Arsenal Finances

[grange]

Next season onwards we will have 50m extra from Commercial Income
Emirates +20m
Addidas +15m minimum
Shobha Reality +15m

Looking good. Should actually get closer to 600m revenue from next season onwards. Actually with player sales it can cross 600m aswell.

Are we getting a tax write off for Prime?

 

[Fallout]

Above is the key table you need to know re: arsenal finances

In yellow are the cash payments we've spent each year on player transfers (net of player sales)

These transfers are financed by the rows above it, which are:
(1) cash earnings from arsenal's business (derived from arsenal's revenues less expenses)
(2) net changes in working capital
(3) capital expenditures
(4) financing activities (e.g., raising new debt)
(5) the cash balance

As you can see in the last column, assuming we don't take on additional debt or eat into our cash balance, I think our business generates ~113 million in free cash flow to be used on player transfers

Two caveats:
(1) I'm not sure where we stand on FFP, etc. so someone would have to educate me on what the rules are in order to incorporate here
(2) We've increasingly been funding our player purchases with deferred / contingent payments, and so we now have an insane amount of transfer debt (~273 million) ... this has to be paid off in the near-term and likely constrains our ability to make moves in a meaningful way

 

[DanDare]

My prediction is this summer is going to be funded by the accounting trickery of selling academy players. Pure profit which is then amortised over 5 years on new players. Nelson, Nketiah and ESR all to go.

 

[jones]

If stating objective facts is having an anti- Arsène stance, okay, I guess.

 

[TH14shahriar]

My prediction is this summer is going to be funded by the accounting trickery of selling academy players. Pure profit which is then amortised over 5 years on new players. Nelson, Nketiah and ESR all to go.

Don't forget CL money.

 

[drippin]

(2) We've increasingly been funding our player purchases with deferred / contingent payments, and so we now have an insane amount of transfer debt (~273 million) ... this has to be paid off in the near-term and likely constrains our ability to make moves in a meaningful way

Didn't Kroenke's make some arrangements, paid off debts, and loaned their own money at low interest?

Why would it have to paid off in the near-term?

 

[Goonger]

Didn't Kroenke's make some arrangements, paid off debts, and loaned their own money at low interest?

Why would it have to paid off in the near-term?

Does most of the Kronke loans not cover the stadium debt? Think we owe the Kronke's £259m per the last accounts. I think @Fallout is correct, we do have a high amount of costs related to transfer debt, think Swiss Ramble mentioned £240m.

It's why i think we might have 1 other big summer and then with a young, settled, quality squad all tied down to new contracts as well as increased revenue, be a bit more methodical in our spending and work the transfer debt down.

 

[drippin]

Does most of the Kronke loans not cover the stadium debt? Think we owe the Kronke's £259m per the last accounts. I think @Fallout is correct, we do have a high amount of costs related to transfer debt, think Swiss Ramble mentioned £240m.

It's why i think we might have 1 other big summer and then with a young, settled, quality squad all tied down to new contracts as well as increased revenue, be a bit more methodical in our spending and work the transfer debt down.

So Kroenke's take loans from external sources for transfers, with bigger interest rates? Or?

 

[Gooner Zig]

View attachment 22524

Please don't ever post this cretin's picture on this forum again, I almost punched a hole through my work computer.

 

[Fallout]

Didn't Kroenke's make some arrangements, paid off debts, and loaned their own money at low interest?

Why would it have to paid off in the near-term?

Your first statement is correct -- however this doesn't have to do with the concept of transfer debt

Transfer debt is being defined as players we have bought "on credit"

For example if we buy a player and space out the payments over 3 years, and only 1 year has passed, money we owe over the remaining 2 years are added to our balance of transfer debt

This transfer debt hasn't been financed with anything so is essentially an unfunded liability that we need to pay off in the near term

 

[Fallout]

Does most of the Kronke loans not cover the stadium debt? Think we owe the Kronke's £259m per the last accounts. I think @Fallout is correct, we do have a high amount of costs related to transfer debt, think Swiss Ramble mentioned £240m.

It's why i think we might have 1 other big summer and then with a young, settled, quality squad all tied down to new contracts as well as increased revenue, be a bit more methodical in our spending and work the transfer debt down.

