by ronk » Thu Jan 21, 2010 5:22 am
Their business model (as with several others) is predicated around the idea that once you build up a sufficient history of success then fans will stay and keep coming. They'll drift away from the team only slowly, you don't have to win, a minimum standard will do.
Barcelona and Real Madrid both went through relative lean periods without really feeling a financial pinch. Real even went from strength to strength recently even through a barren period. Arsenal are stronger than ever financially and support-wise.
The waiting list is interesting. From a short term business perspective it's (or rather it can be seen as) a sign that you've underpriced your product. If you want to extract income, you should increase prices. They'll make more money, even with a small number of empty seats, but you can't continue to raise prices.
South Africa did the same, albeit more extreme, for the Lions tour. They tripled ticket prices and made more money even with half full stadia. But fans were understandable outraged and they probably won't ever get away with a stunt like that again.
The problem, and it's a serious one, is that the rags haven't managed to reduce or even stabilise their debts. Part of this comes from the fact that they've been forced to spend big money to challenge Chelsea. It burned off Arsenal (who spotted what was happening and sold their biggest names to develop kids) and Liverpool (who increased their spending). They were happy enough doing that temporarily but the expectation was that spending would moderate. Chelsea have done so, but now they have a new challenge, from us (and the big Spanish clubs). A new competitor in their sector of the market is the last thing they needed just as they were planning on turning around and starting to earn money. Hence, the decision to change the rules to stabilise spending. Signing Berbatov in a rush to beat us was immensely painful for them. Without our takeover they would have bought Berbatov cheaper and negotiated a discount price for Tevez.
They have a little cash available, but there's no harm in leaving it in the bank rather than paying interest on it, but it'll have to be spent well, really well. Slowly, we're going to see them making less and less star signings and filling out their squad with budget options, like Owen, as they phase out their ageing stars.
“Do onto others — then run!”
B. Hill