The Storrie Of The Blues

Long-suffering Portsmouth fans finally had something to smile about this weekend when their team battled its way past Birmingham to reach the FA Cup semi-finals, but they are still rock bottom of the Premier League, even before the authorities deduct nine points for the club going into administration. However poor their performances have been so far this season, it is off the pitch where the situation has been absolutely desperate.

On 30 December Her Majesty’s Revenue and Customs (HMRC) issued a winding up order against Portsmouth in respect of unpaid taxes (VAT, PAYE and National Insurance contributions), which was debated in the High Court on 10 February when the club was given one week to draw up a statement of its financial affairs. Although they managed to produce this (big deal), it did not prevent the club announcing on 25 February that they would enter administration with debts of over £70m.

They still need to find £14m to operate through April, while they have been ordered to return to the High Court on 15 March, as doubts have been raised by HMRC over the independence of the administrator Andrew Andronikou, who they believe may have links with the current owner Balram Chainrai. Further evidence of Portsmouth’s financial incompetence, if any were needed, came with the players’ wages being paid late three times in four months and, most embarrassingly, the website being temporarily shut down after the bill was not paid.

"Leave in Silence"

In their own misguided version of musical chairs, Portsmouth have somehow had four owners already this season. They kicked-off the new campaign under Alexandre “Sacha” Gaydamak, son of the colourful Arcadi, who was accused of making money from illegal arms deals by the Sunday Times. Having spent money like it was going out of fashion, Sacha was apparently badly impacted by the credit crunch, so in August decided to sell the club to “Doctor” Sulaiman Al-Fahim, the self-proclaimed power broker behind Abu Dhabi United Group’s takeover of Manchester City, who faces an arrest warrant in the United Arab Emirates for an alleged dispute in a major real estate deal.

Just 40 days later, Al-Fahim gave up trying to find the money to complete the purchase and sold 90% of the shares to Ali al-Faraj, who has never been seen at Fratton Park. According to the Portsmouth hierarchy, he is some sort of commodity broker, but however he makes his money, precious little of it found its way to the South coast. The resultant financial difficulties meant that Balram Chainrai took ownership, but this seems to be more a case of an exasperated creditor attempting to protect himself and/or pick up Portsmouth’s major asset (the ground) on the cheap.

The only constant throughout this nightmare period has been the Chief Executive, Peter Storrie, who has been with the club since early 2002. This is the man who managed to introduce just about the only penniless “billionaires” in the Middle East to his club and presided over a reign of staggering financial ineptitude. How could one of the highest paid CEOs in the Premier League with over 20 years experience not realise that signing shedloads of ordinary players on exorbitant wages was going to lead to ruin?

The only skill he has demonstrated has been his ability to manipulate the media into somehow believing that he is the good guy in this sorry tale. In fact, Storrie has plenty of previous with all of his former clubs going on to suffer from financial problems.

"Money for nothing"

He was the first paid Managing Director at West Ham in 1991, where the supporters staged a sit-down protest on the pitch against his bond scheme, which was subsequently withdrawn. Years later, his reverse Midas touch had its effect with West Ham forced to make a fire sale to the porn barons. After he was sacked in 1999, Storrie turned up as Southend United’s Chief Executive, where he came under fire for his whopping (at the time) salary of £120,000. Southend are, of course, currently facing a winding up order.

Storrie then took the role of Executive Deputy Chairman at Notts County, whose own shambolic saga of mysterious owners and unpaid debts has rivaled Portsmouth in the race to win basket case of the year. Obviously, Storrie’s connection to these troubled clubs is purely a coincidence in the same way that his old mucker Harry Redknapp is in no way responsible for the financial crises that have damaged all his former clubs (Bournemouth, West Ham, Southampton and, er, Portsmouth).

Storrie’s standard defence is the laughable assertion that he is only an employee of the club. Sounding like a spoiled child stamping his foot, he has produced this line time after time. Last month he stated, “People have got to appreciate that I am the Chief Executive of the club. I am an employee. I am not the owner and it’s the owners that make the decisions and run the club.” His version of events, namely that he was never involved, has been frequently repeated, “At the end of the day I am simply an employee of the club and I only carry out the instructions of the owner.” Only following orders? Heard that one somewhere before.

In recent weeks, he has been even more explicit about his lack of accountability: in January he told ESPN, “I am no longer involved in the finances. I am not involved in the transfer negotiations”; after the administration, “While accepting as Chief Executive of Portsmouth Football Club that it was inevitable that criticism would come my way (really?), the overall funding of the business was the responsibility of the owner.” Apart from covering his ample backside, this does rather beg the question: what the hell was he doing?

"Is the money over there?"

Despite the numerous denials, at other times Storrie has claimed to be running the club. He described Sacha Gaydamak as a hands-off owner, leaving Storrie to make the operational decisions. Similarly, Storrie said that Ali al-Faraj “doesn’t like publicity. He’ll let me run the club day to day.” His old “partner in crime” Harry Redknapp also dropped Storrie in it, magnificently proving the old adage “with friends like these, who needs enemies”, when he described Storrie’s responsibilities in his own inimitable style, “I don’t have anything to do with transfers. Peter Storrie handles all that.”

Indeed, Storrie has occasionally portrayed himself as the hero of the hour, the saviour of the club fighting off all and sundry. Last year, he gave The Mirror a lengthy interview explaining his pivotal role in securing the “deal that is set to revolutionise the Premier League club.”The article was entitled “Peter Storrie exclusive: how I sealed Portsmouth takeover deal with Sulaiman Al Fahim” and read like a thriller with Storrie as some sort of daring James Bond figure. When he had a difference of opinion with Southampton fans, he took out an onion, shed some tears, but then valiantly insisted that he could not abandon Portsmouth when he was so close to preventing the club from going under. Up, up and away, Superman!

