Arsenal are lining up their ducks in a row and if all goes as planned, this could be another daring summer in the transfer market.
Arsenal already had two bids for West Ham United midfielder Declan Rice, with a second deal rejected in the region of £90m, but they are expected to return with another offer. They have also agreed a deal to sign Kai Havertz from Chelsea for a fee of around £65m, and are in negotiations with Ajax for defender Jurrien Timber, with a bid value of around £30m.
No other Premier League club has yet shown as much intent in this booming window, but for Arsenal it is continuing its ambitious pattern.
Take the summer of 2021, when £145m was spent on players including Ben White, Martin Odegaard and Aaron Ramsdal. Or last season, when the club parted ways with £165m to turn Mikel Arteta’s fifth-placed 2021-22 side into title contenders with the addition of, among others, Gabriel Jesus and Oleksandr Zinchenko.
The age of Arsenal wisdom is no longer under American owner Stan Kronk. Every summer now eclipses the past. The club days when Gunnersaurus, the club’s towering dinosaur mascot, was made redundant in 2020 is a quickly fading memory. Since then, more than £300m has been spent appearing on the other side of the Covid-19 pandemic, all without major sales that would balance the books.
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It looks like this summer will be no different, as long as the best laid plans of Rice and the (other) men don’t go awry, but there will come a time when the question will be asked: How far can Arsenal keep him. on spending?
The shackles of financial fair play are felt elsewhere in the Premier League, after all.
Chelsea know they have to rein in their extravagant spending last season and are under pressure to cut back their bloated squad. Manchester United and Newcastle United are two other clubs that specifically accept FFP which is something that cannot be ignored. Meanwhile, Everton can rarely move due to their restrictions, which has also led to an official Premier League charge being made.
However, Arsenal, who have made pre-tax losses of £226m in the past three years, continue to write cheques.
The Premier League and UEFA, UEFA, will be watching – they always are – but Arsenal maintain a relaxed view. Arteta, for example, insisted last summer that Arsenal were “compliant” with the FFP. “I think the club has been very disciplined throughout and has a very clear vision of how to do things,” he said.
Little has changed and the successes that followed Arteta’s valuation have only encouraged Arsenal. There will be UEFA Champions League football next season for the first time since 2016-17, so, almost inevitably, record-breaking revenue is on the way.
Their 2021 and 2022 summer recruitment may have taken risks during seasons of lower income streams, but this time it comes on a much stronger footing. Arsenal knows what’s coming.
“I don’t see much reason for them to be concerned about FFP,” says Kieran Maguire, Lecturer in Finance at the University of Liverpool and co-host of The Price Of Football podcast. “They spent a lot of money in the last couple of seasons and it looks like they will do it again, but they have seen revenue streams go up quite a bit. In 2022-23 they are higher in the table so they will get more merit pay from the Premier League. They have performed exceptionally well.” Modest in Europe (they lost in the last 16 of the Europa League) but at least there were (those extra games) at home, where they probably make two million at a time.
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“They will get bonuses from[shirt sponsor and stadium name]Emirates etc. for being in the Champions League next season and just qualifying for the Champions League worth a minimum of £30m. That’s before you even kick the ball.
“I don’t see a lot of concerns.”
Arsenal ultimately have to comply with two sets of free play rules: the English Premier League and those supervised by UEFA. Both are designed to encourage sustainability and sound financial practices. Failure to comply will lead to consequences. No laughing in the back room, please.
Domestic regulations are not likely to be a concern for Arsenal anytime soon. Clubs are allowed to lose up to £105m over a three-year monitoring period, but within these valuations there are a host of caveats.
Losses attributed to the pandemic can be waived, as can a range of other permitted deductions, such as stadium development, youth and community development and women’s football. The current assessment period also gives additional scope for financial damage from Covid-19 in 2019-20 and 2020-21, with those two quarters cohered together and an average taken from the two.
That leaves Arsenal effectively making a pre-tax loss of £168m for the period ending in 2021-22, but the deductions allowed are enough to satisfy the Premier League record holders. Respected electronic analyst Swiss Ramble estimates the club could write off up to £162m of that amount.
These numbers, of course, do not include the huge spending last season. Or spending on the one who will start soon.
But Arsenal’s financial strength has also been altered by the events of the past 12 months.
