Arsenal fans hoping for a big summer spending spree, prepare to be disappointed.
Much like their north London neighbours Tottenham Hotspur, for a summer splurge to take place significant funds will need to be generated from player sales unless owner Stan Kroenke breaks the habit of his tenure and invests a significant sum of his own money.
While the Gunners are in a strong position in terms of financial fair play and their wage to revenue ratio is far from the Premier League’s highest at about 65%, they are also fighting a losing battle the longer they are out of the Champions League.
Nine points off fourth with nine games to go, the chances of qualification via the traditional route looks rather slim and winning the Europa League appears more achievable. Either way, falling short leaves the club in an increasingly awkward position – never mind struggling to finance elite talent they will be unable to attract them in the first place.
As football finance expert Kieran Maguire explains: “The critical thing in terms of the ability to spend will be Europe because the value of the Champions League is somewhere between £40-100m in terms of broadcast revenue plus the potential of ticket sales on top of that.”
The £120m Bank of England loan secured in early January complicates matters further. They are precluded from using those funds to attain new assets and, according to Maguire, the bank could even ask for repayments, which are low interest, to be sped up should they see the club spending heavily on new talent. That is before considering the optics.
Kroenke could pump in some of his own money to be used on new signings but there are also limitations to what is allowed under financial fair play rules and it is not something he has a habit of doing.
“You can put in as much money as you want as an investor but in terms of UEFA rules they limit owner investment to €25m over a three-year period,” Maguire says. “For the Premier League, you can lose £15m but that is topped up to £105m over a three-year period so there can be a £90m owner investment.
“But the UEFA rules are the ones we always focus on – Wolves were rapped on knuckles last season [when they qualified for the Europa League] but they were within the Premier League limits.”
Signing Martin Odegaard permanently looks like the current number one target following his recent performances but that is complicated by Real Madrid’s own dire financial situation and the growing chance that they might see if the Norwegian can cut it under their intense spotlight.
A new striker and right back are on the wishlist too but loans and rough diamonds are more likely than household names.
Edu, the technical director, will be aiming to offload further fringe players following a purge in January that saw Mesut Ozil and Shkodran Mustafi come off the wage bill. Lucas Torreira and Mateo Guendouzi could command decent fees but not enough to move the needle in terms of bringing in a superstar name.
While Maguire points to “more flexibility than they realise because historically Arsenal have been a prudent club” they are continuing to lose ground on other elite teams at a time when the train is about to leave the station.
It is no longer controversial to argue that, in a financial sense, the big six is now the big five plus Arsenal.
Maguire adds: “They have dropped off substantially behind Spurs and Chelsea by £50m to £60m a year in terms of revenue and are substantially behind Chelsea and Man United in terms of wages.”
He estimates that the average first-team weekly salary is £104,000 compared to about £130,000 at Stamford Bridge and Old Trafford. And, again, that gap will continue to expand if Mikel Arteta is planning for the Europa League once more.
With Champions League reform on the way from 2024 and Super League chatter getting louder, Arsenal need to get back on board or face even greater consequences.
“It’s a concern for Arsenal and Spurs if they are not part of the initial revamp – we’re almost there already with all of the last 16 last year and 15 of the 16 this year coming from big five leagues,” Maguire adds.
“They want to make sure it’s 16 from those countries for ever more and it’s not guaranteed that [Arsenal and Spurs] will be part of it. City won’t drop off for a long period, Chelsea will always be there with [Roman] Abramovich’s backing, United should do through buying power with Liverpool, Arsenal and Spurs chasing that final spot.”
Putting money into the squad to enhance their chances of a return to the top four seems worthwhile and for that to happen Kroenke will need to change his own policy. Few Arsenal fans will be holding their breath.