"What's the Storrie, morning glory?"

His resolute protection of the club included a bizarre defence against those Match of the Day pundits who dared to raise questions about the whereabouts of the cash generated by the club, “The bulk of the money has gone to the players in wages. The cost of the players’ wages this year is £37m. Last season, when it was running at its height, it was £52m, and the year before it was £42m. The vast majority of the money over the last two to three years has gone on players’ wages and also on their transfer fees.” He says this as if it was an act of God and nothing to do with the executive management, i.e. him.

Of all people, the News of the World highlighted the fact that salaries were an obscene 91% of the club’s income in 2007. The 2008 accounts reported income of £71m, but this included £49m broadcasting income from Sky, which will significantly fall after the inevitable relegation to the Championship (after the parachute payments have ended). This would represent another downward spin in the club’s vicious circle, as it surely cannot survive on its paltry £12m gate income, which is severely limited due to Fratton Park’s meagre 20,000 capacity.

As Storrie so astutely says, the high salary bill is a result of the insane transfer policy. After making a loss of £23m in 2007, the club appeared to be intoxicated by winning the FA Cup in 2008 and went on a £53m spending spree (net £36m after sales), which was one reason for another large loss of £17m in 2008.

Speaking of salaries inevitably brings us on to John Utaka, the non-scoring forward, who cost the club a mere £7m, but is reported to be on £80,000 a week. Harry Redknapp leapt to the defence of his former club, “'People talk nonsense about wages, you see all this rubbish about John Utaka earning eighty grand a week, he's not. He's earning £28,000 a week. Peter Storrie told me that. Peter showed me his contract the other week.”

Leaving aside the issue of confidentiality with Storrie apparently happy to show private documents to the manager of another club, how stupid do they think we are? We know how footballers’ contracts are structured with numerous add-ons: appearance fees, bonuses for goals scored, trophies won, relegation avoided, etc. After all, this is the CEO who negotiated a bonus scheme which paid out far more than Portsmouth earned for their Wembley success.

"When Harry Met Storrie"

The accounts also reveal that the club has been charged £1.2m in late payment fines in the last four years, which is hardly a sign of financial expertise. We probably did not need Nick O’Reilly, a partner at Vantis business recovery services, to inform us that he was shocked at the poor financial management at Fratton Park after he had been given unlimited access to Pompey’s financial affairs, as his damning opinion only confirmed most fans’ worst fears. Storrie also moaned that he was “fed up with everyone highlighting the debts without bothering to look at the assets of this football club.”

Well, the administrator told us that the debts were north of £70m, while the assets probably only amount to £36m, based on the £15m fixed assets (essentially the ground) in the 2008 accounts and £21m for the players. Storrie had estimated a market value for the squad of £38m in the statement of affairs provided to the court, but HMRC went with the £21m valuation and I know who I would rather believe. Either way, the assets are clearly much lower than the debt, which is why the banks decided to pull the plug. The growing debt is the reason why interest payments doubled in 2007 and then tripled in 2008. Frightening stuff.

You might think that this calamitous performance would be reflected in Storrie’s remuneration. You would be wrong. His reported salary of £1.2m makes him one of the best-rewarded Chief Executives in the Premier League. Unbelievably, this represented a 30% increase over the previous year in spite of the collapse in the club’s finances.

In fact, the accounts that were filed showed that Portsmouth’s highest paid director (Storrie) was given a total of £2.0m in salary, bonuses and pension contributions, but the club even managed to cock this up and had to “clarify” the figure, correcting it to £1.2m. Storrie took umbrage at these revelations, “I am sick and tired of lies that have been written. I was unfairly criticised for earning vast amounts of money. I’ve seen £1.4m bandied around, but my basic salary is less than half of what’s reported.” You’re having a laugh - £700,000 for essentially destroying a football club? That seems well above the going rate to me.

"You're having a laugh"

Storrie’s argument actually raises another issue. His bonus is “in recognition of me keeping the club going by selling players.” In other words, he took a cut of each transfer fee, thus acting more like a player’s agent than a chief executive. Come to think of it, if the club were paying agents to arrange player sales, why on earth would you also need to give the chief executive a slice of the pie? Harry Redknapp was apparently remunerated in the same way, but that does not begin to justify this enormous conflict of interest.

The only reason I can think of that helps to explain Storrie’s vast package is his relentless optimism, though some might prefer to think of this as a string of false promises. Storrie has always looked on the bright side of life. Back in 2008, he announced plans for a grand new stadium overlooking Portsmouth Harbour, “We have moved into a new era with the backing of owner Alexandre Gaydamak and these are very exciting times for the club, both on and off the field."

A year ago, he reassured fans, “We’re financially sound now. The moves that we made in the transfer window (selling Jermain Defoe and Lassana Diarra) have made things stable.” After the Al-Fahim takeover was confirmed, “It was a difficult period which was not helped by ludicrous uninformed reports that the club was in complete financial meltdown.” The next owner was serenaded with, “It has been a very difficult year, but one thing you must believe is that Ali al-Faraj and his associates are doing their very best to refinance the club, so we can once again operate the business as we all want to.”

"Everything must go"

In December 2009, Storrie insisted that, “The club is not going into administration. If that were the case, it would have happened at the end of September or early October. Much is happening behind the scenes, but constant malicious rumours and speculation do not assist with the proposed major long-term funding that is currently being put in place.” He got that right – administration did not occur until, ooh, at least two months later.

