Arsenal Finances

[hydrofluoric acid]

Jorginho just got offered an extension no?

Dont know, even if so there is room to sell players this summer. Plus the obvious ones like Vieira, ESR, Nelson, Nketiah, Partey we might think about letting Tomi and Zinchenko if we can get good offers.

 

[db10_therza]

Dont know, even if so there is room to sell players this summer. Plus the obvious ones like Vieira, ESR, Nelson, Nketiah, Partey we might think about letting Tomi and Zinchenko if we can get good offers.

I’m sure he did. I made this whole “is that an extension in your pocket or are you just pleased to see me” joke about it that did not get the likes it deserved

 

[hydrofluoric acid]

I’m sure he did. I made this whole “is that an extension in your pocket or are you just pleased to see me” joke about it that did not get the likes it deserved

Well if he keeps up his current form he will be a better sub than Elneny who we must get rid of in the summer also!

 

[drippin]

Well if he keeps up his current form he will be a better sub than Elneny who we must get rid of in the summer also!

There's no need to get rid, as Elneny's contract ends next summer. Same for Cedric.

That's like 140k per week wages saved.

Pretty sure everyone wants Jorginho to stay. Arsenal has one year option still in the contract so they could force him to stay. But I hope they agree to a new 1+1 contract.

 

[Macho]

Spoiler: Arsenal Finances 2022/23 Empire State Of Mind - By Swiss Ramble

Arsenal Finances 2022/23​

Empire State Of Mind​

SWISS RAMBLE
4 MAR 2024
∙ PAID



Arsenal’s 2022/23 financial results cover an exhilarating season, when the club led the Premier League table for a lengthy period, before eventually finishing in an impressive second place, thus qualifying for the lucrative Champions League.
They had already returned to Europe last season, reaching the last 16 of the Europa League, though they were eliminated in the early stages of both domestic cups.

Profit/(Loss) 2022/23​

​

Arsenal’s pre-tax loss increased from £45m to £52m, despite (football) revenue rising £96m (26%) from £369m to a new club record £465m, as profit from player sales halved from £22m to £11m and operating expenses shot up £89m (21%) from £432m to £521m. Net interest payable also slightly increased from £5m to £6m.

Profit/(Loss) 2022/23​

​

Arsenal’s pre-tax loss increased from £45m to £52m, despite (football) revenue rising £96m (26%) from £369m to a new club record £465m, as profit from player sales halved from £22m to £11m and operating expenses shot up £89m (21%) from £432m to £521m. Net interest payable also slightly increased from £5m to £6m.


The club was at pains to emphasise that the financial result was adversely impacted by an £18m impairment to write-down the value of certain player registrations, compared to just £2m the previous year.

Excluding impairment, the pre-tax loss improved from £43m to £34m, which is obviously better than the reported figures, but is still a sizeable deficit.


All three of Arsenal’s main revenue streams saw good growth with both commercial and match day reaching new club highs, though the largest increase came in broadcasting, which rose £45m (31%) from £146m to £191m.

Commercial increased £27m (19%) from £142m to £169m, while match day was up £24m (29%) from £79m to £103m. Player loans income dropped from £2.0m to £1.5m.


Investment in the squad led to increases in both wages, up £23m (11%) from £212m to £235m, and player amortisation, up £14m (12%) from £125m to £139m. In addition, there was significant growth in other operating expenses, which shot up £39m (52%) from £73m to £112m. The only cost that reduced was depreciation, which fell £2m (12%) from £19m to £17m.

Only eight Premier League clubs have to date published accounts for 2022/23, but Arsenal’s £52m loss is one of the worst, only surpassed by Newcastle United £73m and Wolves £67m, though Aston Villa lost £117m per UEFA’s Club Finance report.

In contrast, Manchester City posted a huge £80m profit, which was £132m better than the Gunners’ result, while Brentford also made £9m.

Player Sales 2022/23​

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Arsenal’s profit from player sales halved, dropping from £22m to £11m, mainly from the sales of Mattéo Guendouzi to Marseille, Lucas Torreira to Galatasaray, Bernd Leno to Fulham and Konstantinos Mavropanos to Stuttgart, though none of these deals were for big money.

Héctor Bellerin and Alexandre Lacazette also left on free transfers to Barcelona and Lyon respectively.

The club said that its ability to realise profits was hit by market conditions with reduced overall liquidity as clubs’ acquisition budgets continued to be impacted by financial pressures post pandemic.

However, it’s worth pointing out that some other clubs still managed to do quite well with player trading, especially Manchester City £122m and Wolves £44m.

Profit/(Loss) Trend​

​

Arsenal have now lost money five years in a row, adding up to an overall loss of £311m in this period, underlining how much the lack of Champions League football has hurt the club’s finances.


This is a big change from the club’s traditional financial prowess, as it had long been considered the Premier League’s poster child of sustainability. Indeed, up to 2018, they had enjoyed 16 consecutive profitable seasons, during which time they made nearly £400m. Until the last five years, the last time that Arsenal had posted a loss was way back in 2002.


