P ES T A N D IN D U S TR Y A N A LY S IS :

A R S EN A L FO O TB A LL C LU B

The Gunners

S N A P S H O T:
Arsenal Football Club
English Premier League Football Club based in London,

England
One of the most successful clubs in English Football, having
won 13 first division and premier league titles and 10 FA cups
Arsenal's parent company, Arsenal Holdings plc, operates
as a non-quoted public limited company
Only 62,217 shares in Arsenal have been issued and are
not traded on a public Exchange such as FTSE.
In April 2010, business magazine Forbes ranked Arsenal as
the third most valuable football team in the world
Directors with significant investment in the club include
Stan Kroenke,Danny Fiszman,Peter Hill wood Lady-Brace well
Smith and Alisha Usmanov
Thierry Henry is the club's top goalscorer with 226 goals in
all competitions between 1999 and 2007, having surpassed
Its the only club with most consecutive seasons spent in
the top flight (84 as of 201011
The longest run of unbeaten League matches (49 between
May 2003 and October 2004

P ES T A N A LY S IS
Political Factors
Stringent Employment Laws amongst players (Work Permits)
Consumer protection (Setting of price caps by the government)
Emphasis on Environmental protection (Noise pollution)
Adherence to effective safety standards (Threats arising from

terrorism)
Imposition of high taxes by the government (wages)

P ES T A N A LY S IS
Economic Factors
Shift of economic climate (transition from recession to recovery)
High concentration of people in the Capital (London)
High immigration rates of foreigners, especially Asians and Africans
Low inflation rates which affords people high spending power
Production rates are higher due to the increase in the number of

jobs

P ESSocial
T A NFactors
A LY S IS
High diversification rates, which promotes passion for the

games
People are characterized to be workaholic, which
stimulates national economy
High Preference on leisure (Peoples lifestyle is Sports
Nut)
Soccer has inspired adults, young adults and even the
aged
Improved living standards due to reasonable pay

P ES T A N A LY S IS
Technological Factors
Increase in E-commerce (Online shopping)
Improvement in match day experience for fans with

integrated IT management
Use of Buffalo technology to protect data
Utilization of PROZONE3 for match day analysis.

PEST ANALYSIS

Factor

Trend

Evaluation

Impact
(1=low;
5=high)

Rank in
terms of
Importance

Political

Strict Employment
laws
Consumer
Protection
High taxes
Safety Standards
Environmental
protection

Threat
Opportunity
Threat
Opportunity
Opportunity

5
5
5
3
2

Economic

Recession to
recovery
Low inflation
High production
rates
High immigration

Opportunity
Opportunity
Opportunity
Opportunity

3
4
4
4

Social

Sports Nut
High living
Standards
Workaholic
Need for Leisure

Opportunity
Opportunity
Opportunity
Opportunity

5
5
3
4

Technological

E commerce
IT Management
Buffalo Technology
PROZONE 3

Opportunity
Opportunity
Opportunity
Opportunity

5
5
5
5

IN D U S TR Y A N A LY S IS
English Premier League
World's most lucrative football league
Combined club revenues of 1.93billion ($3.15bn) in

200708
Total club revenues of 2.326billion in 200809
The second most profitable after the German Bundesliga
Premier League clubs are some of the richest in the world
Deloitte listed seven Premier League clubs in the top 20
for the 200809 season
Its ahead of Spains La liga and Italys Serie A
A total of 43 clubs have competed in the Premier League

Guaranteed ticket availability for all league

M EM
B ER S H IP B EN EFITS

matches at Emirates Stadium

Over 140,000 made available to red members
last season
1500 guaranteed tickets for all premier league
matches
The friends and family option-offers you the
opportunity to purchase multiple tickets on your
membership card.