Most brilliantly, when the club actually did go into administration, he came out with the barely credible, “This course of action has kept the club alive and given someone an exceptional opportunity to take this great club on with fresh investment.” Fifth time lucky, hey, Peter? If the fans had any doubts that prospective buyers would be beating down the door, “Jackanory” Storrie tried to comfort them, “We had a phone call last night and we also had an email from somebody else this morning.” Ye gods. Could he be any more insulting to the supporters?

To be fair, he’s also a master at the blame game, managing to blame everyone and everything (though possibly not the Boogie) for Pompey’s plight. His erstwhile friends, the fourth estate, felt his wrath, “I’ve heard the joke about how we have had more owners than wins this season, but the media have been putting the knife in all season, and no one is going to stop us now.” The banks are the soft target de nos jours and they did not escape, “Standard Bank and Barclays demanded total repayment of their overdrafts. Had that not been the case, we wouldn’t be in the situation that we are now.” Given Portsmouth’s business acumen, I can’t imagine why the banks wanted their money back.

The nasty taxman was also unreasonable enough to demand the money owed to him, but then again he probably lives in the real world. Even poor old Stoke City were lambasted when they pulled out of a loan deal for David James, but the biggest opprobrium was reserved for the Premier League, who issued a transfer embargo until Portsmouth had paid off their debts to other clubs, which they compounded by diverting Pompey’s broadcast payments. With no sense of irony, Portsmouth complained that they were being treated like “poor relations”, not fully appreciating that just maybe the League was concerned about them going further into debt.

"It's a funny old game"

He even took a pot shot at the club’s owners, “Our financial problems increased when we had a succession of owners who didn’t have the money to run the club, borrowed against the assets and put us in more debt”, conveniently forgetting to mention who brought them to Fratton Park. For example, when Storrie introduced al-Faraj, he gushed over his group, “They appear to have considerable assets and they’re immediately putting finance into the club. From everything I know about the guy, he seems very fit and proper.”

This is the major problem with Storrie’s “strategy”, which essentially relies on a friendly billionaire baling out the club’s profligacy. If the owner fails to come up with the dosh, then it’s all his fault. Storrie even attempted to put together his own consortium to buy the club, but managed to make a pig’s ear of that, amazingly being unaware of a competing group despite his privileged position, “We were under the impression that on Wednesday morning we were going to sign and complete the takeover. Unbeknown to us, I now discover that Sulaiman got involved again on the Tuesday.”

When his bid was snubbed, you might have expected Storrie to take his leave, but for some reason (possibly connected to the £20k a week he trousers) he keeps hanging on for dear life. In January, he admitted that his position at the cash-strapped club was “probably” untenable, not because of the unholy financial disaster he “managed”, but because some sales were carried out behind his back (wonder if he received a bonus for them?).

Having stated that he would tender his resignation, Storrie qualified this statement by stating that he was willing (threatening?) to work with the administrator, as “I believe he wants me to help him sell the club to the right person.” Well, of course he would after Storrie’s superlative record to date. By the way, I have yet to see him exhibit any signs of remorse for the many small creditors who will be royally screwed as a consequence of the club’s administration.

"The last owner went that way"

Storrie is, of course, no stranger to the legal system, having been arrested on suspicion of conspiracy to defraud and false accounting in November 2007 along with Harry Redknapp, former Portsmouth Chairman Milan Mandaric, football agent Willie McKay and footballer Amdy Faye. In November 2009, he had the dubious honour of being the first person to be charged in the ongoing investigation into corruption in football, when he was accused of cheating the public revenue during Faye’s transfer from Auxerre. Storrie described this as an “unwarranted and dishonest attack upon my character”, again playing his “not involved” card by claiming to be on honeymoon when negotiations with the Senegal international were concluded. His employer went further, “Mr. Storrie is known by his peers to be a man of impeccable repute.”

How trustworthy is Mr. Storrie? Well, there are lies, damned lies and Storrie-tistics. This is the man who told the world that there would be no fire sale after Portsmouth won the FA Cup, only to then dismantle the team. He slapped down players like Sol Campbell and Peter Crouch who expressed their concerns about the club’s direction with the patronising “sometimes they don’t understand and make these silly statements.”

I suppose that we could always seek out the opinion of Tony Adams, who Storrie admitted was “very, very unlucky” to be sacked as Pompey manager. Adams was almost certainly very, very surprised given that just eight days earlier, Storrie had said, “There's been no board meeting to discuss the manager's position and there isn't one planned. It's important we all get behind Tony: we're all in this together. From the board through to the coaching staff – we win and lose together.”

"Pocket money"

There’s an old saying that you can judge a man by the company he keeps and one of his best mates in football is our old friend Harry Redknapp, who has worked with Storrie at both Portsmouth and West Ham. Harry took time out from his bail to give Peter his full support, “It never entered my mind when I was there that there would be problems. The club was run well.” He must somehow have missed the significant losses, the growing debts and massive salary bill.

Former Portsmouth Chairman Milan Mandaric, coincidentally also on bail for the same charges, also praised Storrie, albeit in a wonderfully contradictory statement, “It's hard for me to comment on what happened now with the new owners. There have definitely been some mistakes there somewhere, but it would be unfair for me to blame Peter for that.” At least Storrie treats his family well, reputedly employing his nephew as a Players’ Liaison Officer (whatever that is) for a cool £60,000 a year.

