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July 2021

With money in the bank will Arsenal spend? Here’s why not…


Spend some money please?

Richard Bedwell

Following the release of the latest six monthly financial figures the demand to spend it all (couched in less polite terms than used above) is sure to follow.

It may be worth going over three of the reasons why it is very unlikely to happen at anything like the level that the spenders desire.

1.      History tells us that it never has in the past. Under the policy of custodianship (derived directly from the Club’s view of itself as a ‘Sports and Social Club’ (I quote Ivan Gazidis) the Club sets out to invest any profits it makes for the long term benefit of the Club – and playing the transfer market has proved itself to be a poor way of investing any clubs money. If you doubt me, and if you haven’t done already, read Why England Lose by Kuper and Szymanski, and you’ll see the evidence laid out.

Every Arsenal team/squad, certainly since the Second World War, has been developed in the same way, giving priority to home grown players and, by and large, only bringing in players from outside if they represent outstanding value for money and also have the potential for that value to grow. Only in extreme cases have Arsenal ever spent at the top of the market and those occasions tend to be quite a while ago and, with hindsight, of very variable actual value.

Tracking Arsenal’s return on investment across that time, despite the ups and downs that 99% of clubs suffer, it has been a remarkably successful strategy.

It also explains why Arsenal have such a large professional playing staff – the more young players that you have, the better your chances of finding a gem.

For further confirmation of the correctness of this policy of ‘grow your own’ we need look no further than the other end of the Seven Sisters Road. Can you name anything like a full team of home grown Spurs players who made it to the top, either at Spurs or anywhere else in the last half century?

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2.      The reason why we have recessions is because people don’t spend money when they think prices are going to fall.

Evidence points to the fact that, as a direct result of UEFA’s efforts to bring in FFP, clubs are not just saying the right things but also acting to move their financial positions towards self sufficiency.  The highest paid players at Chelsea will be phased out over the next year or so and their replacements will be paid much less.

As sugar daddy money gets removed from the transfer market it too will shrink, with the number of free transfers (at the end of contracts) increasing. With less money circulating clubs will need to reduce costs, competing less in the market with each other, and transfer values will plummet.

Arsenal, should they desire to move away from the long term policy (much praised by Kroenke at the time if his take over), will have a much clearer market to work in. But don’t hold your breath. For the reasons stated above, long established strategies that have worked over long periods of time don’t get ditched that readily and I don’t see them changing at Arsenal in the foreseeable future.  The Club, after all, has the highest average attendance at matches ever recorded in London whilst not exactly giving the tickets away for nothing! That represents massive success.

3.      At a point in time when FFP is really looking like its biting Arsenal do not want to lose their position as UEFA’s prime example of how it should be done.

And UEFA want that even less. Today’s announcement that international dates are to be reduced (and player insurance against injury improved) merely goes to emphasise that there is, almost certainly, an overarching agreement between clubs and the authorities to improve things for everyone’s benefit. I’m convinced that this latest move is part of the quid pro quo for helping big clubs come to terms with FFP – a principle that would help Arsenal more than any other club in the EPL with, maybe, the exception of Man Utd.

So what will happen with all that money sitting in Arsenal’s bank accounts? Some will get spent in the market – but only if young players already at the Club aren’t seen to be capable. And they will always be given the chance if it’s felt that they deserve it and so expenditure will, in the eyes of many, appear small/ ‘not enough’. Most of that money will be invested in ways that will lessen the impact of having to meet mortgage repayments – which, of course will enable Arsenal to keep their salaries high and maybe to begin to be even higher than the current, financially doped, clubs.

And that is important because, as it highlights in Why England Lose, the strongest correlation in football is between the relative size of your wage bill and your position in the league.

Remember how well Arsenal did on the pitch before Abramovich vastly accelerated inflation in football?


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The day when Fulham tried to take over Arsenal – the full story in “Making the Arsenal”

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Lenny Henry, Shakespeare, Crisis, Making it Up, Money


Football finance: the AST’s report on Arsenal’s finances analysed:

Part one: The Summer that was: transfer fees, wages and the “best” approach to the market.



22 comments to With money in the bank will Arsenal spend? Here’s why not…

  • Arvind

    Thanks Richard. Did you by any chance read through this excellent (I
    think) article by Swiss Ramble?

    I tried my best to understand half of it; but it got too heavy; so I put it away for later : ). Any chance you or anyone who understands what ’50 million profit’ actually means.. can explain?

    a) How much goes towards wages?
    b) How much towards youth development?
    c) Loan repayment?

    And how much do we actually have..for the spend on new players.. without say.. selling anyone.


  • Neil on Hudson

    An interesting take Richard. UK50m sounds like a lot of money until one realizes the projected costs of Hazard, Goetze et al. At 35m each that profit won’t go far. It seems the club is continuing in the direction you predict with reports that Podolski has reached personal terms with the Gunners. He is near the end of his contract and will probably be available for 8-10m: definitely in the Arsenal historical sweet spot. The area we need to spend is on wages for RVP- he has to stay if the club is to retain credibility as one of the top European clubs. I would like to see Theo also get a better deal, I think we forget how young he is and that if he was played more as a true striker he may have huge upside.

