Was wondering the same....
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How can Arsenal afford possible Rice, Havertz and Timber transfers under FFP?
Arsenal have their ducks lined up in a row and, should everything go to plan, this will be another bold summer in the transfer market.
Arsenal have already had two bids for West Ham United midfielder Declan Rice turned down, with the second deal worth in the region of £90million, and have now returned with a third offer worth £105m. They have also agreed a deal to sign Kai Havertz from Chelsea for a fee around £65million and are in negotiations with Ajax for defender Jurrien Timber, with the proposal worth about £30million.
No other Premier League club has so far shown as much intent in this burgeoning window but, for Arsenal, it continues an ambitious pattern.
Take the summer of 2021, when £145million was spent on players including Ben White, Martin Odegaard and Aaron Ramsdale. Or last season, when the club parted with £165million to turn Mikel Arteta’s fifth-placed 2021-22 squad into title contenders with the addition of, among others, Gabriel Jesus and Oleksandr Zinchenko.
Arsenal’s era of prudence is no more under American owner Stan Kroenke. Each summer now trumps the last. The days of the club making Gunnersaurus, the club’s towering dinosaur mascot, redundant back in 2020 are a fast-fading memory. More than £300million has since been spent emerging out the other side of the Covid-19 pandemic, all without significant sales that would balance the books.
This summer, it seems, will be no different, so long as the best-laid plans of Rice and (other) men do not go awry, but there comes a time when the question will be asked: for how much longer can Arsenal keep on spending?
The shackles of financial fair play (FFP) are being felt elsewhere in the Premier League, after all.
Chelsea know they have to rein in the lavish spending of last season and are under pressure to trim a bloated squad. Manchester United and Newcastle United are two more clubs that privately accept FFP is a consideration they cannot ignore. Everton, meanwhile, can scarcely move for their limitations, which have also resulted in a formal Premier League charge.
Yet Arsenal, who have posted pre-tax losses of £226million in the past three years, keep on writing the cheques.
The Premier League and UEFA, European football’s governing body, will be watching — they always are — but Arsenal maintain a relaxed outlook. Arteta, for one, insisted last summer that Arsenal were “compliant” with FFP. “I think the club has been very disciplined all the time and with a very clear vision of how we want to do things,” he said.
Little has changed and the successes that have followed on from Arteta’s assessment have only emboldened Arsenal. There will be Champions League football next season for the first time since 2016-17 and, almost inevitably, record-breaking revenues are therefore on the way.
Their summer recruitment of 2021 and 2022 might have carried risk during seasons of reduced income streams, but this time around it comes on a far stronger footing. Arsenal know what is coming.
“I don’t see too much reason why they should be worried about FFP,” says Kieran Maguire, finance lecturer at Liverpool University and co-host of The Price Of Football podcast. “They’ve spent a lot of money in the last couple of seasons and look as though they will again, but they’ve seen a significant rise in revenue streams. In 2022-23, they finished higher in the table, so they’ll get more merit payments from the Premier League. They did modestly in Europe (losing in the last 16 of the Europa League) but at least there were (those extra) home games, where they’re probably making a couple of million each time.
“They’ll have bonuses kicking in from (front of shirt and stadium-name sponsor) Emirates and so on for being in the Champions League next season and just qualifying for the Champions League is worth a minimum of £30million. That’s before you’ve even kicked a ball.
“I don’t see too many concerns.”
Arsenal ultimately have to comply with two sets of FFP rules: the Premier League’s and those overseen by UEFA. Both are designed to encourage sustainability and sound financial practices. Failing to comply will bring consequences. No sniggering at the back of the room, please.
The domestic regulations are unlikely to be a concern for Arsenal any time soon. Clubs are permitted to lose as much as £105million over a three-year monitoring period, but within those assessments are a host of caveats.
Losses attributed to the pandemic can be knocked off, as can a host of other allowable deductions, such as stadium developments, youth and community development and women’s football. The current assessment period also gives added leeway to the financial damage done by Covid-19 in 2019-20 and 2020-21, with those seasons bolted together and an average taken from the two.
That leaves Arsenal effectively posting a pre-tax loss of £168million for the period ending 2021-22 but the deductions permissible are enough to satisfy the Premier League’s number crunchers. Swiss Ramble, the respected online analyst, estimates the club could write off as much as £162million of that.
These figures, of course, do not include last season’s hefty spend. Or the outlay for the one that is soon to begin.
But Arsenal’s financial strength has also been transformed by events of the last 12 months.