P O R TER S FIV E C O M P ETITIV E FO R C ES

P O R TER S FIV E C O M P ETITIV E FO R C ES

Bargaining Power of customers
Bargaining leverage is neither high, neither low
Buyer volume upon successful times are high
Buyer information can be considered high
Brand identity is strong
Price sensitivity is not extremely high
Product differentiation is very high
Buyer concentration vs. industry is low
Many substitutes are available

P R EM IER LEA G U ES TIC K ET P R IC ES

EPL Most Expensive Tickets

P O R TER S FIV E C O M P ETITIV E FO R C ES

Threat of Substitution
Low switching costs
Buyers are not highly inclined to substitute
Price-performance, to a certain level, has no influence on

the proffered team

Trade-off of substitutes

P O R TER S FIV E C O M P ETITIV E FO R C ES

Bargaining power of suppliers
High diversity of suppliers
Volume is important to supplier
Inputs have a high impact on costs and differentiation
Switching costs of firms in the industry are low
There is a low Presence of substitute inputs

P O R TER S FIV E C O M P ETITIV E

FO R C ES
Threat of New Entrants
There is quite an easy access to inputs
There is economies of scale
High capital requirements
There are strong brand identity in the soccer sector of the sports

industry
Switching costs are high
Easy access to distribution
Low expected retaliation from well established teams

A R S EN A LS FU TU R E
Arsenals squad averages 23.2 years which offers
potential for growth and maturity.

P O R TER S FIV E C O M P ETITIV E FO R C ES

Rivalry
High exit barriers
Low industry concentration
High fixed costs/High value added
Low industry growth
Low product differences
Low switching costs
High brand identity
High diversity of rivals

SUPPLIER
POWER

BARRIERS
TO ENTRY

THREAT OF
SUBSTITUTE
S

DEGREE OF
RIVALRY

High diversity
There is quite
Low switching
High exit
of suppliers
an easy access
costs
barriers
Volume is
to inputs
Buyers are not
Low industry
important to
highly inclined
concentration
There is
supplier
economies of
to substitute
High fixed
scale
costs/High value
Inputs have a
Pricehigh impact on
High capital
performance, to added
costs and
requirements
a certain level,
Low industry
differentiation
has no influence growth
There are
Switching costs strong brand
on the proffered Low product
of firms in the
identity in the
team
differences
industry
are low soccer
sector
of Trade-off FORCES
of
Low switching
PORTERS
FIVE
COMPETITIVE
There is a low
the sports
substitutes
costs
Presence of
industry
High brand
substitute
Switching costs
identity
inputs
are high
High diversity of
Easy access to
rivals
distribution
Low expected
retaliation

BUYER
POWER

Bargaining
leverage is
neither high,
neither low
Buyer volume
upon successful
times are high
Buyer
information can
be considered
high
Brand identity is
strong
Price sensitivity
is not extremely
high
Product
differentiation is
very high
Buyer
concentration vs.
industry is low
Many
substitutes are

B LU E O C EA N S TR ATEG Y
Arsenal FC
As a entity, the club has expanded the width of its

market by exploring other areas such as India and

America
Arsenal FC has embarked on a strategy of saving
energy costs, emulating key competitors in total
revenue by 2015.
Buyer utility maps and buyer cycles are measures
employed by the club to study supporters preferences
and enhance satisfaction.
By adopting such measures, the club will effectively
utilize the BOS by making competition from other clubs
irrelevant.

C O N C LU S IO N
Potential Future Changes
Foreign investments by individuals imposes financial

burden (massive debts among clubs)

Wage caps should be in place to fend off astronomical
wages paid to players
The FA needs to impose a ban on the Big four clubs
regarding the amount and number of players they can sign
(stabilize competition)
Goal line technology should be enforced to enhance fair
play.
Buyers should also have a say on the maximum amount
they are willing to spend on tickets.

C O M P ETITO R A N D M A R K ET A N A LY S IS

Arsenal Football Club

K EY C O M P ETITO R S :TH E B IG
FO
U R Management/B Players/Acquisi Players/Fina
Team
oard

tions

ncial Culture

Total
Revenue
2009/2010

Manchester
Utd

Coach: Alex
Ferguson
In charge since
1986
CEO: David Gill
Ownership: Glazer
Family/ Other
Minority Owners

25 Man squad
Player
diversification
Net buyers of
players
Effective use of
youth
players(academy)

High discipline
within the squad
Financial
Extravagant
Team with highest
debt in the league

327.0m

Arsenal FC

Coach: Arsene
Wenger
In charge Since
1996
CEO: Ivan Gazidis
Ownership: Stan
Kroenke/ Other
Minority owners

25 man squad
Global in terms of
procurement
Price cap on
signings
Very successful
academy(youth
players)
Buy Cheap Players

High discipline
Wise
spending(players
and property)
Effective Free Cash
Flow
Financial
sensitive(operate
under a
manageable debt)