Despite taking the Portsmouth fans for fools, up until recently they have astoundingly given Storrie their support, even chanting his name at a couple of games, though it’s difficult to know exactly what they were saying over the racket made by that idiotic bell ringer. He claimed that he had been abused by Southampton fans shoving bank notes in his face, though they were probably only trying to reward him for doing such a great job in ruining their local rivals.

Although Storrie was at pains to emphasise that these were not Portsmouth fans, the “Love Storrie” was well and truly over and shortly afterwards he complained, “What I am not prepared to accept is the very personal level of abuse on websites, emails and local radio which I have received over the last couple of days.”

"Alarm bells ringing"

When Storrie announced his forthcoming resignation, he lamented, “It is an extremely sad day for everyone connected with the club.” At the risk of straying into the world of pantomime, “oh no, it isn’t.” As Chief Executive, either he exerted influence and control, in which case he was responsible for the crisis; or he did not know what was going on, in which case you have to question his competence. Whatever. To resurrect an old newspaper headline after Bobby Robson's disastrous Euro 1988 campaign as England manager, “In the name of God, go.”

I Owe You Nothing

In a period when most English football clubs seem to be lurching from one financial crisis to another, culminating in Portsmouth going into administration last week, Arsenal’s recent half-year results shone like a diamond in a dustbin. While most have focused on fans protesting at the mountain of debt constructed at Manchester United, the Glazer family’s plaything is by no means the only team that is leveraged to the hilt, as evidenced by the recent UEFA report which stated that 56% of all the football debt in Europe was held by 18 clubs in the English Premier League. And this figure excluded basket cases Portsmouth and West Ham, who did not even qualify for a UEFA licence, so it’s fair to say that English football is grappling with a major debt problem.

Therefore it was hardly surprising that the media reacted so positively to Arsenal’s results for the six months ended 30 November 2009, which included a dramatic £129.2m reduction in net debt from £332.8m to £203.6m. Moreover, profit before tax of £35.2m rose an impressive 44% from £24.5m in 2008 on the back of turnover of £196.8m (up from £156.8m the previous year). This is an impressive performance by anybody’s standards and is fair reward for a club that has consciously tried to manage its business in the right way. However, contrary so-and-so that I am, whenever I see the media universally applaud anything, I am always a tad sceptical, so thought it worth digging a little to see if everything is indeed as wonderful as it appears on the surface.

"Peter Hill-Wood - Old Skool"

The first obvious point to note is the impact of property development, which was acknowledged by Chairman Peter Hill-Wood, the original Eton Rifle, who stated that, “This has been a particularly strong period for our property business with Highbury Square making a significant contribution to the results”. You can say that again. Property development accounts for almost half of the turnover with £96.6m, compared to football revenue of £100.2m. Even more striking is that just about all of the Group’s year-on year revenue growth of £40.0m comes from the property arm (£38.2m), while the football segment barely grew at all with a miniscule increase of £1.8m. The huge importance of property development is further emphasised when looking at operating profit (before player trading, depreciation and finance charges). At a Group level, this actually dropped £0.5m to £29.3m and this was again a “game of two halves” with property rising £5.0m to £11.3m, while football fell £5.5m to £18.0m – that’s nearly a 25% decrease.

The press release made great play of the fact that the pre-tax profit from the “core business of football” increased to £25.8m from £19.7m, but again this is a little misleading, as it includes £20.8m from player trading, primarily the sales of Adebayor and Toure to Manchester City, up from “only” £8.0m in 2008. Excluding this £12.8m increase, as you would not expect (or hope) for similar big money sales every season, the football operating profit was actually £6.7m lower than the prior year. Not only that, but the profit margin on the real core business, assuming that Arsenal are not a selling club, was slashed by almost 60% from 11.9% to 5.0%, which has to be a cause for concern. In fact, the reported increase of £10.7m in Group profit before tax to £35.2m would also have been more than wiped out if this factor were excluded.

"Ivan Gazidis - facing the future"

Let’s be very clear about this: even if the once-off profits from property development of £9.4m and player trading of £20.8m were to be excluded, Arsenal would still have made a profit, but it would have been considerably lower at just £5.0m. This argument may remind some of the old saying, “if my aunt had balls, she would be my uncle”, but I do think that it’s worth exploring the underlying fundamentals, as Arsenal will exit the property business in the foreseeable future and no fan wants the club to sell their best players every summer.

So, why has the football business become less profitable? You don’t have to look too far for the main reason, which is a “significant increase” of £10.1m in operating costs to £101.4m, largely due to the £8.6m rise in player wages, despite the departure of Greedy-bayor and Toure, who were on pretty high wages. This reflects the re-signing of 17 first-team players on long-term contracts, which the Chairman described as an “investment in a very talented group” and as the “best means of protecting the value of one of our most important assets”. That may well be true, but it still goes against the grain to reward these players for: (a) not winning any trophies for five years; (b) spending lengthy periods in the treatment room with assorted injuries and ailments. This level of investment implies an annual growth of around £20m in player salaries, on the assumption that the increases were spread throughout the period, which is a lot of additional cost to carry, especially as Cesc Fabregas’ new contract will inevitably mean even higher costs.

"Businessman of the year"

Such an increase in the cost base is clearly worrying, but would not be that big an issue if the revenue were rising at the same rate, but the problem is that it only grew by an insignificant £1.8m (less than 2%). Gate and match day revenue is still the highest portion of football revenue at £41.4m, but this was £3.0m lower, though to be fair this is simply a reflection of one less home fixture against the comparative period last year. Commercial revenue also fell – by £0.9m to £23.4m, due to “recessionary factors”. On the other hand, broadcasting revenue grew by an impressive 23% to £35.4m, mainly due to the extended run in the Champions League.