  • Gaddiel Gunner

    Honestly, nobody is calling for spending money on all the eleven positions. Wise spending on key areas where its obvious (even to Mr. Wenger as he admitted after the Milan game) we are lacking quality – supporting strikers, deputy left and right full-backs, one good centre-back. Ship Squillaci, Arshavin, Djourou, Chamakh, Denilson and Bendtner.
    Jenkinson for me will be a marvellous player.

  • The amount of money we have is actually irrelevant. We’re entirely at the mercy of the Super-Four (Chelsea, City, Malaga, PSG) and their dealings in the transfer market. I know lots of Gooners dislike reality (they should try being a Spurs fan for awhile) but the simple fact is that if we had bid for Torres, he would have gone to Chelsea for whatever we offered + £10 million. Same thing with Mata and Valencia (That’s Valencia CF not Antonio for the hard of thinking.)
    Shipping out everyone’s least favourite player is going to be difficult because of their wages, hence why we tend to sell second stringers on for low amounts, we have to help the other club offset their wages against transfer fees.

  • Sean

    Arvind, I think you may be making the mistake of assuming that 50m of “profit” is the same as 50m of surplus cash. It is not – even apart from the fact that this figure is “before tax”. ie. Arsenal will probably have to pay tax on a portion of that profit. In other words you cannot extrapolate 50m of pre-tax profit (on a half year of trading) as 50m of cash available for new players. But of course it’s encouraging that Arsenal are trading so well ! Given that profit on player sales alone is 63m it’s also worth noting that this contribution probably encapsulates well the effectiveness of Arsene Wenger’s financial acumen, something that should be celebrated rather than derided, as it has been of late, bizarrely enough, in various quarters.

  • Richard B

    Actually I think that the source of the money in Arsenal’s bank account is an important guide as to what it’s spent on. If it’s deemed by the Club as coming from property deals then there is no way it will be spent on players – either buying them or paying them. That would be against the basic principles of custodianship.
    If the money is deemed to have come from player sales then it becomes available to spend on players – but may not necessarily be so for the reasons I laid out (youth development, market crash).
    Even since I wrote the piece we’ve had Aston Villa (another financially doped club) declare losses of over £50m only part of which is down to the departure of Martin O’Neill. I doubt that we will ever see Villa ‘spending big’ again. The world around Arsenal is changing rapidly and all of those changes make Arsenal look stronger relative to just about eveyone.
    When all around you are revealing weaker and weaker hands then it isn’t the time to play your trump card.
    And I never fail to read The Rambler! Along with this site, ACLF and (of course) it’s all that the thinking fan needs.

  • Notoverthehill

    Richard, a very nice article BUT the bulk of that cash in hand will be spent on 6 months salaries and 6 months of Other Operating Expenses.

    Receipts from the players sales is separate and distinct from profits from the sales of players registrations!

    When reading Arsenal Holdings Plc Financial Results, I always keep in mind the restrictions imposed by the Bondholders’ covenants. I am sure you will agree.

  • bob

    That money came from “trading”? As in Cesc and Nasri and Clichy. Without re-opening that can of worms in this moment, I still think you’re making a virtue out of a situation which is not entirely virtuous. We have not yet made up in creativity and scoring opportunities what x-Cesc brought us; and “financial acumen” did not bring back even market value for the loss of Cesc Fabregas. So, please….

  • nicky

    I don’t want to appear a doom merchant but I have misgivings over the prediction that the FFPR will be answer to all ills.
    To me, the power of the rouble, the dollar and (dare I suggest)the Chinese yen will oversee little change in the really mega-clubs.
    I only hope I’m wrong. 😥

  • Richard B

    i’ve never read Rambler, but those other blogs you mentioned, you’re spot on. Add Desigunner and to an extent, Wrighty 7. Every true fan must read those blogs.

  • RedGooner

    When you look at Liverpools 25mill a season Kit Sponsorship v our 8 mill a season and the shirt sponsorship at 5 mill for us v 20 mill a season for liverpool.
    I would argue that we should be better able to compete when these deals are up for renewal in 2014.
    Im not suggesting we will go out and pay crazy money for players but it should allow us to buy the types of players we have bought in the past rather than just relying totaly on the youth system for star players.
    When you look at the difference you could argue that keith edelman perhaps didnt negotiate as good a deal as he did at the time hence he moved on and the club are working hard to change things. Our brand surely over the past 15 years has been a more valuable brand than liverpools.
    2014 isnt far away and surely is worth the wait for long term success rather than calling for the managers head after every poor result or substitution that some people dont like.

  • Adam

    @Nicky, Do you think the Yen will become the first gold backed currency.