263.0m

Chelsea FC

Coach: Carlo
Ancelloti
Appointed in June
2009
CEO: Ron Gourlay
Ownership: Roman
Abramovic/Other
minority owners

25 man squad
Regular buyers of
players
Limited use of
youth players
Diversity amongst
players

High player
power(Terry &
Lampard)
Financial
extravagant
2nd in terms of debt
in the league

242.3m

Coach: Kenny

25 Man squad

High Player

The Big Four

K EY C O M P ETITO R S
Managemen Players/Acqu
t/Board
isitions

Players/Financ
ial Culture

FC
Barcelona

Coach: Josep
Guardiola
Appointed in 2008
CEO: Rob Conway
President: Sandro
Rossel
Ownership:
Membership(socis)

Effective use of
youth
players(Academy)
Diversification
amongst players
Sign mostly
domestic players

High player
discipline
Wise
investments(player
s)
Huge spread in
player ages

365.9m

Real Madrid
FC

Coach: Jose
Mourinho
Appointed in June
2010
President and
Director: Ramon
Calderon
Ownership:
Membership

Global in terms of
procurement
Ineffective use of
youth
players(Academy)
Net buyers of
players
Highest
buyer(unwise
spending)

Record setter in
the transfer
market
Highest buyer in
terms of individual
players(Christiano
Ronaldo)
Financial
Extravagant

401.4m

Team

La Liga

Total
Revenue
2009/2010

K EY C O M P ETITO R S
Team

Management/Bo
ard

Players/Acquisiti
ons

Players/Financia
l Culture

AC Milan

Coach:
Massimiliano
Allegri
Appointed in June
2010
President:
Silvio Berlusconi
Ownership: (Silvio
Berlusconi)

Global in terms of
procurement
Players are mostly
from Italy and
Brazil
Sell players at
profits

High team
discipline
Wise
spending(Players)
Operate under a
less debt

196.5m

Inter Milan

Coach: Leonardo
Araujo
Appointed in Dec
2010
President:
Massimo Moratti

Diversification
within the squad
Players are mostly
from Italy
Obtain cheap
players from
Africa
Effective use of
youth players

High team
discipline
Operate under an
effective cash flow
Financial
sensitive(spendin
g)

196.5m

Serie A

Total Revenue
2009/2010

O TH ER C O M P ETITO R S :EP L
Team

Management/Boar
d

Players/Acquisition
s

Players/Financial
Culture

Manchester
City FC

Coach: Roberto
Mancini
Appointed in Dec
2009
CEO: Gary Cook
Ownerhip:Sheikh
Mansour

Squad
diversification
Net Buyers of
players
Ineffective use of
youth
players(academy)
Hefty price tags on
players

Significant losses
on player sales
High player power
Extravagant
spending(strikers)

101.2m

Totenham
Hotspurs

Coach: Harry
Redknapp
Appointed on Oct
2008
CEO: Daniel Levy
Ownership: ENIC
International
ltd/other minority
owners

Squad
diversification
Buyer relatively
cheaper players
Sale players at
profits
Effective use of
the youth team

High squad
discipline
Operate under an
effective Cash
flow
Wise spending on
players

132.7m

CHAMPIONS LEAGUE CONTENDERS

Total Revenue
2009/2010

EP L V S . O TH ER M A JO R LEA G U ES

A R S EN A L FC
Stadium Capacity
The stadium opened in July 2006 and has an all seated

capacity of 60,355
Second largest football club stadium in England behind
Manchester United's Old Trafford

Management
Recently appointed three senior executive positions at the Club
Tom Fox (Chief Commercial Officer), Svenja Geissmar (General

Counsel) and Trevor Saving (Head of People and Operations)

All three will report into Chief Executive Officer, Ivan Gazidis

Ownership
In total, Arsenal's board of directors currently hold 45.6% of the

club's shares
The largest shareholder on the board is Stan Kroenke, with 18,240
shares (29.9%) owned via Kroenke Sports Enterprises
Next is Danny Fiszman who holds 10,020 shares (16.1%
Richard Carr has 2,722 (4.4%) and club chairman Peter Hill-Wood
owns 500 (0.8%)
Minor shareholders of the club, including former players Ian
Wright and Liam Brady, and three shares owned by the Arsenal
Supporters' Trust.

