Arsenal and their ‘War Chest’
After a long and difficult season, Arsenal have one or two remaining financial uncertainties. The biggest of these is the outcome of their FA cup final against Chelsea on August 1st. Win at Wembley, and European football will provide a welcome boost to Arsenal’s coffers, whilst defeat would mean a significant decrease in revenue and as a result a reduced transfer budget. But how greatly do the two endings to Arsenal’s season differ? After examining the club’s projected profits and losses for this season, this article will explore both eventualities, and how much Mikel Arteta, Edu, and Raul Sanhelli and co. will be able to spend to improve the squad going forward this summer.
According to the fantastic twitter account and financial experts @SwissRamble, Arsenal at present face a loss of £37m for the 2019/20 season. Much of this is due to the effects of Coronavirus. It constitutes a £13m loss of matchday income and around £19m due to Television rebates, as well as other losses as a result of commercial opportunities missed.
Added to this is Arsenal’s early exit from the UEFA Europa League at the hands of Olympiakos. Last season’s Europa League run netted the club £40m and contributed to the signings of Kieran Tierney, Nicolas Pepe, and David Luiz. How else their finances will be affected is entirely dependent on the final two games of the season
Route 1: Winning the FA Cup
Victory against Chelsea on August 1st will net Arsenal considerable prize money, as well as granting them passage back into the Europa League. The winner of the game receives £3.6m, whilst the runner up receives £1.8m. Getting out of the Europa League Group Stage could net the club a further £6m in prize money alone, before TV revenue and potential match-day income are taken into account.
An FA cup win, therefore, will not only add some silverware to aid Arteta’s rebuild, but also net Arsenal a minimum of £10m in prize money, which could be added to the transfer budget or equates to almost £200,000 per week into the wage budget. This will be offset by a change to the terms of the Arsenal squad’s wage reductions agreed during lockdown, which would cost the club up to £12m by comparison to not making it into the Europa League. However, as the 2018/19 season demonstrated, a semi-successful run in the competition can yield significant financial benefits that would more than outweigh this.
Route 2: League Finish:
Another financial component to consider is Arsenal’s potential finish. Victory against Watford on Sunday would, with results in their favour, allow Arsenal to finish as high as eighth place. In this position, they would stand to lose £5.4m less than their current tenth-placed finish. This, combined with an FA Cup win represents the least financially disastrous outcome for the Gunners therefore. A combination of these two factors will see the loss in TV Revenue at just £8m, whilst the prize money will stand at £10m from cup and European adventures.
Of course, it is unclear to what extent any money gained by the club will be available for transfers in this unprecedented financial situation. Arsenal have already committed money to renewing the contracts of youth prospects Bukayo Saka and Gabriel Martinelli, which according to reports will add a total of £47,000 per week, approximately £2.5m per year, to Arsenal’s wage bill.
David Luiz’s new contract included a ‘significant’ deduction to his £120,000 per week wages, but this was offset by the signings of Cedric Soares and Pablo Mari on permanent deals. There is hope equally that Pierre-Emerick Aubameyang will sign a new contract, rumoured to be close to £250,000 per week, which would represent an increase of £2.6m per year to Arsenal’s wage bill. With these additions, much will rely on player sales, therefore.
Henrikh Mkhitaryan’s move to Roma has freed up £10m on Arsenal’s wage budget, whilst there is hope that the club will be able to move on Sokratis and Sead Kolasinac, who both earn over £100,000 per week. They also aim to perhaps even come to an agreement with Mesut Ozil, although at present this looks incredibly unlikely.
Like most clubs in the world, Arsenal stand to make a loss this season as a result of the Coronavirus pandemic. How much of a loss this is depends entirely on their final two games of the season, and whether the North London club can find their way back into the Europa League next season. It does not seem that the club will have a ‘war chest’, something that Arsenal fans are used to hearing. Much of the finance will have to be owner-driven or raised through sales, perhaps why there is so much speculation about the futures of the likes of Matteo Guendouzi and Ainsley Maitland-Niles, two of Arsenal’s most valuable assets. This is a summer of hope for the club, but it is necessary to set realistic expectations, and hope to be pleasantly surprised.