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Swiss analysis of Arsenal accounts gives grounds for concern

Writing from his fastness in Zurich with football matches in Switzerland called off, the Swiss Ramble casts his analytic eye over the recent accounts of Arsenal. He says, 'A £32m loss before tax is obviously not great, though to place this into perspective it is much better than Everton and Chelsea, who both reported deficits above £100m. That said, other clubs have posted good profits in 2018/19, especially Liverpool £42m and Manchester United £27m.'

The low player trading profit (which I discussed in a post last Saturday) combined with a second consecutive season in the Europa League meant that Arsenal recorded its first loss since 2002. This is a huge financial comedown, given that Arsenal have delivered five of the top 20 profits ever registered in the Premier League.

It should be note that player sale income this season will be higher after sales of Iwobi, Bielik, Koscielny, etc. Arsenal have made £170m profit on player sales in the last five years, which is around half of Chelsea £332m. Liverpool and Spurs have made £260m and £161m respectively, though this only covers four years, as 2018/19 accounts are not yet published. [Player sales are becoming an increasingly important but volatile revenue stream for bigger clubs across Europe].

Despite the small growth in the club's revenue to £395m, this is still £28m (7%) lower than £423m reported two years ago. All revenue streams are down since then: broadcasting £16m (8%), due to no Champions League, commercial £6m (5%), match day £4m (4%). The Gunners are the only Big Six club to see revenue fall in the last two years. While they have dropped £30m, others have made huge gains, especially Liverpool, up £169m, and Spurs, up £153m. In fact, the Haringey club are now £65m ahead of their Islington rivals, compared to a £141m shortfall just three years ago.

Arsenal's £395m revenue is now the sixth highest in the Premier League, having been overtaken by Liverpool £533m, Spurs £459m and Chelsea £447m in the last two years. The £230m gap to leaders Manchester United £627m is substantial, but at the same time Arsenal are £200m ahead of 7th placed West Ham £191m.

The club fell two places to 11th in the Deloitte Money League, their lowest position since 2001. Their £4m 2019 revenue growth was one of the smallest – in contrast see Barcelona £129m and PSG £81m. Ivan Gazidis will have noted that Bayer Munich £582m earn around £200m more.

Arsenal earned €34m from Europe for reaching the Europa League final, boosted by the new UEFA TV deal in 2019, though held back by Chelesa winning the trophy (lower TV pool). The Swiss Ramble states, 'My estimates are they will receive around £15m less in 2019/20 after going out in the last 32 to Olympiacos.'

The difference between the European competitions is vividly seen in the new UEFA coefficient payment (based on performances in Europe over 10 years). The highest ranked English team in the Champions League (United) received €31m, while Arsenal only got €3m in the Europa League.

Arsenal have earned an impressive €231m from Europe in the last five years, within striking distance of their North London rivals and Liverpool, though a fair way behind Manchester City €337m. However, there has been a tangible drop-off in the last two years, when the club's revenue was by far the lowest in the Big Six.

The importance of match day revenue to the Gooners is very clear, as shown by 25% of their total revenue coming from this category, well ahead of Real Madrid, Barcelona and Lyon, all 19%. Could be a big hit if Arsenal fail to qualify for Europe [which at present looks likely].

Commercial revenue rose £4m (4%) to £111m, mainly thanks to the new Visit Rwanda sleeve sponsorship. This is sixth highest in England, but miles behind United £275m and City £227m. This is also a fair way below Liverpool, while the Haringey club at £134m have overtaken them. In the last four years Arsenal commercial income has basically been flat (only up £8m), while this important revenue stream has grown significantly at the other leading clubs.

More encouragingly, Arsenal will have improved commercial deals from 2019/20: extension of Emirates sponsorship at £40m (up £10m) and Adidas kit supplier (reported £60m vs. Puma £30m). Worth noting that Emirates includes naming rights and does not allow separate training kit deal.

The wage bill rose £9m (4%) from £223m to £232m (excluding exceptional payments), due to new signings and contract extensions, though no Champions League bonuses. This means wages have risen £32m in the last two years, while revenue has fallen £28m. It should be noted that wage increases at other top clubs have been much greater.

One Arsenal fan commented, 'We need more of this, to finally make the Yanks sell up.' Unfortunately, I don't see this happening any time soon.

Vielen dank, Swiss Ramble, sehr gut.

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