FIR S T TEA M S Q U A D
A Total of 25 players from various

countries.
Goalkeepers
Manuel Almunia(Spain),Lukasz Fabianski(Poland),Jens
Lehmann(Germany),Wojciech Szczeny(Poland)
Defenders
Bacary Sagna(France),Laurent Koscielny(France),Johan
Djourou(Switzerland),Kieran Gibbs(England),Thomas
Vermaelen(Belgium),Sebastian Squillaci(France),Gael Clichy(France)
Midfielders
Abou Diaby(France),Cesc Fabregas(Spain),Tomas Rosicky(Cech
Republic),Samir Nasri(France),Denilson(Brazil),Aaron
Ramsey(Wales),Alex Song(Cameroon),Jack
Wilshere(England),Andrey Arshavin(Russian),Emmanuel
Eboue(Ivory Coast),Emmanuel Frimpong(Ghana)
Strikers
Robin Van Persie(Holland),Theo Walcot(England),Marouane
Chamakh(Morocco),Nicklas Bendtner(Denmark)

A R S EN A L FC V S . M A N C H ES TER U TD
Revenue and Net Profit

Match day revenue is rather comparable between Man Utd and Arsenal
Media revenue is higher for Man Utd due to the further progress in Champions

League and EPL

Arsenal did much better commercially on and off the field due to 156M made
in property development
Profit from the sale of players has tripled that of Man Utd due the clubs
reputation of selling players at good values.

P O TEN TIA L FO R G R O W TH
Which Club has a better future Opportunity for growth?
Player Sales:

On the field, I rate both teams equally in their ability to progress to

later group stage and be in the top four in the EPL.
Arsenal have a greater propensity for revenue stream from player
sales. Man Utd do not traditionally monetize this area well
Overall, in terms of adding value to shareholders, Arsenal is the better
investment.
Cash level, Debts and Assets Analysis
Man Utd had twice the amount of total assets compared to Arsenal in
2010
The increase in Debtors within one year from 278 mil to 675 mil puts
Arsenal in a better financial position in terms of the interests paid to
finance the debts

A R S EN A L V S . M A N U TD
Free Cash flow, Depreciation and Interest Expense
Arsenal operated under a superior cash flow compared to Man Utd
This reflected lower interest payments and lesser capital expenditures
The club was in a better shape due to good profits and lower depreciation

compared to Man Utd

The interest expense as a percentage of total debt is higher for Man Utd at
10% compare to 6% for Arsenal indicating much higher cost of capital.
Man Utd tend to be net buyers of players instead of sellers which is why their
net capital expenditures is higher than that of Arsenal
Right now Arsenal can probably pay down its debts due to its effective FCF.
They paid down 135 mil in debts this financial year.

R EV EN U E R EFLEC TIO N S
Commercial, Broadcasting and Match day Revenue
Real Madrid FC ranks first in terms of commercial revenue(Sale of jerseys

and other endorsement deals)

Arsenal and Man Utd boast huge earnings in terms of match day
revenues(high price tags on tickets)
Real Madrid FC also earns massive profits from the sale of its
broadcasting rights(Exert a Monopoly power over other teams)

Arsenal Revenue Statistics vs. Other Clubs

English Premier League

World's most lucrative football league
Combined club revenues of 1.93billion ($3.15bn)
in 200708
Total club revenues of 2.326billion in 200809
The second most profitable after the German
Bundesliga
Premier League clubs are some of the richest in
the world
Deloitte listed seven Premier League clubs in the
top 20 for the 200809 season
Its ahead of Spains La liga and Italys Serie A
A total of 43 clubs have competed in the Premier
League

M A R K ET S IZ E

K EY TR EN D S
Corporate Structure
Operated as a corporation and is owned by the 20
member clubs
Chairman, Chief Executive and Board Of Directors
oversee daily operations
The FA has VETO power when new rules are adopted
by the premier League
Sponsorship
The Premier League has been sponsored since 1993
1993-2001: Carling( FA Carling Premiership)
2001-2004-:Barclaycard(Barclaycard Premiership)
2004-2007:Barclays(Barclays Premiership)
2007-Present:Barclays(Barclays Premier League)

C O N TIN U ED : K EY TR EN D S
Finances
The Premier League has the highest revenue of any

football league in the world

Total club revenues of 2.326billion in 200809
Premier League clubs are some of the richest in the world

"Football Money League", listed seven Premier League

clubs in the top 20 for the 200809 season

Stadia
Stadium attendances are a significant source of regular

income for Premier League clubs

Combined total capacity of the EPL in the 201011 season
is 770,477 with an average capacity of 38,523
For the 200910 season, average attendances across the
league clubs were 34,215
Total aggregate attendance figure of 13,001,616

G R O W TH R ATE: EP L
Worlds Favorite League
EPL has risen well above Serie A and La Liga in the past year

by 1 billion (0.7 billion).