In fairness, Arsenal‘s figures suffered badly from COVID during this period. The pandemic obviously affected all football clubs, but the Gunners were hit particularly hard, as their gate receipts are so high, and most games were played behind closed doors.

As a result, the club lost £122m, split between £35m in 2019/20, £85m in 2020/21 and £2m in 2021/22, which was only behind Manchester United and Tottenham.

Exceptional Items​

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Apart from the player impairment, Arsenal have not had to book any exceptional items in the past couple of seasons. In the preceding 4-year period, the accounts included £70m of such costs, made up of £38m staff restructuring, i.e. changes in the coaching team, and a £32m break fee to refinance external debt.

Player Sales Trend​

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Arsenal’s accounts noted that “player trading profits continue to have a significant impact on overall profitability”, so the slowdown in player trading in the last three years has really hurt the bottom line. In that time, the gain was only £44m, which was less than a quarter of the £192m in the preceding 3-year period.

This season will be better, as it includes a couple of good deals, namely Folarin Balogun to Monaco and Granit Xhaka to Bayer Leverkusen. Both of these deals represent pure profit, as the American striker is an Academy product, while the Swiss midfielder was fully amortised in the accounts.

Money was also earned on the sales of Matt Turner to Nottingham Forest, Auston trusty to Sheffield United and Pablo Mari to Monza, while there were some more free transfers: Nicolas Pépé to Trabzonspor, Ainsley Maitland-Niles to Lyon and Runar Alex Runarrsson to FC Copenhagen.


Despite offloading many players for free (with the benefit of lowering the wage bill), Arsenal still made an impressive £226m from player sales in the five years up to 2022. This was actually the fifth highest in the Premier League, though most of this is ancient history, i.e. £120m in 2017/18 and £60m in 2019/20.


In order to compete (and help meet FFP challenges), Arsenal will have to find a way to make more money from player trading, but they are well set to achieve this objective.

They have many players that would attract sizeable bids from other clubs, even if they are not being given many minutes, particularly some of the Hale End boys, such as Emile Smith Rowe, Reiss Nelson and Eddie Nketiah.

Academy products represent pure profit when they are sold, as they have no costs in the accounts, so this would be a great strategy financially, even though many Arsenal fans would be unhappy to see this homegrown talent leave.

A-M accountants assemble. You will need coffee or cocaine for this one, it's long.

 

[Macho]

Spoiler: Part 2

Property
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There was limited activity in Arsenal’s property development business with just £2.1m revenue and £0.8m profit. Adding this to football revenue of £464.6m gives total turnover of £466.7m.

However, the club said that it has finally received planning permission for the Hornsey Road site, where student accommodation will be built.

Operating Profit/(Loss)
​

Arsenal’s operating loss (excluding player sales and interest payable) narrowed from £63m to £56m, though this was much better than the deficits in the COVID years, which averaged £90m.

The last time that they managed to post an operating profit was back in 2017, which was also the last time that they competed in the Champions League.



In fairness, most football clubs lose money from their day-to-day business, so only Brentford have posted an operating profit so far in the 2022/23 Premier League.

As a rule, clubs lose a lot of money without the benefit of player sales, so Arsenal’s £56m was better than Wolves £101m and Newcastle United £69m last season, while there were also some pretty bad figures in 2021/22, including Chelsea £224m, Everton £92m and Aston Villa £86m.

Revenue
​

Arsenal’s £465m revenue last season was 10% (£42m) higher than the previous £423m peak in 2016/17, which was boosted by the Champions League. Almost all of the growth since then has been in commercial, as match day has hardly moved, while broadcasting is actually lower.

Nevertheless, broadcasting is still the most important stream with 41% of total revenue, ahead of commercial 36% and match day 22%.



Since 2019, i.e. before the pandemic struck, Arsenal’s revenue has grown £70m, which compares favourably with the other members of the Big Six - with the exception of Manchester City, who have comfortably outpaced all their rivals.



That said, Arenal’s £465m revenue is still by far the smallest of this elite group, around quarter of a billion below Manchester City’s £713m and nearly £200m less than Manchester United’s £648m. This really highlights the great job that Mikel Arteta has been doing in the past couple of years.



Arsenal remained 10th in the Deloitte Money League, which ranks clubs globally by revenue, nearly £100m ahead of Juventus and Borussia Dortmund.



That’s pretty good, but it used to be even better, as Arsenal were ranked as high as 5th in 2011. They have regained some ground recently and will make further progress if they can keep qualifying for the Champions League.



Annoyingly for Arsenal fans, Tottenham overtook them in 2019, at least in terms of revenue, earning £85m more than their rivals last season per the Money League (£549m vs. £463m). This is largely due to their new stadium, which has led to them generating £15m more in match day and £57m more in commercial.

