Plenty of good financial news for Arsenal

Arsenal’s pre-tax loss significantly improved from £52m to £18m in 2023/24, as (football) revenue shot up £149m (32%) from £465m to a new club record £614m, while profit from player sales also greatly increased from £11m to £51m.

However, this was partially offset by substantial growth in operating expenses, which rose £142m (27%) from £521m to £663m, while net interest payable also increased from £6m to £18m.

The club was honest enough to point out that the underlying loss only reduced from £34m to £18m, as the previous year was adversely impacted by an exceptional £18m impairment that was booked to write-down the value of certain player registrations.

All three of Arsenal’s main revenue streams saw good growth, achieving new club highs. The largest increase came in broadcasting, which rose £71m (37%) from £191m to £262m, driven by more success on the pitch.

Although it’s rarely good news to lose money, Arsenal’s £18m loss is actually not too bad for the Premier League, where half of the clubs lost more than £50m in 2022/23. It was also much better than Manchester United’s hefty £131m loss last season.  On the other hand, two clubs have already published excellent profits for 2023/24, namely Manchester City £74m and West Ham £57m.

Arsenal’s profit from player sales significantly increased from just £11m to £51m, which is their best result for four years.  This was mainly due to the transfers of Folarin Balogun to Monaco and Granit Xhaka to Bayer Leverkusen. Both of these deals represent pure profit, as the American striker was an Academy product, while the Swiss midfielder was fully amortised.

Arsenal have now lost money six years in a row, adding up to an overall loss of £329m, underlining how much the lack of Champions League football has hurt the club’s finances. The good news is that last season’s loss was the smallest in this period, a considerable improvement on the £127m they lost in the COVID-impacted 2020/21 season.

There has been a big change in the club’s traditional financial performance, as for many years many analysts considered Arsenal to be the Premier League’s poster child in terms of financial sustainability.  Indeed, up to 2018, they had enjoyed 16 consecutive profitable seasons, during which they made nearly £400m. Until the last few years, the last time that Arsenal had posted a loss was way back in 2002. 

Over the last five years Arsenal have the highest revenue growth in England, with their £219m even ahead of Manchester City’s £180m. Both these clubs have comfortably outpaced the other members of the Big Six, where the next highest growth was less than half, namely Liverpool £82m.  As a result, Arsenal have basically caught up with Liverpool £615m, but they are still a fair way behind the two Manchester clubs: City £715m and United £662m.   Arsenal now have the seventh highest revenue in the world, according to the Deloitte Money League.

Importance of Europe

According to the Swiss Ramble, Arsenal earned €93m after reaching the Champions League quarter-finals, where they were eliminated by Bayern Munich. This comprised a €15.6m participation fee, €33.3m prize money, €25.0m UEFA coefficient payment and an estimated €19.2m from the TV pool.

The impact of not qualifying for the Champions League in recent years is evident in Arsenal’s TV money from Europe, so their return has been crucial for the club’s finances.  As a result of their patchy record, Arsenal have earned much less from Europe than their English rivals in the last five years, when they were only once in the Champions League and did not qualify at all in 2021/22.

Arsenal will again benefit from playing in the Champions League this season, especially as the prize money has increased by around 20% with the new, expanded format.    The Swiss Ramble estimatesthat Arsenal have already earned €90m after the new league phase, where they finished in an impressive third place, only behind Liverpool and Barcelona, after winning six and drawing two of the eight games.  If the Gunners did manage to win the trophy, they would earn a staggering €143m.

Match day is clearly a key revenue stream for Arsenal. To illustrate its importance, it accounts for 21% of the club’s total revenue, which is the highest in the Premier League, just ahead of Manchester United 21% and Tottenham 20%.

Arsenal’s match day income was also enhanced by playing six of the women’s team’s league games at the Emirates, which averaged 52,003, including a new WSL record of 60,160 for the game against Manchester United.

Arsenal’s commercial revenue has just about doubled in the last five years, rising from £111m to £218m. However, the problem for Arsenal is that most of their main rivals have experienced similar growth – but from a higher base.  Even after Arsenal’s impressive recent growth, their £218m commercial income remains the sixth highest in England, around £100m less than Manchester City £345m, Manchester United £303m and Liverpool £295m. Most galling to Arsenal fans, they are even a fair way behind Tottenham £256m.

Wages

Arsenal continued to heavily invest in their squad, leading to a significant £93m (40%) increase in wages from £235m to £328m, a massive new club record.  There was also a steep increase in headcount, up 103 from 723 to 826, mainly in commercial and administrative staff, which rose 87. The number of training staff also rose from 74 to 84, which might explain the sizeable “pit crew” surrounding Mikel Arteta in the dugout.

Arsenal’s wages have shot up £116m (54%) in the last five years, which is by far the highest of the Big Six, around twice as much as Manchester City’s £59m. Manchester United and Chelsea actually reduced their wages.  However, even after this substantial growth, Arsenal’s £328m wage bill is still only fifth highest in the Premier League, a fair way behind Manchester City £413m, Liverpool £387m and Manchester United £365m. 

Arsenal’s gross financial debt grew by £66m from £276m to £342m, as the loan from owner Stan Kroenke (repayable on 2 years notice) increased from £259m to £324m, while debentures were slightly higher at £18m  This means that gross debt has risen by £124m (57%) in the last three years and is the club’s highest since way back in 2009.

Up to 2019 owner Stan Kroenke had put nothing into Arsenal (apart from buying the club), but since then he has provided £334m of loans “both to underpin transfer activities and for working capital purposes as required”, including £62m last season.

The success on the pitch has had a major beneficial impact on the bottom line, but it does underline the fact that Champions League qualification remains imperative for the business model.  The club has clearly come a long way in the last couple of seasons, though Arsenal fans would dearly love some silverware to complete “the process”.