Games are broadcast to 600 million homes in 202 Countries
across Europe, Asia, Australasia, Oceania, Africa, the Americas
and the Middle East

The global rise of the Premier League

Overseas rights
2010-2013
1.7bn?
2007-2010
2004-2007
325m
2001-2004
178m

625m

TA R G ET M A R K ET
Arsenal FC/EPL
East Asia, Africa, Middle East, the US, Canada and
Australia
Potential Sources for maximization of revenues
overseas
Premier League giants Such as Arsenal and
Chelsea are now focusing their markets in India
WHY INDIA FOR ENGLISH CLUBS?
Population of 1.15bn
Underlying interest in football/Premier League
Untapped commercial opportunities
Wealthy target audience in Indian middle class
Football identified with youth - there are 325m
Indians aged 20 - 35
Chance to influence/improve local football
Opportunity for corporate social responsibility
(CSR) input

M ED IA C O V ER A G E
United Kingdom and Ireland
Revenue from television rights has helped sustain

clubs both on and off the field

Major media sponsors include Sky, BBC and ESPN
The Premier League sells its television rights on a
collective basis
The first Sky television rights agreement was worth
304million over five seasons
The league brought in 320million from the sale of its
international rights (2004-2007)
Television rights alone for the period 2010 to 2013
have been purchased for 1.782billion

C O N TIN U ED : M ED IA C O V ER A G E
Worldwide
Media Coverage plays a vital role in enhancing the EPL
Most watched sporting league, followed worldwide by

over half a billion people in 202 countries

In the US, coverage is shared between Fox Soccer
Channel, Fox Soccer Plus and ESPN
In Canada, Rogers Sports net owns the Premier League
rights
The Premier League is particularly popular in Asia(widely
distributed sports programme)
In China, data from 2003 suggested that matches were
attracting television audiences between 100million and
360million

M arket Segm entation

Type of Factor

Consumer Markets

Industrial/Organiza
tional Markets

Characteristics of
People/Organization

Young Adults,Adults,Aged
Middle & Upper
Class(Europe)
All Classes(globally)
Sports Nut Lifestyles

Entertainment Industry
Headquartered in UK
Advanced Technology
Complex Management
High Profits

Purchase/Use situation

High brand Loyalty

Pleasure maximization
Repeat purchase behavior
Price Criteria

E-commerce/physical
buying/selling
Revenue generation
Repeat/regular Sales
Price Criteria
Disintermediation

Users needs and

preferences for product
characteristics

Product/Service
differentiation
Low prices/High quality
Brand Sensitive

High team performance

Brand Expansion
High Quality
Effective Design features
Low manufacturing
costs(suppliers)

C O M P ETITO R S A N A LY S IS
Performance measure of team success/failure
Winning a certain number of games every season
Qualification for the European competitions
Gaining maximum points from weaker teams
Conceding less goals as possible and scoring as many as a

team can
Focusing on winning silverware both domestically and
Abroad
Making efforts to try and operate as more environmental
friendly organizations
These include waste minimization, waste disposal and
energy & water use

C O N C LU S IO N
Competitors Analysis:
Teams that keep managers for long spells show more success than

those that change management often

Team success(winning trophies) generates revenue for the club
Clubs that operate under effective cash flows are able to avoid
massive debts and high interest payments.
Revenue maximization can be achieved by eliminating the monopoly
in television rights(Sky)
Penetration into new markets such as India can easily boost a c lubs
financial capacity
Brand Loyalty is enhanced by clubs participation in community
activities
Market Segmentation enhances clients/clubs relationship
Clubs focus on operating environmentally friendly has other teams
embarking the same policies which in turn safeguards the environment.

