Quote Originally Posted by Burney View Post
Surely where this sort of financial analysis of football clubs breaks down is in the fact that almost uniquely in business, big football clubs do not purchase their most significant capital assets (i.e. top-class, proven players) with a view to achieving a financial return on investment? Such returns sometimes occur, of course, but usually most 'top, top' players are purchased at a significant loss. Indeed, the more successful they are on the pitch and the longer they stay with you, the more of a loss they become, since you recoup less money (or none) through resale.

This means that, in order for such business to stay in the black and not be reliant on player sales for player purchases, it must constantly retain a significant cash reserve to allow for the possibility of further such loss-making investments. Given which, not spending that cash reserve simply because it's there would seem to me to be responsible thing to do, wouldn't it? The fact that there may be 'money to spend' is not a sensible argument for it being spent. Thus, any argument about what 'financial constraints' we did or didn't have has to factor in the necessity of holding onto cash to give one flexibility and security against an uncertain future, surely?
Partly correct, partly not. I haulage firm will purchase a truck and then might amortise the cost over a 5 year period at which point it will be replaced using cash reserves which the corporation planned for as part of its cashflow analysis. Arsenal will account for and pay for players in the exact same way. The truck is an investment which allows the firm to make money, in the same way that a top class player might attract additional commercial revenue to the club or increase the likelihood of a payout in the CL or PL (something else Charles neglected to consider in his analysis).

And the question isn't whether it is sensible to spend the money you have or not, it is whether we had the money in the first place. Some people believe that we had to sell players in order to maintain a high cash balance and that this is entirely down to the costs of funding the stadium. The financial records of the club, and no small amount of common sense, indicate this isn't true.