Arsenal vs Ajax

Financial Accounting PresentationComparison of the financial statements of the football clubs Arsenal & Ajax

The Football IndustryWether to invest or not in Arsenal F.C. and A.F.C. Ajax

• Exponential growth of the industry in the last 50 years• The “King of Sports” for many people• Top 10 Euro Clubs revenues sum up to more than 3 billion euros• Clubs have been entering the stock market in the recent years• Revenues connected to the capital structure and sporting results

FORMED BY:

• Season tickets• Sponsorship deals• TV rights share• Merchandising• Matchday tickets• Investments (Youth team, etc.)• Player sales• Bank or ownership loans

Capital Structure (Revenues)

The Financial Fair Play (FFP)

SITUATION:

• Increasing debt in the football industry• Bigger teams have economical advantage

LEAD UEFA TO INSTITUTE FFP:

• Obligation for clubs to balance their books or break even• Obligation to respect payment commitments at all times• Clubs who fail to do that will be required to provide budgets

detailing their strategic plans

Ajax and Arsenal

• Fame• Success in football• Examples for other clubs• Discover youngsters• Top stadium, training facilities, flourishing youth teams

Season tickets and average attendance (2011)

• Ajax :Season tickets: 40%Average attendance: 95%Stadium capacity: 52,342 seats• Arsenal

Season tickets: 98%Average attendance: 100%Stadium capacity: 60,361 seats

Internet (Media overview)

• Ajax has an official Twitter and Facebook account, the latter has 382,839 likes.• Arsenal has the same accounts, with almost 8.5

million likes.

Support spread (Europe, mil. supporters)

-Arsenal is in the 7° position with 21,3 million fans in Europe-Ajax occupies the 19° position, with 6,5 million fans in its continent.

2002 2003 2004 2005 2006 2007 2008

Ajax 55.38 76.52 64.23 66.63 74.43 64.89 61.89

Arsenal 90.97 117.83 156.89 138.4 137.24 200.84 222.97

25

75

125

175

225

Revenues

Reve

nues

in m

illio

n $

2002 2003 2004 2005 2006 2007 2008

Ajax -25.79 -4.04 9.77 2.85 -6.63 -10.42 7.77

Arsenal -20.56 4.01 8.15 8.29 7.9 2.82 25.73

-25

-15

-5

5

15

25

Net income

Net

inco

me

in m

illio

n $

2002 2003 2004 2005 2006 2007 2008

Ajax 0.43 0.43 0.31 0.34 0.36 0.38 0.48

Arsenal 0.27 0.54 0.66 0.67 0.75 0.77 0.69

0.05

0.15

0.25

0.35

0.45

0.55

0.65

0.75

0.85

0.95

Debt ratios

Debt

ratio

s

Current ratioCurrent Ratio Ajax Arsenal

2010 0,72 4,5

2009 1,05 2,72

2008 1,37 3,04

2007 1,29 3,67

2006 1,31 2,73

2005 1,64 2,8

2004 1,58 2,42

2003 1 1,93

2002 0,9 1,31

Equity (In $x10)Equity Ajax Arsenal

2010 39.3 204,3

2009 61,8 195,6

2008 65,4 111,9

2007 57,8 77,9

2006 68,3 36,3

2005 75,5 93,2

2004 73,5 108,7

2003 63,5 92,3

2002 66,4 98,3

2001 93,4 117,3

Intangible fixed assets (In mil.Euros)

Intangible fixed assets Ajax Arsenal

2010 38,8 63,9

2009 44,3 71,9

2008 31,8 78,4

2007 37,4 98,3

2006 29,7 97,2

2005 28,3 42,7

2004 28,4 52,4

Tangible fixed assets (In mil. Euros)Tangible fixed assets Ajax Arsenal

2010 11,2 43,3

2009 9,4 41,4

2008 8,4 40,1

2007 10,1 52,9

2006 10,7 39,5

2005 11,8 25,1

2004 12,3 23,2

Stock turnoverStock turnover Ajax Arsenal

2010 60,3 98,14

2009 50,3 112,32

2008 122,62 150,62

2007 85,73 119,62

2006 97,23 244,22

2005 152,37 161,85

2004 203,01 164,37

2003 191,03 128,77

2002 158,6 199,13

StrenghtsArsenal Ajax

Revenues of 380 million euros Ownership of stadium

Ownership of stadium Most famoust team in the Netherlands

More than 1k euros earned per share Great European club tradition

Quality trademark Quality of youth team

3° most supported football team in the world

Good debt ratio

WeaknessesArsenal Ajax

Profit connected with sporting results Recent years dry spell

High long term debt Well supported only in the Netherlands

Marketing almost fully developed in Europe

Best players are often sold to break even

Main players left or are about to leave the team

Unstable first team leadership

OpportunitiesArsenal Ajax

New Kroenke ownership New De Boer’s coaching

Young football prospects Promising and young first team players

Brand expansion in Asia Brand expansion in Asia and southern Europe

Stadium-connected revenues Not defined leadership in Dutch football in the most recent years

ThreatsArsenal Ajax

Start of the FFP Has not been very successful lately

Correlation between football performance and the ability to pay back the debt

Correlation between sporting performance and brand growth

Possibility that Wenger leaves if investments on new players are not made

Best youngsters will leave if investments are not made

Inability to pay back the debt Overall decline of Dutch football

Final analysis:Should an investor put money in either company?

• Both teams wouldn’t be profitable for a small money investor• Both teams, and especially Arsenal, are and could be very

profitable for their owners or major shareholders

WOULD BE PROFITABLE TO OWN BECAUSE:

• Both teams represent a good way of running a football club• Ajax has huge inexpressed merchandising and marketing

potential• Arsenal’s brand has very few rivals in the world