No FFP problems, no shortage of cash. Financially Arsenal are looking ok

 

 

• Arsenal with the lowest number of foreigners in the team, set to be fined
• The dangers that arise from the mutli-club ownership model

By Tony Attwood

We have often attempted to peer into the murky waters of Financial Fair Play, the Financial Sustainability Rules (applicable to European competitions) and Profit and Sustainability Rules (for clubs in the Premier League).

The idea is for us to get a deeper understanding of just how the financial side of football works.  We know there is no settlement of the ManC  115 charges, but what about the rest of the league?  And in particular how has Arsenal been able to spend as much money as it has this summer?

In fact looking at the data we see that Arsenal didn’t spend as much as Liverpool and Chelsea each spent, but even so it was still quite a lot.   On the other hand Arsenal existed for six years without Champions League income – in one of those seasons have no European income at all.

Arsenal’s route out of that situation has been interesting.  First getting rid of expensive players like Aubameyang and Ozil and then taking the rebuild step by step to the point where Arsenal’s income has doubled over the last five years, including of course last season when Arsenal played five more men’s gams and seven more women’s games at home – while at the same time all the prices went up.   Second in the four years up to 2023/24 Arsenal made a profit on player trading of £96m profit.

Now we have noted before up to 2023/24 Arsenal lost money for six years running  but now it is suggested they might have made a modest profit in 2024/25.   Not enough to cover previous losses but a welcome change.

So for Arsenal, it is not actual money in past seasons that is the problem – it is meeting football’s financial regulations.  And here those who seem to know about such things suggest that Arsenal really have had a lot of spare room in terms of spending this summer. 

And better still, Arsenal have a fallback position, just in case their view of the finances is not the same as that of the financial commissioners overseeing the Premier League and Champions League.  There should be no problem, but thanks to Chelsea’s dealings, Arsenal know they could always sell their women’s team to an associated company, and thus bring in whatever extra money they need to cover any disparity between the club’s losses and the allowable losses under the league rules.  It’s ludicrous of course, and I still dislike the idea, but given that Chelsea did it, the League can hardly stop Arsenal following suit if they choose to.  It’s the final “Get out of jail free” card.

Of course, Uefa have a different set of financial rules which are more demanding.  Under Uefarian regulations, clubs can lose up to €60m as long as losses over €5m are then equally matched by the owners.  Although there are fairly tough rules about what losses count.   This is to stop the game Chelsea played, by giving players 8-year contracts, and then accounting for 12.5% of the players’ cost each year for eight years.

Pulling all the data together, it is widely believed that Arsenal are within these rather complex rules despite recent losses. 

But there is also a thing called the “Squad cost control ratio”  which aims to cap a club’s spending on the squad to a proportion of football activities.  This means this year only 70% of income can be spent on wages, including bonuses and the like.  Estimates suggest Arsenal are within that limit, and given that Arsenal have just established their team, there could be a problem in the future.  But not this season.

Clubs can be fined for breaking the rules, but as we all read this season when Chelsea and Villa were fined, it was by tiny amounts compared to their transfer budgets, so no one seems that worried.

Arsenal are also doing ok in terms of having ready cash – in May last year, when the accounts were totted up, they over half a billion pounds in the bank.  Only Tottenham and ManU had more and Arsenal had a much bigger positive cash flow than any other club.   But on the downside, Arsenal do owe Stan Kronenke around a third of a billion pounds.   If he wants it back, he has to give the club two years’ notice.

On the other hand Tottenham owe over £850m and Everton over £1bn.   Arsenal do of course pay interest on the money they have borrowed (£8m in the last accounts), but Tottenham pay three times as much and Everton over five times as much in this regard.

Arsenal do also tend to pay for players over time – it costs a bit more but makes the debt more manageable.  And let’s not forget that despite Arsenal’s major purchases this year, Chelsea, Tottenham and  ManU owe a lot more to other clubs than Arsenal do.

So as we start to read about yet another attempt by big clubs to set up their own European competition, we can be fairly sure that whatever the outcome, Arsenal are not suddenly going to run out of cash.  Which is more than can be said for many clubs.