IN TER N A L A N D S W O T
A N A LY S IS

Arsenal FC

BUSIN ESS M O D EL
Manager(Arsene Wenger)

Noted for his observant and intellectual

approach
Uses statistical analysis to track development
of his players
Experiments players in different roles(playing
them in different positions
The club offers him complete and full support

Academy

Consistently produced footballers ready for first

team football
Arsenals under-18 are regularly coached by
Wenger to measure their capability
/Effectiveness
Scouts are paid to conduct research both in
and out of the country for best competing
players

Acquisitions

Developing young players at the academy and

turning them into world class players(Ashley
Cole)
Buying young players and developing them
into an integral part of the arsenal squad
Selling players at healthy fees(purchasing
Anelka from PSG at 500,000 and selling him
to Real Madrid FC for 22.3m

BUSIN ESS M O D EL
Selective Use of Investments

Players are sold when they are at their

peak level and not decline
Effective selling of merchandise(well
established distribution channels)
Attraction of wealthy sponsors(Nike)

Style of Play

Attractive style of play

Playing mostly conducted in the middle
Creating chances is just as important as
maintaining possession
Compete to win trophies which is
translated into revenue

Stadium

Investment in large quality

stadium(Emirates Stadium)
Increase in match day revenue due to
stadium expansion
Extra income from pre-season
events(meetings and other tournaments)

BUSIN ESS M O D EL
Why is Arsenals Business model different from
other teams?
Conservative financial approach(price cap on wages and transfer

fees)
Infrequent change in team leadership/management(Arsene Wenger

has been in charge since 1996)

The clubs uses a unique style of play(avoidance of long balls and play

is mostly centered on the middle)

Sell players at a profit(Marc Overmass was initially bought for 5.5m

and later sold to FC Barcelona for 22.3m

Effective use of the academy to groom young players(Jack Wilshere)

Revenue vs.Ependitures:2005-2011
Season

Revenue

Departure
s

Expenditu
res

2010/2011

8.096.000

24

16.720.000

2009/2010

41.976.000

18

8.800.000

2008/2009

20.944.000

2007/2008

50.248.000

2006/2007

14.102.000

2005/2006

22.000.000

16
23
22
22

35.332.000

Arrivals
15
17

20

Total
-8.624.000

33.176.000

14.388.000

25.916.000

17

24.332.000

13.266.000

27

836.000

40.480.000

22

18.480.000

A R S EN A L FC : R EV EN U E
Levels Of Investment
Arsenal generates a huge portion of its annual revenue through

various sources.
These includes television revenue, commercial revenue and the
transfer of players.
The overall idea of setting a price cap on the amount of money
that can be spent on a particular player has proved vital in club
investment.
All proceeds generated from such transactions are carried forward
to the next budget in the following year.

2010
m

2009
m

Total wages

110.7

104.0

Additions to intangible assets

(player registrations)

19.9

41.3

Arsenals Financial Report

Profit on sale of player registrations (38.1)

(23.2)

Net expenditure

122.1

92.5

ArsenalFC:Resources
Structural Assets
Emirates Stadium
Club Vision, Culture
and Goals of Arsenal
FC
Managerial systems

Relational Assets
Club fans and Club
image
Season ticket sales
Sponsorship and
Supporters
Promotion
Brand

Human Assets
Expertise of football
managers
Expertise of players

B C G M ATR IX
Arsenal FC
Stars (=high growth, high market share) Asia
Cash Cows (=low growth, high market share) England
Dogs (=low growth, low market share) Americas
Question Marks (= high growth, low market share)- India

S W O T A N A LY S IS
Business Strategy
The strategy of Arsenal FC is to convert more fans into business customers and
enhance customer value through implementation of CRM tools. For this purpose
it has tied up with the technology sponsors Dimension Data. Other strategies
include:
To seek own routes to market for media rights
To deliver branded services to customers through Arsenal TV
To have proper mix of home-grown and imported talents
Groom players in-house (like Gibson and John Wilshere)
Acquire players in case of requirement (like Chamakh and Koscielny )

Strength
Brand
conscious
Greater Fan
base(High
ticket sales)
Effective
distribution
Channels
Effective free
cash flow
Increase in
Stadium

Weakness Opportuni
ty
Product and
product
variety(jerseys
to credit
cards)
More focus on
proceeds than
soccer

Penetration to
the American
market
Coalition with
other
teams(USA
and Belgium)
Diversificatio
n of the
squad(origin)

Threat
Change of
team
leadership/ow
nership
Insufficient
funds put into
academies
Failure to win
trophies