The gap should narrow this season, as Arsenal have returned to the Champions League, while Sp**s did not qualify for Europe at all.

Broadcasting Revenue
​

Arsenal’s broadcasting revenue rose £45m (31%) from £146m to £191m, partly due to the return to UEFA competitions, partly due to more money from the Premier League TV distribution. This was the club’s second highest ever, only surpassed by £199m in 2016/17, when Arsenal reached the Champions League last 16 and won the FA Cup.



Despite last season’s growth, Arsenal’s £191m broadcasting income was still behind England’s Champions League representatives in 2022/23, especially Manchester City, who earned nearly £300m after winning the competition for the first time.



Arsenal’s Premier League central TV distribution increased by £26m from £146m to £172m. The club attributed this to the “strong” performance, which drove a £9m improvement in merit payments, as they finished three places better (2nd vs. 5th). However, the increase was also due to the start of the new three-year cycle, which benefited all clubs.

One point worth noting is the high £25m facility fee, thanks to Arsenal being broadcast live on 28 occasions, the same as Liverpool and only behind Manchester City’s 29 games.

Europe TV Revenue
​

Arsenal earned €25m for reaching the last 16 in the 2022/23 Europa League, compared to nothing from Europe in the previous season. This compromised €3.6m participation fee, €5.7m prize money, €4.1m UEFA coefficient payment, €11.3m TV pool and €0.4m final balance.



That’s not too shabby, but the huge financial advantage of qualifying for the Champions League was highlighted by England’s four representatives averaging €95m, led by Manchester City’s €135m.



As a result of this significant disparity, Arsenal have earned much less from Europe than their English rivals in the last five years, when they have not been playing in the Champions League. Their €112m was only around a fifth of City’s €551m, while even Sp**s have received more than twice as much as them with €260m.



Given this shortfall, it is not really surprising that the Arsenal have invested so much in the squad in an attempt to reclaim their seat at the top table. As the club said, “qualification for UEFA competition represents a pre-requisite to re-establishing a self-sufficient financial base.”

This season will benefit from once again playing in the Champions League. As it stands, I estimate that Arsenal have already earned €82m, which is more than three times as much as last season’s €25m from the Europa League - and is the club’s highest ever from Europe.

 

[Macho]

Spoiler: Part 3

If Arsenal manage to overcome Porto in the last 16 second leg, they will receive an additional €10.6m prize money, while the semi-final would be worth another €12.5m.



One of the largest elements in this payment is the UEFA coefficient, which is based on a club’s performances in UEFA competitions over the last 10 years. This was worth €25m, mainly thanks to Arsenal’s record in the early years of the last decade.

Match Day Revenue
​

Arsenal’s match day income rose £24m (29%) from £79m to £103m, a new club record, thanks to one more home game , a ticket price increase and higher attendances.

This was the first time that they had generated more than £100m since 2014/15 and also the first time that they had done so outside of the Champions League.



This is obviously pretty good, but it is still a fair way below Manchester United’s £136m and Tottenham’s £117m. On the other hand, it is a lot more than the other members of the Big Six: Liverpool £80m, Chelsea £77m and Manchester City £72m.



Tottenham’s new stadium has contributed to significant growth in their match day revenue, which has more than doubled since 2017 from £45m to £117m. In that period, Arsenal have only increased by £3m, which is actually the lowest of the Big Six.



Nevertheless, match day is clearly a key revenue stream for Arsenal. To illustrate its importance, it accounted for 22% of the club’s revenue in 2022/23, the highest in the Premier League, just ahead of Tottenham’s 21%. Indeed, this was the third highest of all the Money League clubs, only behind Marseille and Inter.



Arsenal’s average attendance increased from 59,568 to 60,082, which was the fourth highest in the Premier League, though a long way below Manchester United 73,671. It’s also now only the third highest in London, behind West Ham 62,459 and Tottenham 61,585.



That said, according to UEFA, Arsenal had the 12th highest crowds in Europe last season, which is pretty impressive, albeit a long way below Barcelona and Borussia Dortmund, who were both comfortably above 80,000.



The club had not raised ticket prices since 2014, but applied a 4% increase in 2022/23, followed up by another increase for 2023/24: 4% in the upper tier and 6% in the lower tier. This means that prices have gone up for some by 10% in just 12 months.

Arsenal justified this because of a steep increase in operational costs, but the decision still feels a little misguided, given the additional revenue to be earned from an additional game in the expanded Champions League group stage, especially considering the difficulties experienced by most fans during the cost of living crisis.

Commercial Revenue
​

Arsenal’s commercial revenue “significantly improved”, rising £27m (19%) from £142m to £169m, which was easily a club record. This was attributed to a new commercial strategy delivering particularly strong results from retail operations, though there were also some new partnerships. In addition, there would have been contractual increases in sponsorships following the return to European competition.

The underlying increase was actually even higher, as the previous season included money from the Amazon “All or Nothing” documentary, reportedly worth £10m.