The really good news in these accounts comes from the property side, where there has been considerable progress over the last few months. The last couple of reports have stressed the risks and uncertainty arising from the property downturn, but now “the position is completely different”. Indeed it is: sales of 261 apartments at Highbury Square increased turnover by 65% from £58.4m to £96.6m, while operating profit was up almost 80% at £11.3m. This means that 524 of the 655 private apartments have now been completed with cumulative revenue of £217m, leaving only 131 units still to sell. The proceeds have been used in repayment of the project’s bank debt, which was cut from £123.6m in May to £35.7m in November and has been further reduced to £12.9m since these accounts were published with Hill-Wood stating, “we can clearly now anticipate the point at which the (Highbury Square) project will become debt free”. Furthermore, the sale of the social housing element of the Queensland Road development site to Newlon Housing Trust means that the Group’s other property activities are now also free of debt.

"How much is my budget?"

The breakthrough in property sales has resulted in a staggering reduction of £129.2m in net debt from £332.6m to £203.6m, which is presumably now down to £180.8m, given the further reduction of £22.8m in the Highbury Square balance. This is a major achievement, which is worthy of the lavish praise from the media, especially when you consider the £716m (and rising) of debt that the Glazers have loaded onto Manchester United. However, I would point out that most journalists have been comparing apples with pears here, as the United figure is gross debt, i.e. ignoring £140m of cash, while Arsenal’s gross debt is actually £305m, before including £101m of cash to produce the net debt of £204m. Even so, it’s clear that Arsenal are prudently managing their balance sheet with new kid on the block, Chief Executive Ivan Gazidis stating, “I think it’s important that clubs act responsibly with respect to debt”. Having said that, it’s all relative. For example, Portsmouth went into administration with debts of around £75m, which is a lot less than Arsenal’s reduced balance, but the point is that Pompey cannot service their debt, as their earnings capacity is much lower and their cost base is too high compared to those earnings.

Enough already with the past, there are some key questions that need to be answered in the future:

1. Can revenue from the football business be increased?

(a) Commercial revenue – this is clearly an area of weakness with revenue lagging way behind the club’s English peers. According to the Deloitte's Football Money League 2010, Arsenal’s annual commercial revenue of £48m is much lower than the other teams in the so-called “Big Four” (Manchester United £70m, Liverpool £68m and Chelsea £53m). The comparisons are even worse against the continental European teams (Real Madrid £119m, Barcelona £96m and Bayern Munich £136m). Understandably, Arsenal tied themselves into long-term contracts with Emirates (stadium naming rights until 2021, shirt sponsorship until 2014) in order to provide security for the stadium financing, but recent deals by other clubs highlight the opportunity, which is probably worth another £20m a year. Gazidis is well aware of this and has recently restructured and strengthened his commercial team to explore new partners and overseas markets.

"That's what I call branding"

(b) Gate and Match Day revenue – partly depends on the number of home games that the club plays, which is in turn dependent on how far the club progresses in the various Cup competitions. Deloittes estimated that 20% of Arsenal’s total revenue came from participation in the Champions League in 2008/09, when they reached the semi-final. It is difficult to see how the club could greatly increase ticket prices, which are already among the highest in Europe. Indeed, demand at the higher end has not been so strong this season, which is important, as those 9,000 premium seats generate approximately 35% of match day revenue. Any continued lack of success in terms of winning trophies might also negatively affect demand.

(c) Broadcasting revenue – this is again partly linked to performance on the pitch, especially in the Champions League. Despite the recession, football continues to be vitally important to television companies. Whatever faults Premier League Chief Executive Richard Scudamore may have (and there are many), he has secured some impressive broadcasting deals, recently increasing the domestic rights contract by 4% to £1.8 bln for the three years from season 2010/11 and overseas rights by a rumoured 70% to £1.2 bln for the same period. However, the top English clubs suffer from the Premier League’s collective bargaining, compared to the Spanish giants, Real Madrid and Barcelona, who are allowed to negotiate individual deals with broadcasters, thus earning almost twice as much (£137m) as Arsenal (£76m).

"More Songs About Buildings And Food"

2. Can costs be controlled?

This is difficult to address, as the accounts do not provide much detail for operating costs, but we do know that players’ salaries have significantly increased as a direct result of the strategy to sign young players to long-term contracts. I can only see this trend increasing, especially if the market continues to be artificially inflated by the arrival of extremely wealthy benefactors. The weakness of Sterling and the harsh UK tax regime also makes countries like Spain more attractive for players, which can only be compensated by increasing gross salaries in England. I don’t think that it is in Arsenal’s DNA to demolish the wage structure, unless the Board suffers a communal fit of madness and appoints Harry Redknapp, but Arsenal’s wage/revenue ratio is currently among the lowest of top football teams, so costs are more likely to increase than fall here.

3. How much money could the club get from property development?

Peter Hill-Wood confidently stated, “It is clear that the next couple of years will see our property activities deliver excess cash”. Ivan Gazidis confirmed, “We will soon be delivering a profit back into the football side of the Group”. We can estimate the value of the 131 remaining apartments at Highbury Square as between a conservative £32.8m (assuming the quoted starting price of £250k) and £54.3m (based on average price for sales to date of £414k), which would produce net proceeds of £19.9m to £41.4m, say £30m, after clearing the outstanding debt of £12.9m. That would be an extraordinary achievement in the current economic climate. Furthermore, the club’s other three property assets (Queensland Road market housing, Hornsey Road and Holloway Road) are now free of debt following the sale of Queensland Road social housing, so any future sales here represent pure profit, generating cash that would be available to use elsewhere in the Group. I have no idea what that could be worth, but let’s say £10m.