Kroenke loans essentially replaced whatever debt we used to have in place at the time, but at a lower interest rate

As you can see from the evolution of the cash balance in the table, we've already spent the proceeds from any debt that we've raised unfortunately, so now it's just a drag on future earnings via added interest expense

 

[Fallout]

As for my prediction I think the poster above is correct

To the extent ffp allows I think Kroenke puts more money into the club via adding to the debt balance at low interest rate (see the net cash flow from financing line in the table to see what he's been putting in, last year was 50 million)

Then we have one more big summer and go quiet longer term

 

[Tnegs]

An extra couple of three hundred million into the club is an easy decision for the Kroenkes. The total debt might increase to 500m+ but the clubs valuation will have increased by significantly more than that. If you could borrow a dollar to make two it’s a decision you make all day long.

 

[SA Gunner]

I need to look at the finances some more, but thanks to you guys for adding such rich context.

If I had to guess, I'd say a combination of pure profit players (academy, Cedric, Elneny, possibly TP5), Champions League money, loans with obligations, and amortization, would likely allow us to bring in our players.

This is the last summer where we need to make big investment I think. And I think the financial team would have a plan.

 

[Goonger]

I need to look at the finances some more, but thanks to you guys for adding such rich context.

If I had to guess, I'd say a combination of pure profit players (academy, Cedric, Elneny, possibly TP5), Champions League money, loans with obligations, and amortization, would likely allow us to bring in our players.

This is the last summer where we need to make big investment I think. And I think the financial team would have a plan.

What the Kronke's have allowed us to do is to speculate to accumulate. I think there was a realisation we have to upscale Net spending because we had an aging squad that we'd get little return for, but we wanted to spend to improve the squad, increasing the quality but making it younger in the process, however i dont think we'll be looking at high net spends going forward.

Where you want to get to is similar to where City are now. There are obvious question marks on how they got there, but they have ultimately got to a place now where their finances look really healthy, winning things while posting profits each year. They've become fully self sufficient to a level that Chelsea never got to under Abramovich, who was still needing to put in loans every couple of years to either cover losses or cover transfer spends.

 

[Sanchez11]

We just need to stay in cl every season and go deep and the prize money will help us. But we need to start selling well and that includes youth players. If they become stars elsewhere so be it.

 

[JuliusfromDenmark]

Your first statement is correct -- however this doesn't have to do with the concept of transfer debt

Transfer debt is being defined as players we have bought "on credit"

For example if we buy a player and space out the payments over 3 years, and only 1 year has passed, money we owe over the remaining 2 years are added to our balance of transfer debt

This transfer debt hasn't been financed with anything so is essentially an unfunded liability that we need to pay off in the near term

Just from a general business standpoint, I don't think this technically AP line is any bad? It is 2x current FCF, and I would assume that we can stretch it to at least 3x, and likely 5x without any issues. Especially when the squad is young.

I agree that we likely have one last squad assembly summer ahead of us, before we have a pretty decent budget available every summer, in the range of 85m, excluding player sales, since we can bring down the transfer debt with 30-50m per year with that model.

Getting to the deep stages of UCL and consistenly at the very top of PL will help, along with improved sponsorship deals - which the club is all doing.

 

[Topside]

We now have a young squad, lots are only reaching near potential as players go 22, 23, 24.

New contracts for Saka, Saliba, Gabriel, Martinelli, White and the captain Ødegaard etc, the club has secured players for years at peak years, any club looking to take them will be paying huge fees.

 

[Topside]

Asssets of a football club should always be on the team sheet not the balance one.

CL football again next season revenues will certainly grow.

 

[Maybe]

We just need to stay in cl every season and go deep and the prize money will help us. But we need to start selling well and that includes youth players. If they become stars elsewhere so be it.

I don't really agree with the youth part, they are cheap to keep and all they want is to get better so motivation in them is still high.

I'd say we need to be better and get rid of Elneny's, or even better, never get them in the first place.
We did a poor job of bloating this squad with Luiz, Cedric, Mari, Willian, Runnarson, and some horrible players from the past.

Thankfully we are past that and that's something we should never look at doing again.