In fact, Arsenal’s commercial revenue has grown by £58m (53%) in the last four years, up from £111m in 2018/19. That’s not bad, but the problem is that they have still been outpaced by many of their rivals. For example, in the same period Manchester City’s growth was nearly double at £114m, while Tottenham and Liverpool are up by £92m and £84m respectively.



In other words, even after Arsenal’s recent growth, their £169m commercial income is still a distant sixth highest in England, less than half of Manchester City’s £341m, and also a long way behind Manchester United £303m and Liverpool £272m. Most galling to Arsenal fans, they have even been overtaken by Tottenham £227m.



Arsenal have extended their Adidas kit supplier deal, currently worth £60m a year, to 2030. The club has not confirmed the value of the new agreement, but some media reports have suggested that it has increased to £75m with a sizeable advance for signing the contract two years before the old deal would have ended.

The £40m Emirates sponsorship has also been further extended to 2028, taking this collaboration to at least 22 years. Again, financial details have not been divulged, but most analysts suggest that it will increase to £50m from 2024/25.

If so, it will be the same value as Liverpool’s Standard Chartered agreement, but it is worth noting that Arsenal’s deal also includes stadium naming rights and does not allow the club to sign a separate training kit deal.

The controversial Visit Rwanda sleeve sponsorship, worth £10m a year, has also been extended, while a new naming rights deal for the Sobha Realty Training Centre was announced last month.

Player Loans
​

Arsenal’s player loans income dropped from £2.0m to £1.5m, which was somewhat surprising, given how many players were loaned out last season.

Admittedly, many of these were Academy youngsters looking for experience, but the list of loanees also included experienced pros such as Pépé, Maitland-Niles, Tavares, and Mari.

Wages
​

Having significantly dropped in 2021/22, Arsenal’s wage bill rose £23m (11%) from £212m to £235m last season, following renewed investment in players in both the men’s and women’s teams, while a bonus would have been paid for Champions League qualification.

The process of getting under-performing players off the payroll continued, even if it meant letting them go for free, with the departures of Lacazette and Bellerin.



There was also a steep increase in headcount, up from 649 to 723. This was mainly in commercial and administration employees, but the number of playing staff rose from 106 to 115, the highest ever. However, total staff has only really climbed back to pre-pandemic levels.

 

[Macho]

Spoiler: Part 4 ffs (wages & staff & squad cost)

Even after last season’s growth, Arsenal’s wages have only increased by £12m (5%) in the last five years, which is by far the lowest of the Big Six. In the same period, four clubs have seen increases of more than £100m, led by Manchester City £163m and Chelsea £116m.


Consequently, Arsenal’s £235m wages are the sixth highest in England, far below the top four clubs, who are all well above £300m. Manchester City lead the way with £423m, followed by Liverpool £374m, Chelsea £360m and Manchester United £331m. The Gunners were even overtaken last season by Tottenham £253m.

It might sound strange to say that a club with a wage bill approaching a quarter of a billion pounds is punching above its weight, but Arsenal have really over-performed in the last couple of seasons. For example, they have finished ahead of Manchester United and Chelsea, despite their wages being around £100m lower.

However, wages are likely to rise going forward with new contracts awarded to the likes of Bukayo Saka, Gabriel Martinelli, William Saliba, Martin Ødegaard and Gabriel, while Declan Rice will be on a high salary and there will be more Champions League bonuses.


Arsenal’s wages to turnover ratio reduced from 58% to 51%, which is the club’s lowest since 2016/17, and a lot better than the COVID-impacted 73% two years ago.


This is one of the lowest (best) ratios in the Premier League, almost identical to Manchester United 51% and only bettered by Tottenham’s amazing 46%. Clubs outside the Big Six usually have much higher wages to turnover ratios, e.g. Wolves 84% and Newcastle United 75% last season.


Arsenal’s highest paid director’s remuneration more than doubled from £634k to £1.4m, while total remuneration was up from £1.2m to £1.9m.

The club did not name the highest paid director, but this is presumably Tim Lewis. Even after last season’s increase, this was still a lot less than former chief executive Ivan Gazidis, who received £2.7m in his last full season.


Plenty of directors in the top flight take home less than a million, but others are more handsomely rewarded for their efforts, so Arsenal’s £1.4m is still a lot less than the likes of Daniel Levy at Tottenham £3.3m, Paul Barber at Brighton £2.9m and Richard Arnold at Manchester United £2.6m.

Player Amortisation​

​

Arsenal’s player amortisation, the annual charge to expense transfer fees over a player’s contract, increased by £14m (12%) from £125m to £139m, which means this expense has more than tripled from only £40m in 2014.

The club also booked £18m player impairment to reduce the value of certain players in the accounts, which was more than the previous nine years combined. The only time that Arsenal have charged anything like this amount before was £12m in 2013.