"I'll tip my hat to the new constitution"

4. How much money could be available for transfers?

Arsene Wenger has always maintained that he has the funds to compete in transfer negotiations. This was confirmed by Ivan Gazidis when commenting on the results, “We have money available to invest in the transfer market, when we can identify the right players to add into the mix that add something to the squad”, but just how much money could be available? The starting point is £101m of cash, but £22m of that must be maintained on deposit as security against future interest payments, leaving £79m. To that, we could add £30m from the sale of the remaining Highbury Square apartments plus the £10m guesstimate from the other three property assets. The core football business should also contribute £10m, which is calculated based on annualising the £5m profit for the last six months, having stripped out the £20.8m earned from player trading. Against that, the accounts mention contingent liabilities of £11m, which represent further transfer fees payable to other clubs is players make a certain number of first team appearances, play for England, etc. All this gives you a very rough figure of £118m for the transfer pot. Wow. Of course, Arsenal still have to pay a hefty annual interest charge of around £20m (£5m repayment, £15m stadium financing) for many years, so they might want to reserve even more than the specified minimum, unless they can substantially increase commercial revenue. Either way, there will definitely be a lot of cash available.

5. How will the funds be invested?

Well, we already know that Arsene Wenger’s budget not only covers the purchase of new players, but also salaries, so it is likely that some cash will be allocated to improving the contracts of the existing squad, most notably Cesc Fabregas, but potentially also Andrei Arsahavin. Those fans that would prefer to see the club put money into the “Arsenalisation” of the team rather than the stadium, would be comforted by Ivan Gazidis’ comments after the results, “We have delivered a profit before tax of £35m for the first half of the year, but it’s important to note that this isn’t our primary objective. The reason we run a responsible, profitable and self-sustaining business is so that we can deliver success to the club and invest in the club and ultimately deliver success on the pitch”. However, Peter Hill-Wood said, “In addition to investing in the team, I think we will examine investment in club projects and infrastructure … into the next phase of growth”. Might that mean expanding the stadium to 80,000, as per the original design?

"Hands off, she's mine"

6. What will happen to the club’s debt?

The majority of Arsenal’s debt is long-term, a mixture of fixed rate bonds £178m, floating rate bonds £53m and debentures £26m, at an average interest rate of around 5.6%, which is much lower than the exorbitant rates required by Manchester United’s lenders (over 9% on the bonds and an eye-watering 16.25% of the PIK notes). Net finance charges for the last six months actually increased from £7.9m to £9.2m, but that is almost entirely due to lower interest receivable, as interest rates have declined. It’s not clear whether it would be possible for Arsenal to pay off this debt early in order to reduce the interest charges, but my guess is that they are in no hurry to do that, as Gazidis has argued that debt is sometimes justified, “The debt that we’re left with is what I would call ‘healthy debt’ – it’s long term, low rates, very affordable for the club, and it’s effectively a mortgage on our stadium, which generates revenue for the club. Not all debt is bad and I think Arsenal’s debt delivered an asset to the Club that will be an asset for generations to come in our stadium”.

7. Will the financial success have any impact on the club’s ownership?

Some people have claimed that the Board’s desire to reduce the debt is part of some sort of Machiavellian scheme to make the club more attractive to a prospective purchaser like “Silent Stan” Kroenke or Alisher “Fat Boy Fat” Usmanov. Granted, both Danny Fiszman and Peter Hill-Wood have sold shares to Kroenke, but this does feel like a conspiracy theory too far. For one thing, everything else being equal, increased profits should increase the share price, making any acquisition more expensive. On the other hand, you could argue that this would make selling shares more attractive for the current directors. The real concern is that any take-over would be in the form of a leveraged buy-out (like Manchester united), which would mean that the club would once again be saddled with large debts, but frankly this could happen at any time.

"Of course, we're going to buy"

The Board should be commended for how they have managed the club’s finances over this challenging period, especially as Arsene has kept the team competitive, albeit not actually winning anything. When it became palpably obvious that Highbury was simply too small to provide the revenue required for a major European club and could not be expanded, due to the proximity of local housing and two stands being listed, the club embarked on an ambitious five-pronged strategy: (a) develop and sell Highbury; (b) build a new stadium with a much larger capacity; (c) invest in the youth academy to develop talent; (d) improve and sell players to cover finance charges; (e) not waste money on big money transfers.

This could loosely be described as the Barcelona model, whereby you rely on bringing through young talent, coached to play in the club’s style, and supplement this with a couple of world class acquisitions every season. Arsenal are not quite there yet, and some may argue that they have erred too much on the side of frugality when it comes to the transfer market, but they will soon be able to exit the property business and fully concentrate on football. At that stage, we will see whether the strategy was successful – not just in property development, but also on the pitch.

Blondes Have More Fun

Imagine for a moment that you were a musician in Blondie. On the plus side, you were part of a brilliant band, pioneers of the American punk and new wave scene in the mid 70s. Against that, you were destined to be largely ignored by the media, no matter how well you played, as you would inevitably be overshadowed by the beautiful, charismatic singer: the original platinum blonde, Ms. Debbie Harry. To the cognoscenti, Debbie’s celebrity status did not lessen the impact of the group, even though the label’s early press releases felt the need to reinforce the importance of the others with the tagline, “Blondie is a band”.

The relative lack of appreciation was particularly tough on the likes of Clem Burke, whose powerful drumming provided the perfect backbeat for all their different styles, from thunderous rock to disco grooves. Jimmy Destri’s keyboards were also a highlight with his mixture of sparse synths and barnstorming organs alternately taking the lead and falling into the background. The guitar duties were shared between the wonderfully named Frank “The Freak” Infante and band founder Chris Stein, who was maybe better known for being Debbie’s boyfriend, even though his intense technique was ideal for their brand of power pop.

