Arsenal Is Two Years Away From Financially Competing, CEO Says

Arsenal is two years away from competing financially with major soccer clubs as the London team signs more valuable sponsorship contracts and the sport’s European governing body starts to enforce financial rules, its chief executive officer said.

Arsenal’s board met with supporters and shareholders today with the club coming off two losses, sitting in ninth place in England’s Premier League, 10 points behind crosstown rival Chelsea at the top. Fans questioned the team’s spending plan, which allowed captains Cesc Fabregas and Robin van Persie to leave in the last two seasons.

The 13-time English champion signed agreements with Emirates airline to sponsor its 60,000-seat stadium, which opened in 2006, and the players’ jerseys. They allowed Arsenal to keep debt down while building the new facility, and Chief Executive Officer Ivan Gazidis said the club is ready to get more lucrative terms to close the financial gap to Manchester United, Manchester City and Barcelona.

“As a consequence of this ambitious transformation, in the next two years Arsenal will have the financial resources to sit and compete among the leading clubs in the world,” Gazidis said at the club’s annual meeting. “That’s an extraordinary achievement for our club.”

Arsenal lost 1-0 at Norwich in the Premier League five days ago and was beaten 2-0 last night at home by Germany’s Schalke in the Champions League, Europe’s elite club competition. While the club has made the regional tournament each of the past 15 years, Chelsea became the first London winner last season. The Gunners last won a trophy in 2005.

‘Real Confidence’

“We are now in a position to look forward with real confidence in our position in the new emerging landscape of the game,” Gazidis said. “I have no doubt that we can and will return the club to winning trophies and driving it forward to new heights.”

The team has attempted to increase its non-match day revenue by touring Asia and expanding its commercial contract department to allow it to find non-U.K. backers, Gazidis said.

Last month, Arsenal Holdings Plc said its fiscal full-year profit doubled as the team benefited from the 2011 sales of Fabregas to Barcelona and midfielder Samir Nasri to Manchester City.

Net income rose to 29.6 million pounds ($48 million), or 475 pounds a share, in the year ended May 31, from 12.6 million pounds, or 203 pounds. The club made 26 million pounds from selling players, compared with a loss of 14.6 million in the year-earlier period.

It also had 153.6 million pounds in cash, down slightly from the year-earlier period, and net debt of 98.9 million.

Captain’s Sale

In response to a supporter’s question, Chairman Peter Hill- Wood said the team had sold Van Persie to Manchester United for “footballing reasons,” not to make a profit. The Dutchman was entering the final year of his contract and said he wouldn’t resign with the Gunners.

“When we lose a great player like Robin van Persie, it’s not because we want to lose Robin van Persie, and certainly not because we want to make a profit on a transfer fee,” Gazidis said. “We do have to be responsible in the type of difficult decisions we make to make sure we’re not plunging our football club into financial difficulty.”

Majority shareholder Stan Kroenke, the American owner of the National Football League’s St. Louis Rams and other U.S. sports franchises, said he would be willing to meet with Arsenal supporters to discuss the club.

‘Optimistic Skepticism’

Gazidis said Arsenal was well-positioned to take advantage of new spending rules being introduced next year by European soccer’s governing body UEFA and its president Michel Platini.

UEFA’s so-called Financial Fair Play regulations will aim to punish clubs that spend beyond their means from 2014. English soccer’s second-tier Championship division has also introduced fiscal controls, and as many as 17 Premier League clubs are in favor of domestic rules addressing spending.

“We have taken the approach of optimistic skepticism,” Gazidis said. “It’s not being driven by Michel Platini on high as a way to punish English clubs. It really is being driven by the clubs.”

To contact the reporter on this story: Christopher Elser at at celser@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at at celser@bloomberg.net

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