There has been a great deal said and written about Arsene Wenger’s footballing philosophy and the way he approaches the game, on and off the pitch. Admirably, the Frenchman prefers to nurture young talent through the club’s youth system rather than spending lavishly on players that are deemed ‘the finished article’.

Financial Situation

Many have sniped at Wenger for his inability to ‘splash the cash’ but, in truth, the canny 59 year-old should be lauded for his frugal approach to the club’s finances.

There are signs that the Russian Revolution at Chelsea has started to come undone. Roman Abramovich has always maintained that he wants a return on his investment in the West London outfit and, should he elected to leave, Chelsea would find themselves in all kinds of problems. They have a team full of ageing stars and, although they have a couple of decent youth prospects, they are nowhere near the calibre of Arsenal’s starlets. Even if nightmare scenario does not come to fruition at Stamford Bridge, can it really be said that Chelsea will be challenging for the Premier League title in three to five years time with their current squad?

There are mixed opinion as to whether building the Emirates Stadium has provided financial constraints on Wenger in the transfer market. I find this hard to believe; when budgeting for this scenario the board will have included money for transfers and Wenger has removed many of the high-earners from the wage bill.

True, Emmanuel Adebayor was appeased with a contract his current form doesn’t justify but Gilberto, Alexander Hleb and Mathieu Flamini have all left the club. In terms of transfers, Wenger’s net spending has been around £5 million as the money from selling Hleb was used to finance the Samir Nasri deal.

The result of this is that Arsenal can comfortably afford to push through a deal for a certain Russian playmaker later this week, and possibly even push the boat out on an unknown entity to anchor the midfield. This would be uncharacteristic of the tight-fisted Wenger, but the fresh influence of Ivan Gazidis may see Arsenal being a touch less cautious.

The advantage of buying now not only improves the chances of salvaging the season, it increases the optimism on the terraces and, most significantly, it gives the new players half a season to bed in. This means that when the next campaign starts the new acquisitions won’t have to get up to speed – a flying start in the new season is worth paying a slight premium for now.

Wenger clearly understands the situation and may feel under no pressure to make hurried purchases. Liverpool spent £20m on Robbie Keane, who has generally disappointed, and, in the past, Manchester United seemed to be able to spend £15m on substitutes and £30m on first-teamers .This outrageous spending can’t last forever - and whatever happened to Kleberson?.

At a time where politicians are maligning bankers and telling the public that we have taken out too many loans, the idea that the ‘spend, spend, spend’ binge of the top Premier League clubs won’t come back to bite them is naïve, and economics graduate Wenger knows this very well.

People Problems

There is undeniably an issue with the depth of the Arsenal first team squad. Wenger has alluded to the conundrum he faces in that if he has too much experience then it means his younger players don’t get the game time they need to develop – Cesc Fabregas is a prime example of this and Theo Walcott isn’t a bad one either.

Wenger had the opportunity to poach Xabi Alonso from rivals Liverpool in the summer but decided against it. Now Liverpool are top of the league while Arsenal are largely struggling due to their lack of midfield cover.

To add insult to injury, Liverpool have struggled to muster any kind of creative force when Alonso doesn’t play. It is notable that Liverpool have performed woefully against Stoke recently without the Spaniard, and they didn’t look anywhere near as dangerous against Preston North End when Alonso failed to emerge for the second half.

Completing the deal would have provided the perfect opportunity to critically weaken a rival whilst addressing the need for a deep-lying counterpart to partner Fabregas.

It’s not so much that Arsenal lack a defensive midfielder - Alex Song has done relatively well in the big games against ‘top four’ opposition and Arsenal have collected an impressive amount of points from their 'title rivals' - rather, when playing against the lesser sides his presence isn’t required.

Denilson has shown promise this season but still should be considered deputy to Fabregas rather than a midfield partner, though at full strength the team could carry him to ensure his development.

Personnel is an issue, but not as great a problem that is often made out. Nasri has shown he is able to deputise in the centre and, if Wenger can sign a creative player to play on the flank, or possibly go with the emerging Carlos Vela on the left, then Arsenal could still land in reasonable distance of the top – if not realistically challenging.

Walcott and Eduardo will come back into contention very soon; this should provide the side with additional attacking verve. A rampaging Russian or a central midfielder would be a welcome addition, but they are not essential to the cause.