Porters Value Chain M odel

Prim ary Activities

Inbound
Logistics
Transfer of
players and
coaching staff

Outbound
Logistics

Operations

Marketing
and Sales

Service

Nike shirt
deals
Season tickets

Arsenal TV
Finance(clubs
credit cards)

Sponsorship
deals
TV deals
Endorsements

Customer
service
Website

Secondary Activities
Firm
Infrastructure

Human
Resources

Technical
development

Emirates Stadium
Luxury
apartments(formerly
highbury stadium)

Soccer
academy(training
)
Scouts(recruiting
players)

Internet presence
enhanced and e
commerce
enabled
Personalized
content delivered
direct to
fans(match day

Procurement
Nike manages
clubs
merchandising
operation

C H O IC E O F S TR ATEG Y

Generic Strategy

Arsenal FC offers a wide variety of products and services

These ranges income from commercial revenue, financial and merchandising

income
The club also operates a TV channel, Radio Station, Publishes a magazine,
provides newsletters broad bands, and desktop alert
The club therefore has to sought out the best strategy to increase revenue while
saving costs and maximizing customer satisfaction.
Hence, in analyzing the strategies, the company has to put forward two drivers
that ultimately impact the companys revenue status.
These includes the Critical Success Factors and the Key Performance indicators.
The CSF measure identifies the factors that are necessary for the company to
develop and grow

D R IV ER S
Key Performance Indicators(KPI)
Sound business plan
Stable administration, close communication between all levels of Club

Management
High quality coaches at both senior and underage levels
High profile and acceptance within the community
Strong Club presence in schools, both primary and secondary
Sound oval management, high standard of club facilities
Sound financial management, expenses kept in line with income base
Development of Juniors, particularly local based players

C O N TIN U ED : D R IV ER S
Internal and External factors that affect Cost differentiation
There are three major cost categories that affect the choice of the strategy used.
These include both Internal and External costs related to the operation and

development of the corporate Arsenal FC, the costs related to the operation and
development of the sporting club , and other related costs.

Corporate Costs
Dept and
maintenance
costs
Costs related to
the commercial
activities

Infrastructural
costs

Club related
Costs

Compensation of
the players and
staff
Purchase of new
players and stuff

Maintenance and
development cost
of the stadium

S TATU S A N D P ER FO M A N C E:A R S EN A L FC
Generic Strategy
The scale and scope of activities are greater(differentiation of

products/services)
There are far more alternatives for the configurations valueadding activities(suppliers and distributors)
There are not only greater difficulties in coordinating global
activities abut also greater scope of competitive advantage if
activities are effectively coordinated(new markets such as
America and India)
The strategy takes into account cultural and linguistic
similarities and differences
National economic and factor conditions can be harsened to
give competitive advantage

G RAN D STRATEGY
Factor

Plan of Action

Innovation

Integrated IT development to improve matchday analysis

Market development

Asia
Coalition with Asian companies(Hoang AnhVietnams largest property developers and the
main distributor of Arsenal FC merchandise in
Southeast Asia
America
Partnering with youth teams to enhance
technical assistance(Richmond Strikers Soccer
Club
Increase fan base by holding pre-season
tournaments in the US
Establishment of clubs megastores in cities
like LA

Product development

Pre-season membership and loyalty through

direct mail and website

Market penetration

Core market is the UK

Contributes up to 94% of its revenues
These include match day revenue,
membership/subscription revenue,
sponsorship/endorsements and TV deals
6% of its revenue come from other markets
such as Asia and America.

C O N C LU S IO N
Internal and SWOT Analysis
A conservative financial approach has helped improve the

clubs image both on and off the field

A stable manager has steered the clubs success by signing
quality players at cheaper fees
Arsenals style of play has attracted/increased the fan base ,
hence growth in revenue
The club has diversified its resources in a precise manner,
thus generating substantial revenue(players and property
develoment,eg highbury transformed into luxury apartments)
Exploring and entering new markets such as India and The
US offer potential for future growth
Effective distribution channels enhance club loyalty and
increase consumer confidence

C O N C LU S IO N
Generic Strategy
Innovation has been delivered through new

product quality and services

Strong brand loyalty has also been created
through effective advertising and promotion
Distributors have been able to add value to the
products through effective distribution channels
Merchandise has been made available to the
market at cheaper prices through use of latest
technology
Products have also been marketed on the basis
of price to achieve economies of scale.