Arsenal’s £139m player amortisation is now the fourth highest in the Premier League, only just below Manchester City £145m, though a fair way below Manchester United £170m. Furthermore, once Chelsea publish their 2022/23 accounts, they are likely to blow this out of the water, even with the assistance of their “innovative” long-term contracts.

The Gunners’ player amortisation will further grow after the big money signings of Declan Rice and Kai Havertz, though this will be partly offset by the accounting impact of extending player contracts.


Arsenal’s £18m player impairment is the highest to date in last season’s Premier League, albeit miles below Chelsea’s unprecedented £77m in 2021/22.

This charge almost certainly relates to ending the expensive Nicolas Pépé saga. The Ivory Coast winger cost a massive £72m in 2019, but it’s fair to say that this did not turn out to be one of Arsenal’s better purchases.

Depreciation​

​

Arsenal’s depreciation fell £2m (12%) from £19m to £17m, which was more in line with previous years. Following the investment in the Emirates Stadium, this is the second highest in the Premier League, though a lot less than Tottenham’s £72m (2021/22 figure).

Other Expenses​

​

Arsenal’s other expenses shot up £39m (52%) from £73m to £112m, by some distance their all-time high, but still a lot lower than the two Manchester clubs (City £173m and United £163m).

Like all clubs, they were hit by the significant impact of inflation, especially on the price of utilities. The growth was also influenced by a £15m increase in the provision for “probable” transfer fees, based on players achieving a specified number of appearances.

The club noted that if any additional costs arrive as a result of the closure of the European Super League project, these would be fully recharged to KSE.

Transfers​

​

Arsenal spent a club record £251m on player purchases in 2022/23, including agent fees, which was a striking £63m more than their previous high.

This included the summer recruitment of Gabriel Jesus and Oleksandr Zinchenko from Manchester City, Fabio Vieira from Porto, Matt Turner from New England Revolution and Marquinhos from Sao Paulo.

In addition, there were three arrivals in the January transfer window: Leandro Trossard from Brighton, Jorginho from Chelsea and Jakub Kiwior from Spezia.

Surprisingly, this was more than both Manchester United £247m and Manchester City £221m, though Chelsea’s outlay will be significantly higher when they release their 2022/23 accounts.


This means that Arsenal have splashed out an amazing £835m in the last five years, which is considerably more than the £493m outlay in the preceding 5-year period. As the club drily noted, it has “again invested strongly in the development of the first-team playing resources”.

Allied with the slowdown in player sales, this means that nets spend has more than doubled in the past five years from £301m to £667m.

 

[Macho]

Spoiler: Part 5 (squad cost continued)

Arsenal have continued to spend big this season, bringing in Declan Rice from West Ham, Kai Havertz from Chelsea and Jurrien Timber from Ajax.

In fact, in the last three seasons, only Chelsea have outspent the Gunners in the Premier League, although their £1.1 bln was twice as much (based on Transfermarkt).

Squad Cost
​

Arsenal’s squad cost, based on amounts paid per the club’s balance sheet (as opposed to market value), increased from £649m to £774m, which means that this has grown by nearly 50% in the last four years.



Even after this rapid growth, Arsenal’s £774m squad cost is still a long way below the top three. Manchester City have broken through the billion pound barrier and Chelsea will almost certainly join them (and probably overtake them) when their 2022/23 accounts are published.

Debt
​

Arsenal’s gross financial debt increased by £42m from £234m to £276m, as the loan from owner Stan Kroenke (repayable on 2 years notice) rose from £218m to £259m, while debentures remained at £17m.

This means that gross debt has grown by £58m in the last two years and is the club’s highest since way back in 2009.



However, even after this growth, Arsenal’s £276m debt is miles below Tottenham £853m (new stadium) and Manchester United £613m (Glazers’ leveraged buy-out).

The club has also taken out a £70m working capital facility with Barclays, which is required because the club’s cash flows vary during the year.



Interestingly, Arsenal’s £259m owner debt is now the fourth highest in the Premier League, only behind aspirational clubs like Brighton, Everton and Leicester City.



Arsenal’s annual interest payment has more than halved from £10m to £4m since the club redeemed the third party bonds, replacing them with the KSE loan. The £34m paid two years ago included a once-off refinancing break fee.



As a result, Arsenal’s £4m interest payment is now significantly lower than Manchester United £31m and Tottenham £22m, while some other clubs have taken on expensive third party debt recently, leading to higher interest charges, e.g. Wolves £10m and West Ham £5m.

Transfer Debt
​

One reason why Arsenal have managed to spend so much on recruitment, despite their revenue lagging wayy behind their rivals, is that they have bought players on credit, i.e. making use of stage payments on transfer fees.

In this way, transfer debt increased from £188m to £240m last season, so this has more than tripled since 2019 from just £77m.



Of course, this is a growing phenomenon for all clubs, but Arsenal now have the third highest transfer debt in the Premier League, only behind Manchester United £277m and Tottenham £252m.

Arsenal are owed just £27m by other clubs, so their net transfer payable is a hefty £213m.