Style of play

And all this before we really get onto the pitch! It seems a lot of commentators don’t really watch Arsenal as the criticism has consistently taken the form, ’they play nice football, but they aren’t strong enough’. However, if you have actually watched Arsenal consistently this season, you will see that they really have not produced the kind of dynamic and attacking football that they played last season.

They have at times strung together some stunning moves but watching the highlights masks over the real problem and that is the team have too often looked short of ideas.

Although this is concerning it is to be expected; young footballers are generally more inconsistent than seasoned professionals. The key for this Arsenal side in determining how many future honours they claim is the extent to which they can learn from their mistakes and resolve them.

There are signs that this is happening and the mainstream media have failed to pick up on it. For instance, when Liverpool or Aston Villa don’t perform particularly well but manage to pick up the victory, it is a quality to be admired - they ‘ground out the result’ and, especially in the case of Liverpool, ‘this is evidence they will make a title challenge’.

When Arsenal don’t play very well but beat Bolton 1-0 at home, a fixture they have traditionally had many problems in winning, it is a sign of even more concern! If you look to the early part of the season that is the type of game the Gunners would not have take three points away from. This is something that should be seriously noted by those that love to criticise Arsenal.

In the End

When they are at their best Arsenal can dominate teams and tear them apart - even with their second string - and now the side is finally starting to learn how to win in trying circumstances. With possible January reinforcements allied to Eduardo and Walcott coming back into the side, Arsenal should be flying at the business end of the season.

Too many people wrote Arsenal off at the start of last season following Henry’s departure and too many people are writing Arsenal off now. It remains to be seen if Arsenal are too far off the pace to challenge for the league title - they probably are - but talk of Aston Villa finishing fourth is premature. At the time of writing Arsenal are six points off the leaders; I would back them to be closer than that by the time the campaign comes to a close.

Owen Watson, Goal.com

Despite the clamour for him to spend heavily on ‘big names’ during this transfer window, Arsenal manager Arsène Wenger is likely to disappoint the pundits, media and anxious fans convinced that only mega-outlays on some established stars can preserve the Gunners’ ‘Big Four’ status.

He will disappoint them because he has a different perception not only of what his squad needs, but also of what is best for the longer-term health of Arsenal Football Club – particularly in a global economic downturn. ‘Le Professor’ views those two things as compatible, not conflicting – and works for a board who are on the same wavelength. So while his critics – more numerous and vociferous this season than at any time since he joined the Gunners in 1996 – view Wenger as stubborn, tight-fisted and infatuated with his own image as an alchemist with raw, young talent - the man himself remains unmoved by public opinion and focused only on what he feels makes sense for the future of the club.

And that philosophy may well insulate Arsenal from the worst ravages of the gathering financial storm.

He may well bring in a new face or two this month to bolster specific positions. But don’t expect him to follow the media agenda and rock Arsenal’s financial boat.

Bubble And Squeak

Wenger has been warning for several months that the repercussions of the recession will inevitably affect football. He famously said: “People still think we [football] are in a bubble, but we will be hit like anybody else.” Indeed, many clubs are likely to start squeaking as indebtedness and falling revenues start to bite. But the Frenchman with a degree in economics thinks Arsenal's prudent approach will stand them in good stead in the months and years ahead. His prudent approach means Arsenal are not living beyond their means.

He said this week of the Gunners: "We live in a naturally healthy situation - we do not depend on one person, we do not depend on the banks because we make our profit. We respect our balanced budget, so I believe that we will not be in trouble."

"Fifteen clubs are for sale… and nobody is buying. I don't know what will happen… I just know three months ago specialists said a barrel of oil would go to $200 but now it is under $40.”

Dire Warnings

Of course, Wenger’s is not a lone voice in the economic debate. Even before the UK economy toppled from worrying slowdown into headlong recession, FA chairman Lord Triesman set alarms bell ringing by claiming that English football was £3 billion in debt and that a top club could go bust in the current financial crisis. “There is one thing certain about debt and that is that it has to be repaid, alternatively it has to be refinanced,” said Triesman, adding: “Debt is not only a problem in terms of its volume, it’s a problem because those who own the debt are themselves now often in serious problems.” As he spoke, West Ham’s owners, major shareholders in Iceland’s second-biggest bank, Landsbanki were left reeling from the credit crunch as the bank plunged into receivership.