"Lipstick Vogue"

However, there is no doubt that Debbie Harry was the focal point of the group, the undisputed star of the show, the “Leader of the Pack”. A former waitress and Playboy Bunny she may have been, but she was confident, street-wise and appeared completely in control. The inspiration for the band’s name, reputedly based on truckers calling out, “Hey, blondie” as they drove past Harry, this was no dumb blonde. She may have been one of the biggest sex symbols the pop world has ever seen, but hers was a contradictory appeal. Her perfect cupid’s bow was offset by her slapdash use of the peroxide bottle, so that she resembled a sort of sophisticated tomboy, personifying a tough-girl glamour.

Quite possibly the most influential and stylish frontwoman in the history of pop, Harry could switch from sweet chanteuse to punk fighter, exuding cool elegance while still appearing eminently approachable. She may have looked like a pop princess, but she had the attitude of a rock rebel. Even at its most saccharine, her singing demonstrated a bite lacking in other female vocalists with a formidable range: one moment purring like a kitten, the next growling like a lioness. Possessing many vocal tricks and affectations, she could play sultry, aggressive, sweet and vulnerable – often within a single song.

"Hands across the ocean"

Each of Blondie’s first three albums are wonderful, but the boys (and girl) were at their peak on “Parallel Lines”, their third album released in 1978, which is the perfect example of their ability to blend 60s power pop with 70s new wave as witty, infectious harmonies complemented Harry’s unique mix of raucous, luscious vocals. Recorded very quickly over the summer, which might explain the fresh sound, it may not be the most energetic or experimental of their albums, but it is a symbol for how effortless, stylish and plain enjoyable pop music can be. The group’s Blonde Ambition informed the first two albums, the eponymous “Blondie” and the intelligent “Plastic Letters”, but “Parallel Lines” is like a more refined, sophisticated version of that hard-edged sound. The band’s roots (see what I did there?) are very worthy of examination, but this is the album where everything worked.

Produced by British glam rock svengali, Mike Chapman, who had previously worked with the likes of Sweet, Mud and Suzi Quatro, the album delivered a more commercial sound without sacrificing the band’s underlying new wave credentials. Chapman was a hard task-master and Harry was struck by the intensity of his working methods, “It was diametrically opposite from working with (former producer) Richard Gottehrer. He's very laid back and Mike is a real hot chili pepper and very energetic and enthusiastic. Mike would strive for the technically impeccable take, so we would do take after take, whereas Richard always went for the inspired take”. Chapman’s mastery of the mixing desk and his ability to spot a great pop tune acted as the ideal catalyst for Blondie’s natural talent and unbridled energy, taking their music to a new level and resulting in an all-time classic.

"I'm too sexy for my shirt"

Nevertheless, the band was condemned by some of their New York contemporaries and the music press for selling out, because of the perceived change in direction, as the brooding artiness of their early work was replaced by a crisper, cleaner sound. Despite the apparent move towards the mainstream, in reality this was a group that was prepared to take chances, happy to try new things and more than ready for the international success that followed.

The main reason for the criticism was “Heart Of Glass”, a disco pastiche turned disco classic. An old Blondie song, know to fans as “The Disco Song”, this was the single that transferred the band from CBGB to Studio 54, as they bridged the diametrically opposed sensibilities of solid underground credibility and unapologetic pop aspiration. Clem Burke characterised the sound as Kraftwerk by way of Saturday Night Fever, though he could not resist some trademark, exuberant drumming towards the end of the track, which featured a remarkably assured vocal by Harry, whose gorgeous, glacial voice soared over the bubbling, machine-like rhythms provided by Jimmy Destri’s shimmering keyboards. This was just one of the songs on the album that dealt with the theme of love and lost love in particular, “Once I had a love and it was divine/Soon found out I was losing my mind/It seemed like the real thing, but I was so blind/Mucho mistrust, love's gone behind”.

"New York Dolls"

OK, “Parallel Lines” may not have been as abrasive or challenging as Blondie’s first two albums, but it is by no means a soft, fluffy record with satirical, cutting lyrics providing wry observations on love and life - a hard centre beneath the glossy surface. It manages to walk the line between several different musical styles with the band’s diversity almost reminiscent of The Clash’s appetite for experimentation, as they packed punk, new wave, art rock, psychedelia and (later) reggae and rap into a very catchy pop format. They hopped across numerous genres, singing their way across the full spectrum from soft, atmospheric ballads to punk-inspired rock-outs, ensuring that they enjoyed a broad appeal. Even when the songs had a simple bubble-gum sound, the arrangements gave them an edgy, gritty feel, covering many emotions including passion, love and infatuation. Their eclectic approach owed much to the several songwriting combinations in the band with contributions from all members, even the lesser lights like bassist Nigel Harrison (“One Way Or Another”).

Whatever the style, Blondie are rightly remembered for being the ultimate practitioners of perfect pop, as can be seen in the lively, engaging “Hanging On The Telephone”, which is just what the doctor ordered for the opening track. It’s a great introduction to the album as Clem Burke drums with equal parts restraint and abandon, Chris Stein and Frank Infante slash out power chords and, above all, Debbie Harry gives us two minutes of pure lust wrapped in a pleading, insinuating vocal that unleashes all her theatrical capacity, “I had to interrupt and stop this conversation/Your voice across the line gives me a strange sensation/I'd like to talk when I can show you my affection/Oh, I can't control myself”.