Cash Flow
​

Arsenal’s £56m operating loss swung to £137m positive cash flow after adding back £174m of non-cash amortisation, depreciation and impairment plus £19m favourable working capital movements.

This was further boosted by £37m player sales, before they spent £184m on player purchases, invested £17m in infrastructure and paid £4m interest, leading to a £34m cash outflow before financing. However, this was more than covered by KSE’s £46m additional loan.

The club noted that while season ticket renewals for 2023/24 were very strong, the timing meant that the cash impact partly came in June, i.e. after these accounts closed.



As a result, Arsenal’s cash balance increased from £30m to £43m, which is pretty good, but significantly lower than the £231m “war chest” that they had in 2018.



This was a lot less than Tottenham’s £227m (in 2022), though that figure is a bit misleading, as much of this was ring-fenced for stadium development.

It is worth noting that Arsenal no longer have to hold a debt service reserve following the redemption of the bonds, which freed up around £37m of cash.



Looking at cash flow over the past four years gives us a decent overview of Arsenal’s business model during this period. They made £300m from operations, which was boosted by £272m from the owner loans, while they took £124m from cash reserves, giving them nearly £700m available cash.

This was largely spent in the transfer market with £395m bringing players to the Emirates (net), while £214m was used to redeem third party bonds and another £52m went on interest.

 

[Macho]

Spoiler: Kroenke kindess+ Sustainability rules + Conclusion

Funding​

​

Up to 2019 owner Stan Kroenke had put nothing into Arsenal (apart from funds used to buy the club), but he has provided £272m of loans since then “both to underpin transfer activities and for working capital requirements”. That included £46m last season with £5m of this classified as a capital contribution for technical accounting reasons.

The club stated that it is “reliant on the continued financial support of its ultimate parent company, Kroenke Sports & Entertainment.”




In fact, Kroenke has been one of the more generous owners in the Premier League in recent years, as his £226m funding up to 2022 was one of the highest.

That said, all of his money to date has been provided in the form of loans, while other owners have injected capital (which does not need to be repaid). It is likely that Kroenke’s loans are not quite as “friendly” as those provided by some other owners.

​

Premier League Profitability and Sustainability Rules​

​

Arsenal’s large losses over the past few years have raised the question of whether they have any Financial Fair Play problems.

Indeed, it was reported that the reason that David Raya arrived from Brentford on loan was due to FFP restrictions.

On the other hand, Mikel Arteta implied that the lack of signings in the January window was more to do with retaining funds for the summer, “We didn’t have the capacity to improve the team in the way that we think we want to improve it. So we decided not to do something yet.”

The first thing to appreciate with the FFP calculation is that the reported losses are reduced in two ways:

• “Healthy” expenditure on infrastructure, youth development, women’s football and community.
• Losses attributed to the COVID pandemic (as well as averaging the 2019/20 and 2020/21 seasons).

After making all these adjustments, I estimate that Arsenal ended up with a £15m FFP loss over the 3-year monitoring period up to 2023, which meant that they were £90m lower than the £105m maximum allowed loss.



The accounts confirmed that Arsenal were OK, stating, “The club continues to be compliant with applicable financial sustainability regulations put in place by UEFA and the Premier League.”

This analysis assumes that Arsenal can use the higher £105m threshold, as opposed to the much lower £15m limit, so the club needs to provide evidence of “secure funding”.



In the past, this effectively meant that an owner had to put in equity capital, but the Premier League Handbook now gives much more leeway, allowing a letter of credit or any form of security that the PL Board considers satisfactory also to be used as “secure funding”.



That said, based on my calculations, Arsenal would still have been within the £15m lower loss threshold (just).

UEFA Financial Sustainability Rules​

​

Given that Arsenal hope to regularly qualify for Europe, they must also comply with UEFA’s regulations, but the good news is that these are less strict than the former regime, as the maximum allowable loss has doubled from €30m to €60m (potentially as much as €90m if a club is deemed to be in good financial health).

In any case, there was no UEFA acceptable deviation test to pass for the 2023/24 sporting season, because the counter was set to zero as part of the transition to the new regulations.



UEFA have also introduced squad cost control via a new ratio of player wages, transfers and agent fees that will be limited to 70% of revenue and profit on player sales, though there will be a gradual implementation over 3 seasons (90% in 2023, 80% in 2024 and 70% from 2025), giving clubs time to get their house in order.



Based on my calculations, Arsenal’s ratio was 77% in 2022/23, which was much worse than their 51% wages to turnover ratio, due to the high player amortisation/impairment allied with relatively low player sales.

This is within striking distance of the ultimate 70% target in 2025, so this is unlikely to be a major challenge for the club, though higher player sales would make it more comfortable (plus not booking any more impairment).

​

Conclusion​

​

Although Arsenal’s £52m loss is far from desirable, it’s the inevitable price to pay for a club that wants to compete at the highest level.

It is clear that the owners have demonstrated an abundance of ambition, spending big on players in order to get back into the Champions League and compete for the Premier League title.

