Arsenal’s financial position from 2020/21 to 2022/23

The following table sets out a snapshot look at the figures for the financial years to 31 May 2021 (season 20/21) and 31st May 2022 (season 21/22). These are actual figures as reported in Arsenal’s report and accounts posted at Companies House.

The figures for the financial year to 31 May 2023 (season 22/23) are an estimate based on our best guesses, past experience of Arsenal’s finances and the information that is in the public domain about transfers, TV deals and prize money paid.

The overall picture shows that Arsenal have been loss-making in each of the last three seasons albeit with reduced losses season by season.

*Cash generated toward player trading is a simplified description of the amount we see the club generating for expenditure on players.

Matchday

There were almost no ticket sales in season 20/21 due to Covid and season 21/22 was severely impacted by the absence of European football. Season 22/23 should see a return to 18/19 levels of matchday revenue plus 4% ticket price increases. It may do even better than forecast as we understand all premium seating was sold out which it certainly wasn’t in 2019.

Broadcast

Season 21/22 is based on published Premier League revenues and shows a considerable fall due to Arsenal not playing in Europe. Season 22/23 is our best estimate of broadcast income and includes a Premier League uplift from a new USA TV deal and a return to European football, with the club progressing into the knockout phase of the Europa League.

Commercial

Commercial income is more difficult to assess as contracts are increasingly performance- based and there were likely further penalties/income foregone for being out of Europe in 21/22.

The Rwanda and Adidas deals have been renewed at existing levels on longer terms extending beyond the 23/24 season and we expect 22/23 commercial income to have grown following the return to European competitions, with further substantial growth in 23/24 as the club returns to the Champions League after a six season absence. We also note that the recent renewal of the Emirates short sponsorship but have no information on the values for this.

Wages

The impact of the Őzil and Aubameyang wages coming off the payroll and the expiry of Lacazette’s contract in June 2022 can be seen in the falling wage bill, which will have generated substantial savings in 22/23.

Offsetting that was considerable re-investment in new signings in summer 2023 (Jesus and Zinchenko) and again in January 2023 (Trossard and Jorginho) that on balance leads to a best guess that wages will be close to flat at £215m in season 22/23.

Bumper new contracts for the likes of Saka, Martinelli, Gabriel and Saliba plus the marquee signing of Declan Rice and return of Champions League appearance bonuses could provide an eye-watering increase in salaries for 23/24, so we expect the club to work really hard to offload unwanted players before the season starts (the likes of Pepé and others who spent much of last season out on loan).

Amortisation

This is the write down of the value of the player asset pool including agents’ fees on new contracts for existing players and add-ons triggered by appearances, etc. Arsenal added aggressively to the pool in 21/22 (net £64m increase to £650m) and went further still in 22/23 (probably a net £100m increase to £750m) and have likely added £150m so far in 23/24. 

This will raise the amortisation charge from £127m in 21/22 to around £140m in 2022/23.

We expect attempts during the rest of the window to dispose of expensive players not contributing on the pitch to help manage a further substantial rise in amortisation in season 23/24. Pepé alone is costing over £15m pa in amortisation charges.

Other football costs

These include hosting costs, travel, retail costs of sale, costs related to sponsorship agreements, medical costs and all the usual types of overhead present in any substantial organisation. It is always difficult to know the detail of what is in them, what moves them and why they have changed season by season.

They fell by a staggering £32m in 20/21 to £47m when no games were played having already fallen £7m from the last normal season in 18/19 when they were £86m and were still down below trend in 21/22 when there were no European games. Logic says they will return toward 18/19 levels in 22/23 (especially with the inflation in energy costs) but a crystal ball is needed to know with any certainty.

Finance costs

Season 20/21 included a one-off charge of £32m to pay for the stadium debt refinancing by KSE. Indebtedness to KSE stood at £218m at May 2022 (up £16m). Interest costs on KSE debt were only around 1% in 21/22. Recent interest rate rises could have a significant impact on finance costs unless they were fixed, which we feel is unlikely. We allow for a modest amount of interest for that loan and the debenture loans in 22/23 (£10m).

We anticipated originally that in lieu of the low operating cash flow in 21/22, KSE would have advanced further funds to cover transfers in 21/22 (possibly a further £50m). Despite spending £144m net on new players and contract extensions in 21/22 in reality only £16m was advanced by KSE due to the very low amount of net player trading cash outflows actually incurred in 21/22 (£86m).

This was because Arsenal managed to negotiate substantial deferred payment terms for new signings in 21/22. Paying in instalments for players is common practice and clubs in receipt of an IOU from Arsenal can easily turn this into real cash via the many ‘football finance institutions’ active in the market.

Money owed to other clubs is a very significant “source of funds” for Arsenal, with future payments for players a net £148m at 31 May 2022 (£193m including provisions for bonuses).

In 22/23, we think the club needed further financial support (ie loans) from KSE at around the £20m level and will have debts to other clubs for player purchases around the £170m mark (plus provisions on top) and have outlaid around £150m in cash in the year.

23/24 is potentially another dramatic transfer window (around the £170m net level so far) which is another reason we expect significant disposals before the end of the window.

Overall picture

In November 2022 we said:

“We believe the club has finally got a grip on its playing costs, with these equating to regularly qualifying for Europa League football, so securing Champions League should ensure more cashflow to invest in the squad. The wage bill is, however, over £100m per season LESS than at Man City and we should be prepared for sizeable bonuses to be paid to the current players should they qualify for this competition. The return to form of the team sees ticket sales strong and the renewal of commercial contracts on similar terms is a positive step as the country enters a lasting recession. With the young age profile of the squad and the stability now found in the finances there is a good foundation for Arsenal to build on in the next few years.”

The playing success of the team has supported this approach with another £200m+ outlaid on three new players in 23/24 and new contracts awarded to a core of four existing young players. The club is clearly pushing hard to stay close to the very top of the League. Much will now rest on maintaining regular qualification for the Champions League.

July 2023