This 2021-22 accounts covered a campaign without European qualification (2020-21) and one that ended with a fifth-place finish in the Premier League worth £145.7m from the club’s £369m revenue.
Arsenal’s appearance last season, which ultimately ended as runners-up to Manchester City, likely brought central distribution from the Premier League in the region of £180m, due to increased merit payments and additional income from overseas broadcasting rights. This run through to the last 16 of the Europa League is also likely to have added up to £30m in prize money and matchday revenue.
All that guarantees a significant turnover and next season, with a guaranteed return to the Champions League, will see net profits rise again for 2023-24. An extended return to Europe’s elite club competition would be worth more than £70m in prize money alone for any Premier League club.
The club, which was in danger of falling behind the rest of England’s elite, returned with revenues £75m less than neighbors Tottenham Hotspur in 2021-22 and £114m less than London counterparts Chelsea, in the last two years.
Arsenal are back to the levels of 2016-17, when annual revenue peaked at £419m. The accounts for the 2022-23 season, due to be published this winter, will depict a club going after its rivals. Returns for 2023-24 could see them pass one or two.
“The accounts we can see regarding Arsenal don’t show what happened in the last 12 months,” says Dan Plumley, a sports finance expert and lecturer at Sheffield Hallam University.
“There was an increased TV deal with the Premier League, a very successful season and they’re back in the Champions League. That’s at least £50m for English clubs and you’d expect them to get out of the groups. You could be looking at £70m-£80m there. , and perhaps more if they go too far in the competition.
“They’re going to budget against it now. When you look at this summer transfer window and go after players like Declan Rice, it comes with the knowledge that revenue is going to go up sharply next season. We look back at the numbers we have, but what happened last year will be It has a bigger impact on what we see this summer.”
There is, of course, extinguishing to consider too – a word that Chelsea has almost single-handedly thrust into football’s lexicon.
Money spent between now and the September 1 deadline by Arsenal – or any other club, will not be included in this season’s calculations and can instead be distributed across upcoming players’ contracts. Gabriel Jesus, for example, may have cost Arsenal £45m when he joined from Manchester City last summer, but his five-year contract guarantees the cost will be spread between 2022 and 2027 at £9m per season.
It means Arsenal’s extravagant spending is projected forward, giving them the chance to do it again this summer.
Sales will likely help, too. This proposed £200m increase will be matched by expenses, with questions over the futures of Granit Xhaka, Thomas Partey, Kieran Tierney and Folarin Balogun. Unlike the past three seasons, it is possible for Arsenal to raise something in the region of £100m through the players they leave.
One of the other things Arsenal have had is controlling costs in recent years. Wages paid in 2021-22 accounted for just 58 per cent of the turnover and only in 2020-21, a season played almost entirely behind closed doors, did the proportion rise to more than 70 per cent. The £212m paid out on wages in 2021-22 was minuscule compared to Manchester United’s £384m, Manchester City’s £354m and Chelsea’s £340m.
“If we look at their wages, they were lower in 2022 than they were in 2018,” Maguire adds. “What we’ve seen over the last five or six seasons is Arsenal have their costs under control very well, even though they haven’t been a club in the Champions League. Again, that puts them in a strong position.”
Since then Arsenal’s wage structure has been expanded with the arrivals of Zinchenko and Jesus last summer, as well as new and improved signings for Bukayo Saka and Ramsdal. The addition of Rice, Havertz and Tempers will lead to more financial commitments.
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These will be even more important under UEFA’s revised FFP rules, now known as the Financial Sustainability Regulations, which came into force in June last year. Clubs will not be able to commit to more than 90 per cent turnover in wages, transfers and agent fees in 2023-24, with that percentage dropping to 80 per cent in 2024-25 and ending at 70 per cent in 2025-26. Losses allowed over three years also rose from €30m to €60m (£51.3m / $65.4m) under revised UEFA rules.
Unlike Chelsea, Leicester City, Manchester City and West Ham United, Arsenal were not among the 19 clubs on UEFA’s watch list last September, and the expectation is that they are not among the clubs sailing too close to the wind.
“Because of the TV revenues, the big English clubs are really willing to conform to UEFA rules,” says Plumley. “You take into account the agent’s fee and the transfer fee but they’re still very well prepared for the shift.
“Arsenal actually has a wider scope than most. They are back in the Champions League, the fans are back again and they are in a position where they are confident in their ability to invest.”
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