From the archive: How can Arsenal afford this summer?
From the archive: How can Arsenal afford this summer?
The answer lies in the wage bill, not the transfer fee.
This piece was first published on our Patreon almost exactly a year ago. We’re reposting it on here, free for all to read, as it explains how Arsenal are able to spend heavily again this summer.
And this brief explainer by football finance expert Kieran Maguire has further validated it. Details have changed but the overall point remains the same.
Despite missing out on Champions League football again, Arsenal are putting together a big summer of investment. But how can they afford it? Here is Stephen Ganavas' assessment.
Disclaimer: I am not an accountant. This is a very basic, macro view of how this all makes sense. Clubs book transfer spend on their accounts as an amortised cost over the length of a player’s contract. It is a little bit complicated, but here are some good resources to learn more about how it works if you are interested:
Fábio Vieira, Gabriel Jesus, Raphinha, and probably more. It seems incredible that a club that has missed out on Champions League football yet again can afford to add all this quality to their squad. So how are Arsenal doing it?
The answer is a simple lesson in squad building, revolving more around the club’s wage bill rather than incoming transfer fees or other revenues.
But let’s back up a couple of years to a tougher time. The 2020/21 season was a disaster for Arsenal. They had a truly woeful season and they missed out on European football entirely. But a few important things happened: Henrikh Mkhitaryan, and Mesut Özil, and their gigantic wage packets, left the club.
In fact, allowing veteran players to depart the club has become a bit of a trend at the club in recent years. There was some short-term on field hurt, but the club has come out the other end of it in a much healthier state.
In 2020/21, their wage bill (via capology.com) looked like this:
It was a total mess, with huge earners from top to bottom, many of them providing declining or little output at all. Willian, Alexandre Lacazette, Özil, Sead Kolasinac, Pierre-Emerick Aubameyang, David Luiz, Héctor Bellerín, Pablo Mari, Bernd Leno... these are problems.
Now, we aren’t operating with exact figures down to the pound (and not all these reported wages will be entirely accurate), but capology.com puts the annual payroll for this squad at over £147 million:
As Arsenal director Josh Kroenke famously stated in 2019, Arsenal were running a Champions League wage bill on a Europa League budget’. Fast forward to 2021/22, Arsenal’s wage budget is in much better health. Here’s the general snapshot:
And the total annual payroll for 2021/22 was a touch under £86 million:
But the club aren’t finished there. If we look a little closer we can clearly see some dead weight still on the chopping block. These are: Nicolas Pépé (£7.3m p/a) and Leno (£5.2m p/a). There are a few missing names that will come on to this wage bill, but they aren’t major earners: namely William Saliba (£2m p/a), Marquinhos and Matt Turner.
There are a few others that will come on to the payroll, but they are very likely to be moved on: Lucas Torreira (£3.9m p/a), Ainsley Maitland-Niles (£1.8m p/a), Bellerin (£5.7m p/a), and Reiss Nelsson (£0.8m p/a).
If Arsenal are able to sell those six players (Pépé, Leno, Torreira, AMN, Bellerin, Nelsson) this summer, then rough calculations would place their 2022/23 wage budget pretty close to £70m.
I will add again here that these reported wage figures are likely not perfect, but the best way to really compare is thinking relative to that initial 2020/21 figure. Arsenal’s wage bill could be as little as *half* of what it was.
That is crucial, and this attitude to trimming and maintaining a tight wage bill has been a key aspect of the revival of AC Milan in the last 2-3 years, just like it was for Juventus in the early 2010s.
And so that brings us to Fábio Vieira, Gabriel Jesus and Raphinha.
Let’s start with Vieira. Despite the £30 million fee, he is a fairly low-cost operation given his reported low wage demands. Some reports have that wage as low as £25,000, which would make him the lowest paid player in the senior team, around the same wage as Nuno Tavares (£1.4m p/a).
Then there’s Raphinha. Capology currently has his wage packet at Leeds as £3.3m p/a. That would put him middle of the pack at Arsenal, but he will obviously get a pay rise with his move to the Emirates. Let’s assume a figure around £6m p/a. Then there’s the likely fee around £60 million. This isn’t such a low-cost operation, but obviously adds important top-end quality.
And then there’s the £45 million move for Gabriel Jesus, which might be the cream of the crop. He’s on a reported £4.7m p/a, and you’d expect a small bump with the move, so let’s say he’ll be on £6m p/a too.
Not to saddle you with too many numbers, let’s try to simplify it. We worked out Arsenal were spending *around* £70 million p/a on wages. They’ll be adding (let’s be generous) £15 million of wage expenses per year, while spending roughly £135 million on transfer fees.
That leaves Arsenal still £60 million short of their 2020/21 wage bill, while they have also made returns on the sale Mattéo Guendouzi (around £10m), and will likely have future fees to bank from most/all the six we mentioned earlier (this could easily be £40-50m).
£60m + £10m + £40m = £110m. There is still a nominal £25m shortfall, though it’s pretty normal for Arsenal not to cover every single penny of incomings with outgoings. The key takeaway, rather than a pinpoint number, is that Arsenal can afford these signings because they have dramatically restructured their club.
The lesson is this: clubs with lower wage bills have much better spending power. It seems pretty obvious, but it is massively glossed over in the football transfers discourse.
And so, a tip of the cap to those running the show at Arsenal, who have successfully shed expensive dead weight from the wage bill in recent years, putting the club in a position to compete for some key signings for another tilt at the Champions League places. A certain Manchester United could learn a lesson or two.