  • Mandy dodd

    Tend to agree with the points in this post. But I am pretty sure we will lose a couple strikers, and bring in another, plus hopefully Campbell next year, assuming we still have our MVP, and I believe he will stay, he needs more backup than he has at the moment.
    I also believe we will see a new creative attacking mf, again Rambo and jack cannot do it all alone without the risk of injury. There is talk of Matthias Suarez and gourcuff, as well as the usual suspects. Guess much will depend also on how realistic a diaby comeback may be, fingers crossed on that one.
    We can raise money by offloading the surplus, then there is the players, apart from rvp who have yet to sign, could we lose one of them?
    Talk and gossip, but whoever we buy will probably be pretty much offset by departures, that is how we are run.
    Whoever we do or do not sign, just hope we see a lot more of the likes of frimpong, le coq, Lansbury, miquel, kyle b, afobe, yennaris, Jenks and who knows who else as well as our more established youngsters. If bought on slowly and with care, some of these players could be amazing for the club.

  • Gooner Gal

    Nice article Richard.

  • Gooner Gal

    Here are a few goals by Arsenal players and possible stars of the future yesterday :-

    Joel Campbell

  • Gooner Gal

    Lansbury (I wonder if he meant to bend it like Beckham)

  • Damien Luu

    Great article. One (hopefully near) day, we can proudly state that we are “The Arsenal FC – The Club That Changed Football – The Great Example For The Football World”. How does that sound? 😉

  • Damien Luu

    And I believe that in developing our own stars through the youth ranks, we will find more and more Gooner-Gunners, which is the essential to success.

  • Richard B

    When it comes to doing sponsorship deals timing is everything. Liverpool (and others) got more money for their deals because they were done later. We got less because ours were done earlier and were, in the case of Emirates, done on the basis of cash up front. That reduces what you’ll get but also greatly reduces what you need to borrow which, after all, is the more expensive option.
    We are approaching the end of the shirt deal and that’s one of the reasons why being in Europe is so important.
    It’s also important to remember what the sponsor demands for his money. Liverpool were made to make grovelling apologies for their actions around the Suarez affair. Any complaints from Emirates about Arsenals bad image rubbing off on them? I don’t remember anything other than praise and I fully expect a highly (mutually) beneficial relationship to continue at a higher rate of return..

  • ImztheGooner

    Hi Guys,

    Can someone please tell me, how much debt Arsenal are in currently?

  • ATAF

    “And that is important because, as it highlights in Why England Lose, the strongest correlation in football is between the relative size of your wage bill and your position in the league.”

    No matter how much you pay a diaby or a bendtner that won’t transform them into a better player, our wage strusture is still inefficent! or did they not mention this in why england lose?

  • goonergerry

    I would like to know what Ivan Gazidis really knows about top level football. His previous role was as an administrator of the MLS-which in terms of salary levels of players cannot be compared with top European sport. Does he have any experience of being a CEO of a top European football club?
    No this is his first job-quite honestly he is not qualified to determine what impact buying a player may have on the playing capacity of our team. What he can and does have competence to determine is what the negative impact of spending the kind of money that a specific player costs will have on the clubs finances. He is not surprisingly a far stronger advocate for not spending money on players than spending.

    I am quite prepared to accept that there is very little money available for transfers and it would help to reduce the tensions between fans-which at times are in danger of boiling over and making the experience go going to the Emirates intolerable-if the club -Gazidis in particular could make it clear that there is no money available for transfers- even after the sales of Clichy, Nasri, Fabregas and explain at the same time why?-because many fans find it hard to reconcile the sale of first choice players and such high ticket prices with an inability to compete in the transfer market for top players.

    It would be more honest if the club could make it clear that as there is no money for transfers-there is no point in the media and supporters speculating about who they might like the club to bring in but we might be able to attract some freebees, loanees, kids and unknowns who have never played at this level before to replace departing star players commanding transfer fees in excess of 20m.

    Currently the club engages in deception-at the time of season ticket sales-it talks about having money available and competing for top players- in order to encourage sales-then responds by buying kids and unknowns. We know the outcome of this- a minority are very good, some are good, eventually, some are not and others are inconsistent and eventually leave. As a strategy , It ain’t all good. Its risky.

    The risk in underspending on transfers is not as major as grossly overspending on transfers-but the long term impact on the clubs finances may be significant- the good players the club have nurtured want to leave just as they reach maturity and the club fails to qualify for the ECL, loses 45m directly, loses EPL revenue and commercial revenue reduces as a result of lower exposure-which in Arsenal’s case is already low relative to its richer competitors.

    Maybe we have all rather got ahead of ourselves at Arsenal-instead of regarding ourselves as being a top club with the 5th highest income in Europe-perhaps we should think of ourselves more like Bolton with a bigger ground- a selling club-that can only buy at the bottom of the market and sell off our best players once they become ambitious to win something or can command higher salaries than we are prepared to pay. We might not win anything but eh by gum we’ll always be ere. Then perhaps we won’t be so frustrated when we lose 8 times in a season before February to the likes of Fulham or Swansea and not so surprised at low commercial revenues.