Whether this significant outlay will be enough to deliver silverware is debatable, but at least they now have a fighting chance.

 

[Makingtrax]

Spoiler: Kroenke kindess+ Sustainability rules + Conclusion

Funding​

​

Up to 2019 owner Stan Kroenke had put nothing into Arsenal (apart from funds used to buy the club), but he has provided £272m of loans since then “both to underpin transfer activities and for working capital requirements”. That included £46m last season with £5m of this classified as a capital contribution for technical accounting reasons.

The club stated that it is “reliant on the continued financial support of its ultimate parent company, Kroenke Sports & Entertainment.”




In fact, Kroenke has been one of the more generous owners in the Premier League in recent years, as his £226m funding up to 2022 was one of the highest.

That said, all of his money to date has been provided in the form of loans, while other owners have injected capital (which does not need to be repaid). It is likely that Kroenke’s loans are not quite as “friendly” as those provided by some other owners.

​

Premier League Profitability and Sustainability Rules​

​

Arsenal’s large losses over the past few years have raised the question of whether they have any Financial Fair Play problems.

Indeed, it was reported that the reason that David Raya arrived from Brentford on loan was due to FFP restrictions.

On the other hand, Mikel Arteta implied that the lack of signings in the January window was more to do with retaining funds for the summer, “We didn’t have the capacity to improve the team in the way that we think we want to improve it. So we decided not to do something yet.”

The first thing to appreciate with the FFP calculation is that the reported losses are reduced in two ways:

• “Healthy” expenditure on infrastructure, youth development, women’s football and community.
• Losses attributed to the COVID pandemic (as well as averaging the 2019/20 and 2020/21 seasons).

After making all these adjustments, I estimate that Arsenal ended up with a £15m FFP loss over the 3-year monitoring period up to 2023, which meant that they were £90m lower than the £105m maximum allowed loss.



The accounts confirmed that Arsenal were OK, stating, “The club continues to be compliant with applicable financial sustainability regulations put in place by UEFA and the Premier League.”

This analysis assumes that Arsenal can use the higher £105m threshold, as opposed to the much lower £15m limit, so the club needs to provide evidence of “secure funding”.



In the past, this effectively meant that an owner had to put in equity capital, but the Premier League Handbook now gives much more leeway, allowing a letter of credit or any form of security that the PL Board considers satisfactory also to be used as “secure funding”.



That said, based on my calculations, Arsenal would still have been within the £15m lower loss threshold (just).

UEFA Financial Sustainability Rules​

​

Given that Arsenal hope to regularly qualify for Europe, they must also comply with UEFA’s regulations, but the good news is that these are less strict than the former regime, as the maximum allowable loss has doubled from €30m to €60m (potentially as much as €90m if a club is deemed to be in good financial health).

In any case, there was no UEFA acceptable deviation test to pass for the 2023/24 sporting season, because the counter was set to zero as part of the transition to the new regulations.



UEFA have also introduced squad cost control via a new ratio of player wages, transfers and agent fees that will be limited to 70% of revenue and profit on player sales, though there will be a gradual implementation over 3 seasons (90% in 2023, 80% in 2024 and 70% from 2025), giving clubs time to get their house in order.



Based on my calculations, Arsenal’s ratio was 77% in 2022/23, which was much worse than their 51% wages to turnover ratio, due to the high player amortisation/impairment allied with relatively low player sales.

This is within striking distance of the ultimate 70% target in 2025, so this is unlikely to be a major challenge for the club, though higher player sales would make it more comfortable (plus not booking any more impairment).

​

Conclusion​

​

Although Arsenal’s £52m loss is far from desirable, it’s the inevitable price to pay for a club that wants to compete at the highest level.

It is clear that the owners have demonstrated an abundance of ambition, spending big on players in order to get back into the Champions League and compete for the Premier League title.

Whether this significant outlay will be enough to deliver silverware is debatable, but at least they now have a fighting chance.

Very fair appraisal of our situation. Pretty obvious the heights the owners have climbed to give Arteta a fighting chance at the title. Our squad cost has not far off doubled since 2018 getting much closer to the rich clubs. If they can take this £300m+ loss since 2019 without a FFP penalty then it's all good.

Without a decent squad cost you've no chance of winning this league, something that's finally dawning on our fans. All those years of profit and CL qualification that Wenger delivered when he had no right to, was quite remarkable.

 

[Macho]

Very fair appraisal of our situation. Pretty obvious the heights the owners have climbed to give Arteta a fighting chance at the title. Our squad cost has not far off doubled since 2018 getting much closer to the rich clubs. If they can take this £300m+ loss since 2019 without a FFP penalty then it's all good.

Without a decent squad cost you've no chance of winning this league, something that's finally dawning on our fans. All those years of profit and CL qualification that Wenger delivered when he had no right to, was quite remarkable.

