Sunday 20th September 2020

An updated look at how Covid-19 is affecting Arsenal's finances

How might COVID-19 affect Arsenal’s financial position?

At the end of April we set out some estimates for how the onset of Covid-19 might affect Arsenal’s finances for the years ending 31 May 2020 and 2021.

We concluded that the club would require assistance from the owner to get through the summer and are pleased to report that Kroenke Sports and Entertainment (KSE) has provided some support by refinancing the club’s historic stadium building debt. The precise amounts provided and the terms of the money extended by KSE remains unknown so we are obliged to make some assumptions as to those issues.

In addition, the 2020 season finished behind closed doors (“BCD”) and there is now greater clarity on the club’s income and costs for the season just ended.  However, there remains considerable uncertainty over the level of some income streams for 2020 (noticeably commercial income) and for the 2020/21 season it remains an educated guessing game as to what will happen in terms of match day, broadcast and commercial income.

All that said, Arsenal fans are anxious for an idea as to the club’s financial situation and ability to finance new signings so we have, as ever, done our best to provide some reasoned analysis and thoughts.

It should be stressed that this remains a very uncertain time and that all estimates and assumptions can rapidly change in light of policy changes by both the Government (match attendance) and football authorities such as UEFA and the Premier League (TV revenue streams). 

AST analysis

The following analysis of Arsenal’s financial situation is set out in a simple table format.

The second column (Actual) reports Arsenal’s actual financial performance for the year ending 31 May 2019 from the figures made available on in December 2019.

The third column (AST – estimate before suspension) sets out how we expected the financial year 2019/20 to conclude before COVID-19 occurred.

The fourth column (August 2020 estimate) is a revised estimate for the season 2019/20 made in August 2020. Note this is not what will be in the accounts for the year ended May 2020 as the season for Arsenal did not end until after the Cup Final on 1st August.

The fifth column (AST estimate) is an estimate of what season 2020/21 could look like if all matches are played with 25% matchday capacity allowed. Again this is not what the actual accounts would look like because the 19/20 season numbers will be comingled with those for 20/21 season.


Year to May 2019

Year to May 2020

Season 19/20

Season 20/21



AST estimate – before suspension

AST (August 2020 estimate)

AST estimate











Commercial & Retail





Player loans





Football revenue










Total revenue











Football costs wages





Football costs other





Amortisation of squad










Property & loans




Total costs










Operating loss





Player sales and JV income share





Finance costs





Profit / (loss) before tax





Matchday revenue was set to be £92m for 2019-20, but is now reduced to £77m as a result of the club having to refund all ticket holders for the final four Premier League games of the season.

This figure also includes refunds (not Covid-19 related) to season ticket holders for two pre-paid cup credits.

If 2020-21 is played BCD there will be no matchday revenue. But it is hoped a 1 seat in 4 model will pass the necessary government tests and be allowed from the second home game of the season versus Sheffield United. How this will affect demand for seats especially premium seats is unclear.

We have therefore included £20m as an estimate for a season where occupancy is about 25%. This could of course go up or down and is below 25% of the normal expected gate receipts due to a disproportionate negative impact on Box and Club seat revenues.  It should also be noted that the costs of running these matches will be considerable with the club needing a large contingent of stewards, to purchase PPE and safety equipment, and to manage new ticketing arrangements.

Broadcast revenue – Arsenal’s broadcast revenues from the Premier League season are estimated to have been about £150m as a result of finishing eighth. There has been a slight uplift in the value of Premier League’s overseas broadcast deals which explains the increase despite Arsenal having a poorer season than 18/19 season.

Their revenues from the Europa league are estimated to have been about £19m. This is a considerable reduction on the £35m earned the previous season when they reached the final compared to the R32 exit in 19/20.

So the total broadcast income is estimated at about £169m.

However it has been widely reported that rebates of £600m have been agreed by the Premier League with their UK and overseas broadcast partners for season 2019/2020 as a result of COVID. This will reduce Arsenal’s income by about £33m. The cash for this rebate will not be withheld until 2022 according to reports, at the end of the current three year TV broadcast cycle.

It is also expected that there will be some rebate given by UEFA to their broadcasters so the estimate of £19m from UEFA may reduce a little.

We have assumed the same broadcast revenues in 2021 without any rebate. Broadcasting revenue is an income stream that might be under pressure, with many potential variables including a more compacted 2020/21 season and overseas rights holders seeking reductions in payments or being unable to make them. So this is also a figure that could see further reductions.

For Commercial & Retail in April we made a working assumption of a reduction of 12.5% in revenue from sponsors as some would seek refunds and deferrals but have now refined that down a little as the club won the FA Cup. This is a very hard figure to estimate as it will be reliant on whether Arsenal and their sponsors come to a voluntary agreement on how to share the ‘pain’ and the extent to which the main sponsorship agreements with Adidas and Emirates have force majeure clauses that the sponsors could invoke. There will not be an overseas summer tour which is an event that particularly benefits the large sponsors and is built into these commercial deals. 

Football costs: wages – we’ve reduced our estimate for 2020 from £230m to £219m. We believe that payroll figures for April and May 2020 dropped by about £2.5m in each month as a result of most of the players agreeing to a pay cut of 12.5% and the club’s 14-person senior executive team agreeing to a cut of 30% (for up to 12 months). Furthermore, our original estimates allowed a full eighteen months salary for Unai Emery and his team (£12m) whereas Emery has now taken up a new position at Villareal so we have cut that provision to just £4m.

However, as Arsenal qualified for the Europa League, the players will only take a wage cut of 7.5%, with the other 5% reinstated to 2020/21’s salary payments.