"Never mind the Fade Away, just Radiate"

Equally “poptastic” is the high-spirited “One Way Or Another”, which features a simple yet effective guitar riff that is one of the most recognisable ever. A brutal slab of militant feminism, bordering on stalking (“I will drive past your house/And if the lights are all down/I'll see who's around”), this song exhibits Harry’s mean girl snarl in all its glory, as she taunts and teases. It’s all too believable when she sneers, “I’m gonna getcha”.

Of course, Debbie Harry was one of the sexiest women in pop, the music industry’s very own blonde bombshell, and she was not above using her assets, pouting and winking her way through “Picture This” with its blatantly suggestive cover, showing her lasciviously licking the disc’s black vinyl. The song itself is another luminous moment of immaculate, sublime pop with a memorable, melodramatic melody underlining Harry’s worshipful, yet somehow scornful vocals, “All I want is a photo in my wallet/A small remembrance of something more solid/All I want is a picture of you”. Just as seductive is the apparently superficial “Sunday Girl”, elegant to the point of lushness. Harry is youthful innocence personified, but it’s a bittersweet symphony. The beguiling tune disguises a caustic worldview, “I know a girl from a lonely street/Cold as ice cream, but still as sweet”, which could actually work as a description of the singer herself.

"I don't pray that way"

There’s a 60s girl group air to “Sunday Girl”, which is even more the case for “Pretty Baby”, which opens with some spoken words that recall The Shangri-Las. Apparently referring to Brooke Shields’ character in the scandalous movie of the same name, this is an ode to youth and beauty, as Harry dreamily intones, “Stars live in the evening/But the very young need the sun”. Although not the fiercest example of “girl power”, the feel is not dissimilar to Blondie’s breakthrough singles in the UK: the bouncy “Denis” and the moody “(I’m Always Touched By Your) Presence, Dear”. Even the 50s were referenced with a joyous cover of Buddy Holly’s “I’m Gonna Love You Too”, which was performed New York-stylee.

To underline Blondie’s art background, Robert Fripp contributed ethereal guitar to the eerie “Fade Away And Radiate”, a sinister homage to a deity which is slowly revealed to be a television, “The beams become my dream/My dream is on the screen”. Beginning with a slow, haunting pulse beat and cool synths, before jangly guitars and keyboards break through, this track owes a debt to early Roxy Music. Moody and apocalyptic, it’s also progressive and hypnotic. Seductive even, but then I do love my TV.

"It was all about the image"

The tougher sound of old was also present in a couple of tracks. Like “X-Offender” and “Rip Her To Shreds” from the debut album, they were also bursting with Blondie’s unmistakable zest and tongue-in-cheek humour. The anthemic “I Know But I Don’t Know” is a quirky song with goofy synthesizers, featuring weird vocal stylings and an interesting harmony between Infante and Harry (“I give but I don't get/I will but I won't yet/I lose but I don't bet/I'm your dog but not your pet”). Similarly, “Will Anything Happen” matches a massive punk rhythm with a classic pop hook and could easily have found its way onto “Plastic Letters”.

You want some teen angst, some ambivalence and despair? I give you Jimmy Destri’s superb “11:59”, a great song with an even better title that encapsulates the anxieties of youth, “Today can last another million years/Today could be the end of me/It's 11:59, and I want to stay alive”. How about some teen attitude? Please accept “Just Go Away”, a sardonic, vitriolic dismissal complete with aggressive call-and-response, “You got a big mouth and I'm happy to see/Your foot is firmly entrenched where a molar should be/If you talk much louder you could get an award/From the federal communications board”.

"No arguments here"

Yep, La Harry is a tough chick. You only have to look at the iconic album cover where the singer stands there in a white dress, unsmiling, hands on hip in front of her band giggling like naughty school boys in dark suits. It’s a pose full of confrontation – do you want some? The band never seemed to take themselves too seriously. They did such a good job that it all seemed so effortless, so natural, but the album produced six singles and it became an unintentional greatest hits package.

Of course, Blondie would go on to produce many more hit singles: “Atomic” and “Union City Blue” from the album “Eat To The Beat”; “The Tide Is High” and “Rapture” from “Autoamerican”; and “Call Me” from the film “American Gigolo”. The band broke up in 1982 after the release of “The Hunter”, but reformed fifteen years later, notching up another number one single with “Maria”. That meant, fact fans, that Blondie were the only American act to reach number one in the UK charts in the 70s, 80s and 90s. Quality and quantity, not to mention longevity.

"Live and Dangerous"

There's something about Harry. Sure, the camera loved her, and her stunning looks were in some ways as important as the music, but this was definitely no damsel in distress. She may have had a sexual image, but hers was a playful, independent personality. As Rolling Stone said, she performed with “utter aplomb and involvement throughout: even when she's portraying a character consummately obnoxious and spaced-out, there is a wink of awareness that is comforting and amusing yet never condescending”.

Debbie Harry has inspired a host of copycats, most obviously Madonna, though the former Mrs. Ritchie has focused more on the ambition than the music, while other so-called tough female artists should be eternally grateful to Harry for paving the way. I’m thinking of Gwen Stefani, Pink and (God forbid) Lily Allen and The Ting Tings. Of the younger pretenders, Lady Gaga would give her left bollock to have a tenth of Debbie Harry’s talent, not to mention class.

"Smile and the world smiles with you"

“Parallel Lines” was the album that made the world love Blondie and everyone fall in love with Debbie Harry. The girls wanted to be her, while the boys just wanted to be with her. Blonde highlights? There were loads.