Arsenal may have fallen short at the end of a “so close but yet so far” season in 2022/23, but their second-place finish in the English Premier League (EPL) was evidence that the Gunners are well-placed to rejoin the top table of English football after the disappointments of recent seasons.
However, in the world’s richest league, money talks, and manager Mikel Arteta will undoubtedly be looking to the club’s hierarchy for a cash injection that will allow him to strengthen his squad and build on last season’s achievement.
So will his wish be granted, or will the EPL’s Financial Fair Play (FFP) rules stop the club from adding to an already talented squad? Let’s take a closer look.
Arsenal FFP Report
Arsenal’s most recently released accounts – covering the year ending May 31st 2022 – revealed an operating loss of £45.5 million. However, this was actually a huge improvement for the club after the previous year saw losses of £107.3 million.
The 2021/22 campaign saw the club invest heavily to fund Mikel Arteta’s signings, spending over £100 million after the club missed out on European competition for the first time in 23 years.
The difference European competition makes is clear from the results, as broadcast revenue fell by £38.4 million to £146 million for the year.
This financial report, if repeated, would almost certainly see the Gunners fall foul of the EPL’s FFP rules – where teams cannot make a loss that exceeds £105 million over three seasons – having racked up a £205 million deficit over the past four seasons.
If the loss is between £15 million and £105 million, the deficit must be covered by the club’s owners or third parties.
However, UEFA also has its own version of FFP regulations, where clubs can only spend five million euros more than what they earn over a three-year assessment period, or 30 million euros if it is covered by owners or third parties.
Given that Arsenal have qualified for the 2023/24 Champions League, they must abide by financial rules both at home and on the continent, and are already on a 20-team watch list, compiled by UEFA, of teams at risk of breaching its financial regulations.
However, according to football finance expert Kevin Maguire, Arsenal are in a relatively safe position.
“There will be Covid allowances that they have been able to claim,” he explained.
UEFA is moving towards a new form of Financial Fair Play called the “Financial and Sustainability” rules, where clubs are assessed on wages as a percentage of revenue.
“Because Arsenal’s wages went down hugely in 2021/22, the club is now well within the limits in respect of the rules, as they are tapered in over the course of the next few years.”
Are Arsenal in Trouble with FFP?
Arsenal are not currently in trouble with FFP. Providing they stay within the rules’ losses limits then they can avoid the sanctions that can be used against teams that operate outside their means, which can include points deductions or even expulsion from the EPL.
The FFP rules are based on a club’s pre-tax losses, but some costs are exempt, including those relating to the club’s infrastructure, youth academy, women’s team and community projects, which means not all of Arsenal’s latest reported losses of £45.5 million will be considered as part of the three-year rolling FFP calculations.
How Much Can Arsenal Spend in 2023/24?
Despite having spent a combined £259 million over the past two summers, and also splashing the cash in the winter windows, it is reported that Mikel Arteta will still be given a “war chest” of around £150 million to spend on new signings to prepare for 2023/24.
How is this possible given the EPL’s strict FFP rules? It is reported that the club’s American owners, the Kroenkes, will provide a portion of the investment, whilst several player sales will add to their spending power while ensuring the club remains within the FFP rules.
Arsenal’s finances – as you might expect given their lofty status in the world’s richest league – are healthy, with a reported turnover of approximately £390 million in the club’s most recent accounts, up 17% on the previous year.
However, the Gunners did make a £45.5 million loss over the 2021/22 season, and their turnover figure is less than EPL rivals Spurs, Chelsea, Liverpool, Manchester United and Manchester City, who alone generated around £260 million more than Arsenal over the same period.
Despite this, Arsenal sit tenth in the Deloitte Football Money League of the richest clubs in the world, while the club’s wage bill of £206 million is the lowest of the so-called “Big Six” EPL clubs, dwarfed by the £384 million paid out by Manchester United.
Arsenal P+L (Profit and Loss)
The table in this section reveals the profits and losses registered by Arsenal in the six previous campaigns.
|Profit and Loss (£)
As we can see, Arsenal have registered a mixed bag of profits and losses, with profitable seasons such as 2017/18 cancelled out by losses in three of the past four seasons.
However, with fresh investment by the owner reportedly in the pipeline, and a guaranteed Champions League windfall for at least one season, it is fair to expect revenue to increase and losses to be reduced over the coming seasons if the relative success of 2022/23 is repeated.
Arsenal Transfer Net Spend Year-by-Year
In this section we will take a closer look at Arsenal’s net spend over the past six seasons, as calculated by Transfermarkt. This shows us the sum of all transfer dealings conducted by the club during each campaign, including both buys and sales.
If a club spends more on new signings than it collects in transfer fees, the net spend will be poitive. The figure is negative if the club’s income from transfers exceeds what it spends on new players. The figures below are in euros.
|Net Spend (€)
Arsenal’s losses in the transfer market of 540.46 million euros were largely accrued in the past two seasons, which saw them make big-money signings like Gabriel Jesus from Manchester City and Ben White from Brighton.
However, despite these losses, it would appear manager Mikel Arteta will once again be backed in the transfer market this summer.
What is the Financial Situation with Arsenal?
Despite the losses registered in the transfer market and the most recent operating loss of £45.5 million in 2021/22, it is fair to say that the overall financial situation at Arsenal is relatively stable, largely thanks to a reduced wage bill in recent seasons and an increase in revenue post-Covid pandemic.
If the club can continue to perform well on the pitch and play regular Champions League football, the Gunners will have a chance to re-establish themselves as a powerhouse in domestic and European football.
However, the existence of FFP regulations, in England and in European competition, means football’s financial watchdogs will continue to closely monitor Arsenal’s spending going forward.