Wednesday, 22 October 2014

It's Just The Ticket

None of you are likely to buy The Gooner, so here's a piece I've written for it on the subject of Premier League ticket prices:

It's that time of year when that annual piece of lazy journalism comes around like clockwork. Yes, the BBC's Price of Football survey.

Of course, at one level, they are correct. In absolute terms Arsenal has the most expensive season ticket. Yet whilst I'd expect that sort of simplistic analysis from a news editor looking for a cheap headline, I demand better from Robert Peston, a Gooner and the BBC economics editor, who chose to do a half-baked analysis of his own.

Bemoaning his lot, and in an attempt to illustrate that consumer choice in a free market doesn't apply to football, he clumsily wrote: "I suppose I could have defected to Spurs or given up football altogether." Well, far from me to contend that the two are basically the same option, a mere 2 seconds with a calculator would have shown him that Spurs highest price season ticket works out to £90 per match whilst Arsenal's is £77. Exactly which London club is doing the ripping off and forces you to watch football on a Thursday night?

It's not fair to blame the BBC alone. Other media outlets on the back if it wrote easy 'why-oh-why' opinion pieces comparing Arsenal to Barcelona and Real Madrid, willfully ignoring the fact that they have stadiums 40-66% bigger and are both effectively state financed clubs.

Of course. the Premier League has its own state funded clubs: Man City and Chelsea. Man City is a wholly owned subsidiary of the United Arab Emirates and Chelsea partially financed by the Russian government, both of whom worked out that 'commercial' deals can be used to drive a coach and horses through UEFA's fair play regulations. I'll try to be objective here - clubs like Man City are cheating when the Council of Europe can call their £400m naming rights deal for the Etihad an "improper transaction".

So what's to be done?

I've heard enough to know that some fans would prefer Kroenke to 'open his bloody wallet' but dodgy non-commercial loans from owners and spending shareholder capital on the revenue account is the path of madness for any business, ask Leeds and Portsmouth. However, it is reasonable to ask, with two revenue streams outside the club's control, why is the other one lagging so far behind our competitors?

Football has three major sources of revenue: Commercial, Broadcast and Matchday. The mix of these streams is what determines the character of a club. Arsenal has the highest dependency on matchday revenue of all the Deloitte* top 20 clubs by quite some distance, hence the high ticket prices. Broadcast money in general is linked to performance but it is commercial revenue that is holding Arsenal back.

Yet in some quarters, generating commercial revenue is a dirty word. A certain fanzine (no names no pack drill), refuses to use the words 'Emirates Stadium', when the shirt and sponsorship deal brings in nearly half Arsenal's commercial revenue. The cost of merchandise is also attacked as ripping off fans, but Arsenal's prices are 10% lower than the twin Manchesters, so the club aren't maximising the profit here. No, I'm, not trying to give them ideas!

The purity of the 'true' fan is a joy to behold, but it doesn't pay Sanchez's wages. If the Sky deal in the 1990s has taught us anything, it is that broadcast money goes straight into the pockets of the players and their agents. Any attempt to offset matchday revenue by robbing the broadcasting revenue pot will lead to an inevitable decline in status as other clubs are left free to spend it on players.

If this does seem that I'm trying to defend our ticket prices or make a case for 'like it or lump it', I'm not. You see, Arsenal does have an option to generate more matchday income without cross-subsidy from other revenue streams - safe standing areas. Although Arsenal would require a 93,000 capacity stadium to match Bayern Munich's cost levels, a move in this direction would allow upward pressure on ticket prices to be reduced.

It would be clearly impractical to convert the whole stadium but if the seats behind the goals became safe standing, using Bayern's figures, we could see a 20% cut in ticket prices in those areas and generate a secondary spend uplift of £1/2m a year from the extra fans.

However, there is one obstacle, it is currently illegal. Yet politicians sensing a 'cost of living crisis' bandwagon and free air time on the BBC have condemned ticket prices on the back of this news without proposing a single constructive thing to help. Typical was shadow sports minister Clive Efford MP who said the "inflation-busting" increases "just cannot be acceptable". Well, agree to allow safe standing you muppet or shut up if you have nothing to contribute but hot air and platitudes!

Arsenal has very little wriggle room unless commercial revenues are seriously increased or the capacity can be tweaked. A full hearted backing to limited safe standing areas from the board would go some way to answering their critics.

* Figures used are from Deloitte's All to play for Football Money League 2014 so will exclude recent deals.