Yeah I found this quote pretty interesting. He could have atleast shouted out Wenger

This is a big change from the club’s traditional financial prowess, as it had long been considered the Premier League’s poster child of sustainability. Indeed, up to 2018, they had enjoyed 16 consecutive profitable seasons, during which time they made nearly £400m. Until the last five years, the last time that Arsenal had posted a loss was way back in 2002.

This was also really telling:

Up to 2019 owner Stan Kroenke had put nothing into Arsenal (apart from funds used to buy the club), but he has provided £272m of loans since then “both to underpin transfer activities and for working capital requirements”. That included £46m last season with £5m of this classified as a capital contribution for technical accounting reasons.

In fact, Kroenke has been one of the more generous owners in the Premier League in recent years, as his £226m funding up to 2022 was one of the highest.

That said, all of his money to date has been provided in the form of loans, while other owners have injected capital (which does not need to be repaid). It is likely that Kroenke’s loans are not quite as “friendly” as those provided by some other owners.

11 years of no funds

Which changed after 2019 when he became sole owner of course, but still this context is very important.

Back to the present day, Arteta is clearly over performing for the past 2 seasons in terms of squad cost and salaries.

 

[Makingtrax]

Yeah I found this quote pretty interesting. He could have atleast shouted out Wenger



This was also really telling:



11 years of no funds

Which changed after 2019 when he became sole owner of course, but still this context is very important.

Back to the present day, Arteta is clearly over performing for the past 2 seasons in terms of squad cost and salaries.

Totally agree, he has over performed in his league position. And so did Wenger, every single year until they took him out.. Just a shame there’s still plenty on here who still can’t get their heads around this very simple premise and feel that he let the club down and left a mess.

 

[Sanchez11]

Citys matchday revenue is shocking, commercial deals cooked to fvck.

 

[Maybe]

11 years of no funds

Which changed after 2019 when he became sole owner of course, but still this context is very important.

That 400M is not adjusted for inflation I believe, just insane what Wenger was achieving as a manager.

Also, finally some clarity on Kroenke "giving" us money like so many fans believe (and I had some ugly debates on that here).

 

[Macho]

That 400M is not adjusted for inflation I believe, just insane what Wenger was achieving as a manager.

Yeah I was Wenger Out at the time, but going forward the end of his tenure needs to be seen under a different context seeing numbers and the trajectory under Arteta. He was legit working miracles over a prolonged period.

Also, finally some clarity on Kroenke "giving" us money like so many fans believe (and I had some ugly debates on that here).

Same

Many would argue being given money and long term low interest loan are the same thing.

A "fan" or ambitious owner pouring money into the club or a calculating business man providing very low intetrest loans each have their own pros and cons in my opinion.

 

[Tomb Bombadil]

We made £25m in last years Europa League. With United and Newcaslte already out of the CL I guess we will make at least £80m this year and I guess 10-15m more for each extra round. So that's an extra £50-100m this year.


Plus we made £60-70m profit on player sales this years compared to £20m last year: Another £40m. And I guess we will be making much more profit next season with the players like: Nketiah, Nelson, Ramdsale, Viera, ESR, Partey.

And with more sporting success we will get better commercial deals. So it looks pretty good financial in the future with whom we can correct the last 5 years.

This will be the problem of Chelsea next season and even more the season after if they don't reach the CL.

 

[avenellroad]

That 400M is not adjusted for inflation I believe, just insane what Wenger was achieving as a manager.

Also, finally some clarity on Kroenke "giving" us money like so many fans believe (and I had some ugly debates on that here).

Wenger’s last decade at the club (apart from possibly the final year and a half when the writing was on the wall) was simply incredible in terms of keeping us in the Champions League whilst we were selling our best players each summer to finance the stadium. Imagine any of the top clubs trying to do that now. Clubs like Everton are trying to build a stadium whilst having no pot to piss in.

We owe a great deal to Arsène.

 

[Sanchez11]

We made £25m in last years Europa League. With United and Newcaslte already out of the CL I guess we will make at least £80m this year and I guess 10-15m more for each extra round. So that's an extra £50-100m this year.
View attachment 22216

Plus we made £60-70m profit on player sales this years compared to £20m last year: Another £40m. And I guess we will be making much more profit next season with the players like: Nketiah, Nelson, Ramdsale, Viera, ESR, Partey.

And with more sporting success we will get better commercial deals. So it looks pretty good financial in the future with whom we can correct the last 5 years.

This will be the problem of Chelsea next season and even more the season after if they don't reach the CL.

Our tv money should go up abit too, been on tv alot this season.

 

[quattro]

Totally agree, he has over performed in his league position. And so did Wenger, every single year until they took him out.. Just a shame there’s still plenty on here who still can’t get their heads around this very simple premise and feel that he let the club down and left a mess.

Also, given how matchday revenue prop up about 1/5 of the revenue, we have him to thank for building and financing the Emirates over the time when failure to be continuously profitable would have been debilitating to our long-term future.