FIFA president Sepp Blatter has voiced serious concerns about the implications of indebtedness among major English football clubs, and Middlesbrough boss Gareth Southgate has warned that the Premier League is heading for meltdown unless clubs get a grip on wages and transfer fees - and make ticket prices more affordable.

There is evidence that recession is already affecting the Premier League, with falling attendances at several clubs, match tickets on general sale, revenues from stadium catering and merchandise falling, and season tickets being shared by financially stretched fans. West Ham United and Portsmouth are fending off fire-sales of players as their owners look to bail out while they can, Newcastle United’s owner can’t find a buyer for the club, and even Roman Abramovich, who has personally bankrolled Chelsea since 2003, is said to be contemplating the choice between selling his £200 million yacht or selling the Blues. Abramovich's losses on the Russian stock exchange mean manager Luiz Felipe Scolari can’t splash out this January, while 15 scouts have been sacked. And at Liverpool, co-owners George Gillett Jr. and Tom Hicks, could struggle to renew their £350 million bank loan for another six months, while plans for a new stadium have stalled.

Oil-rich Manchester City may well be comfortably inside Wenger’s 'bubble', but there is no doubt that for most others, these are worrying times. The windfall of inflated deals for TV rights, which net Premier League teams at least £35m a season, and which have fuelled the explosion in players’ salaries, could be seriously eroded by the credit crunch when the next TV deal is negotiated in 2010. And TV money for some clubs is 50 per cent of their income.

Self-Sustainability

So could Wenger’s model for Arsenal be the club’s salvation? The key to that model is operating as a business which is financially self-sustaining. He refuses to compromise Arsenal's financial future by following the examples of big-spending clubs. He accepts and agrees with the restrictions that building the Emirates Stadium imposed on Arsenal, and is comfortable with how much money is available. Wenger has consistently balanced the books and frequently turned a profit on his transfer dealings over the last 12 seasons, and he stresses that Arsenal have a new, revenue-boosting stadium, are in a healthy situation financially – and continue to be one of the top clubs on the pitch.

“This team is getting stronger and stronger but what we need to focus on is continually developing and not live in dreamland where we are linked with players of £30-£40m, because that’s not realistic,” he recently told Arsenal’s official website.

"Chelsea haven’t built a stadium and they lose £100m per year. How do you imagine you can deal with that at Arsenal Football Club without going bankrupt? We have to be responsible.

"It is not that we don’t want to spend. I believe that we have gone for a policy and we need to have a logic and a line of conduct inside the club that has to be respected. We have gone for a policy that is to develop our young players and we have to show some character and strength and not listen to everybody who comes out every day with a new name.”

In The Figures

In September Arsenal announced their annual financial results for the year ending 31st May 2008, reporting their second highest ever pre-tax profit of £36.7m. There was significant growth in turnover to £223m, reflecting increased broadcasting income to £68.4m, and sharply higher matchday income to £94.6m. The latter was the crucial revenue component, vindicating the move from Highbury to the Emirates, but also reflecting the fact that the football played by Wenger’s team consistently fills the 60,000 capacity venue.

The Arsenal board have stated repeatedly that adequate funds will always be available to Wenger to improve the quality of the squad. They trust his judgement, so he decides whether he needs to strengthen.

Chairman Peter Hill-Wood has articulated the club’s belief that to continue competing at the highest levels over the long-term they need a viable business that can pay its own way. Self-sustainability is the credo of Arsenal’s – and Wenger’s - financial and football planning, and despite the media talk of crisis when the team lose a couple of matches, the Gunners are in an enviable position.

They are not debt-free after building a new stadium, but there are two main components of their debt finance which are independent of each other. Firstly, there is a bank loan of £133m, used to fund the construction and redevelopment works at Highbury Square, which will be repaid entirely from property sales. Secondly, £250m of bonds represent the borrowings the club took on to finance construction of the stadium, and is repayable like a mortgage over 23 years at a fixed interest rate.

The repayments on the bonds together with the interest costs total £20m a year, covered by the significantly increased levels of income and profits being generated by operating from Emirates Stadium rather than the much smaller Highbury.

It is a financial model that promises greater stability than that of many of Arsenal’s rivals, and one neither the board nor Wenger is prepared to jeopardise with short-term moves for high-profile players whose purchase fees and salary demands could bust the budget.

The team may not scoop a major trophy this season, but nor are they likely to be too far away. And the outlook on and off the field looks bright despite the economic chill.

Graham Lister, Goal.com