Those 2021-22 accounts covered a campaign without European qualification (2020-21) and one that ended with a fifth-placed finish in the Premier League that was worth, all told, £145.7million in club revenues of £369million.
Arsenal’s resurgence last season, eventually finishing as runners-up to Manchester City, is likely to have brought central distribution from the Premier League in the region of £180million, owing to increased merit payments and additional income from overseas broadcast rights. That run to the Europa League last 16, too, is likely to have added as much as £30million in prize money and matchday revenue.
All that guarantees a marked uplift in turnover and next season, with a return to the Champions League secured, will see the bottom-line figure climb again for 2023-24. An extended run back in Europe’s elite club competition would be worth more than £70million in prize money alone to any Premier League club.
A club who were in danger of falling behind the rest of England’s elite, with revenues £75million less than neighbours Tottenham Hotspur in 2021-22 and £114million less than fellow Londoners Chelsea, has come bounding back in the last two years.
Arsenal are back at the levels of 2016-17, when annual revenues peaked at £419million. Accounts for the 2022-23 season, due to be published this winter, will depict a club catching up with its rivals. The returns for 2023-24 might even see them overtaking one or two.
“The accounts we can see for Arsenal don’t show what’s happened in the last 12 months,” says Dan Plumley, a sports finance expert and lecturer at Sheffield Hallam University.
“There’s been an increased TV deal with the Premier League, a very successful season and they’re back in the Champions League. That’s a minimum of £50million for the English clubs and you’d expect them to get out of the groups. You could be looking at £70million-£80million there, perhaps more if they go far in the competition.
“They’ll be budgeting against that now. You look at this summer transfer window and chasing players like Declan Rice, it comes with the knowledge that revenues are going to climb sharply next season. We’re looking back at the numbers that are available to us, but what’s happened in the last year will have a bigger bearing on what we see this summer.”
There is, of course, amortisation to also consider — a word Chelsea have almost single-handedly pushed into football’s lexicon.
The money spent between now and the September 1 deadline by Arsenal — or any other club, for that matter — will not all be included in the accounts for this season and can instead be spread out over the arriving players’ contracts. Gabriel Jesus, for example, might have cost Arsenal £45million when joining from Manchester City last summer, but his five-year contract ensures the cost will be spread between 2022 and 2027 at £9million a season.
That means Arsenal’s extravagant spending is projected forward, affording them the chance to do it all again this summer.
Sales are likely to help, too. This proposed £200million spree will be offset by outgoings, with questions over the futures of Granit Xhaka, Thomas Partey, Kieran Tierney and Folarin Balogun. Unlike the last three seasons, it is conceivable Arsenal could raise something in the region of £100million via outgoing players.
Another ace held by Arsenal has been their cost control of recent years. The wages paid out in 2021-22 accounted for just 58 per cent of turnover and only in 2020-21, the season played almost totally behind closed doors, has the ratio gone higher than 70 per cent. The £212million paid on wages in 2021-22 was dwarfed by Manchester United’s £384m, Manchester City’s £354m and Chelsea’s £340m.
“If we take a look at their wages, they were lower in 2022 than they were in 2018,” adds Maguire. “What we’ve seen over the course of the last five or six seasons is Arsenal getting their costs under pretty good control, even though they’ve not been a Champions League club. Again, that puts them in a strong position.”
Arsenal’s wage structure has since been expanded with the arrivals of Zinchenko and Jesus last summer, as well as the recent new and improved deals for Bukayo Saka and Ramsdale. Adding Rice, Havertz and Timber would bring further financial commitments.
These will matter more under UEFA’s revised FFP rules, now known as financial sustainability regulations, which came into force in June last year. Clubs will not be able to commit more than 90 per cent of turnover on wages, transfers and agents’ fees in 2023-24, with that falling to 80 per cent in 2024-25 and ending at 70 per cent in 2025-26. The losses allowed over a three-year period have also climbed from €30million to €60million (£51.3m/$65.4m) under UEFA’s revised rules.
Unlike Chelsea, Leicester City, Manchester City and West Ham United, Arsenal were not one of the 19 clubs placed on UEFA’s monitoring list last September, and the expectation is they are not among those sailing too close to the wind.
“Because of the TV revenues, the big English clubs are already well set to conform with UEFA’s rules,” says Plumley. “You factor in agents’ fees and transfer fees but they’re still well set to transition.
“Arsenal have actually got more scope than most. They’re back in the Champions League, crowds are back in and they’re in a position where they’re confident in their ability to invest.”
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, are all your essays 5,000 words?