For 2020/21 we are assuming no net changes overall to the player wage bill with wages for new signings and pay rises matched by departures although clearly the next few weeks of transfer activity could change this. The absence of any severance provision for Unai, a further three months of salary savings until the season ended in July, and recent management changes and redundancies reduce our estimate to £212m.

The wage bill remains bloated and is too high for a club about to enter its fourth year in the Europa League and facing a global pandemic but should fall substantially next summer when Ozil’s £18m annual wages comes off the payroll.

Other football costs would be expected to fall by a small amount. We expect the cost of staging matches to remain about the same due to all the special COVID arrangements but see reductions  in other football costs of £10m which cover reduced operating costs from the absence of touring and hosting the Emirates Cup, the business rates saving, plus general belt tightening.

Amortisation is unchanged at £110m. In the absence of departures of expensive players still in their initial contract periods little should change.  Our working assumption is that Arsenal will spend about the same amount on new players as they receive from sales and because net receipts will probably be staggered over time we assume net nil impact on immediate available cash.

Profit on player sales: Because the book value of players likely to be sold is low (surplus centre backs and ex academy players) this translates to a substantial book profit (£40m) from the sum raised.

Finance costs: Finance costs comprise interest on the bonds and debentures that Arsenal took out to fund the building of the Emirates stadium. These were very consistent but as a result of the refinancing of these arrangements they will see changes. In the immediate term there are charges related to the early repayment of the residual stadium debts (“bonds”). We cannot be certain if these costs have been added to the overall debt or taken as a charge on the club.

On 14 August KSE UK Inc refinanced the stadium bonds at a combined outlay estimated at £214m which will take the form of a new loan from KSE to Arsenal on terms and at interest rates as yet unconfirmed. The estimated outlay comprises £162m for repayment of the outstanding bonds, £25m in early repayment charges, £24m for cancelling interest rate swaps Arsenal had entered into swaps to fix the rate of interest on the £50m of floating rate bonds and £3m of accrued interest.

The benefits to Arsenal from the refinancing are prima facie immediate access to the £36m cash in the Debt Service Reserve Account (DRSA) and a reduction in the interest rate charged (we estimate app £5mpa will be saved assuming an interest rate of 3% for the new loan). In addition, it is hoped there will be no immediate debt repayments against the new £214m loan saving app £9m in cash in 2021.

In 2021 finance costs are estimated at £35m. This comprises:

  • the early repayment charges of £25m
  • £3m for writing off the residual deferred costs of raising the bonds in the first place
  • reduced interest bill of £7m

Cash position

In an analysis for the AST in February 2020 Simon Hill set out his analysis of Arsenal’s cash position at 31 May 2019 which showed that after the last summer transfer window Arsenal had residual cash reserves of about £69m.

Cash as at 31.5.19


Debt reserve (service)


Working capital


Net player payments due 2019-20


Tax and debt payments


One-off factors


Available Cash


Net spent – summer 2019


Residual Cash 1.9.19


 *estimated initial cash outlay from a summer net spend of £92.7m (the initial payments that Arsenal had to make on their signings).

Rolling forward this analysis to the summer of 2020 is particularly complicated given the Covid-19 impact but we would highlight the following big changes to available cash for this transfer window

  • The club will have seen a considerable fall in cash flow due to the suspension of Executive box / Club Level renewals in March and April and Season Ticket renewals in May 2020. These “pre-payments” normally total close to £70m and provide working capital for the non-matchday months of June, July and some of August. We believe the club has access to a £30m overdraft facility to partly offset this loss.
  • As of 31 May, 2020, Arsenal still owe a net £120m on player transfers. An estimate is that £40m of that is due to paid in summer 2020 and a further £30m in summer 2021. It is possible some clubs may delay or default on payments they owe to Arsenal.
  • Trading for the season 2020 should generate approximately £50m in additional funds after allowing for the deferment in cash terms of the EPL rebate until 2022.
  • The debt refinancing removes the need to maintain the debt service reserve (£36m)
  • Trading for the season 2021 is estimated to generate £30m as it is hard to see much new capital expenditure being incurred and the early repayment premium payable on the debt refinancing is assumed to be funded by the KSE loan. The impact of player trading in cash terms for summer 2020 is assumed to generate net nil cash.
  • So overall our sense is these issues leave some residue in the club as of 1 September 2020 (£80m) to cover further risks in income and extra working capital needs following the disruption to advance payments from sponsors and delays in receiving TV payments.  Much of this residue results from the debt refinancing in August, recent qualification for the Europa League and anticipated cost savings from trimming the squad. The situation looks a bit healthier than in the spring but if reduced attendances remains a feature of the game for season 2021/22 further cash will need setting aside.

In summary

The AST estimates that Covid-19 is likely to take Arsenal from a situation where they would have reported a small profit of £4m for this current season to one of recording a financial loss of over £40m for 2019/2020.

With Behind Closed Doors (BCD) and then restricted attendances continuing for all of next season the club could face reporting losses of a further £80m in 2020/21. This could get much worse if broadcasters and/or sponsors do not see things as charitably as we do and if the government does not allow the return of spectators.

KSE’s actions in refinancing the existing debt is an action the AST long advocated and has improved the club’s financial position.  It is a shame it took a crisis to provoke a reaction from the owner and arguably now is the time to invest more in the club as players will be cheaper, with many clubs desperate to sell. Arsenal need to invest to close the gap on the top four next season as the further widening of revenues between Champions League and Europa League will put the club at further disadvantage if a fifth season of Europa League compounds the Covid-19 impact. 

 September 2020

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