of the joint four supporters groups' letter to Mr Kroenke.  However, the mood was very different to last year’s AGM. That took place the morning after Arsenal - having sold Mr van Persie - had lost 2-0 at home to Schalke in the Champions League and were ninth in the Premier League, with just 12 points from their first eight games. The questioning from the floor was raucous and accusatory.  This year, few opposed the re-election of Mr Kroenke to the Board, and the criticisms of the club were for the most part very specific - such as ticket prices and the purchase of a data management company - rather than about overall direction.  Mr Kroenke's spoke briefly to shareholders, telling them that trophy success is vital to the club's commercial growth.

 We are pleased with the progress of the club, most importantly progress on the pitch … None of us up here (on the board), fans, players, or Arsene (Wenger) are happy until we have won trophies, we have said that over again and are committed to that.  It is also important for the club to be successful commercially, and we are pleased with that.  We have come a long way, with the debt being paid down, commercial revenues are increasing. We have more (deals) coming and are confident. However, nothing works unless we have success on the pitch.[53]

 The Arsenal Supporters’ Trust noticed that the AGM had never been so  controlled before and had therefore further reduced the dialogue and engagement with supporters.  The vast majority of questions had been pre-submitted and the board's answers carefully prepared.  Few came from the floor afterwards and were mostly  unanswered.

 Conclusion

 There has been a welcome cessation of a number of matters of evident concern from the previous audit.  The signing of Mr Özil confirmed the end of both the second player recruitment policy and the socialist wage policy.  The loss of those economic and playing policy inefficiencies, and positive commercial developments, enabled Arsenal to spectacularly smash their previous transfer record and gave weight to the announcement that the Club was entering a new financial era.  One which also appears to have heralded the cessation of the sale of star players to balance the books which also characterised the second period of Monsieur Wenger's reign.  Although ultimately unsuccessful, the various attempts to sign established (and top) Premier League players was another welcome new development.  Further improvements in risk management have also been visible in Monsieur Wenger's adoption of some management methods that he had previously eschewed.  Not least, a return of player leadership and prioritisation of defensive strength.  There have and even been signs of tactical approaches to neutralise the opposition on a team and even individual level.  Above all, Arsenal top both the Premier League and (in the early stages of group matches) the toughest Champions League group and the Club's aspirations of trophy success, for the first time in a long time, seem both genuine and credible. 

Matters of Evident Concern

Nevertheless, previous matters of evident concern remain, that if uncorrected, could prevent the genuine aspirations of trophy success materialising and lay waste to all the good progress Monsieur Wenger and his staff and players have made.

1.  Monitoring and acting

Arsenal's extensive offensive midfield / wide player resources have enabled the Club to cope admirably with a remarkable series of injuries that would have tested any club.  However, there is a clear lack of of cover for three crucial players:  Messrs Mertesacker and Flamini (and their leadership and physicality), and Mr Giroud (who has all the many attributes necessary to lead the line effectively in a 4-2-3-1 system).  The rationalisation of the first-team squad with the exit of a number of the second player recruitment policy's unsuccessful players was very welcome.  However, following the problems in the summer transfer market, and as Monsieur Wenger has acknowledged, the squad is now simply to small for players to play twice a week for two months.  Despite the forthcoming return from injury of a number of players, there will be even greater pressures on the squad in the New Year. 

During the second period of Monsieur Wenger's reign Arsenal have imploded on three occasions as Arsenal struggled to compete across three trophy fronts.  In the 2007 - 08 season they were five points clear with twelve games left, but finished third. In 2009 - 10 they were top with seven games remaining but finished third.  In 2010-11 they were one point behind Manchester United with eleven games left but fell away very badly and finished fourth.  It was their last title challenge and the period was also notable for the loss of the Carling Cup Final to soon to be relegated Birmingham City.

It is imperative that the customary reluctance to sign players in the January transfer window is overcome and the problems that dogged Arsenal in the summer transfer market are not repeated.  Arsenal must use the £30m available, at least, to strengthen the squad's lack of depth in crucial areas, as soon as the window opens.

Monsieur Wenger has expressed his worries over operating in an evermore competitive transfer market.  And Arsenal's problems, since the departure of Mr Flamini in 2008,  at simply renewing the contracts of existing players has been highlighted in previous reports.  Likewise, the absence of Mr Dein's expertise and support in such matters.  Arsenal appear to have an insufficient number of experienced and competent personnel able to scout and cost prospective purchases at realistic 2013 market prices, set out a transfer strategy and deliver it in a timely manner.   

2.  Target setting

In addition to a lack of transparency over targets, as the previous audit noted, Monsieur Wenger's approach to targeting competitions and balancing competing priorities during the second period of his reign, has been dogged by inconsistencies and misjudgements.  The suspicion remains that the Champions League, absent from his CV, has been afforded an unrealistically high priority and more feasible FA Cup success wrongly downgraded.  The Club must maintain its trophy aspirations across all competitions to maximise its opportunities to end the long trophy drought.