BREAKING NEWS: UEFA announces shocking punishment for Arsenal for breaking the financial fair play rule of £553M projected – decision made after yesterday verdict on FFP
BREAKING NEWS: UEFA announces shocking punishment for Arsenal for breaking the financial fair play rule of £553M projected – decision made after yesterday verdict on FFP
Financial Fair Play is a many-headed beast, with Arsenal forced to fight on multiple fronts.
If we’re being accurate, ‘Financial Fair Play’ or ‘FFP’ hasn’t existed for several years now. In the Premier League, it’s Profit and Sustainability Rules (PSR), while in Europe it’s Financial Sustainability Regulations.
To complicate matters, UEFA’s rules – with which Arsenal must comply due to playing in the Champions League – are split into three separate systems relating to A) solvency, B) stability and C) cost control.
The Premier League meanwhile, whose current rules are relatively simple and based on a club’s bottom line, are considering introducing two new financial control mechanisms: anchoring and, like UEFA, cost control.
Arsenal have never been particularly close to breaking Premier League PSR, under which clubs are permitted to lose up to £105m over a rolling three-season period.
Despite losing £329m since they last turned a profit in the 2017-18, the Gunners have always fallen comfortably within the £105m threshold when allowable expenses like academy and women’s team investment, infrastructure spending and community programmes are factored in.
Under the UEFA system, however, it hasn’t been smooth sailing. In 2021-22, European football’s governing body placed the North Londoners on a watchlist of 20 clubs at risk of breaching their rules.
At that time Stan Kroenke was underwriting significant losses to bring Champions League football back to the Emirates Stadium, which Mikel Arteta eventually delivered in 2023-24.
Back at Europe’s top table, Arsenal are now on much surer footing financially and set to post a healthy surplus when they release their 2024-25 accounts next February. Commercial and matchday income are soaring, as are proceeds from UEFA’s central pot thanks to the new 36-team Champions League format.
But UEFA has now moved to a system which doesn’t consider a club’s profit-and-loss account alone – and in this new FFP paradigm, Arsenal aren’t as safe as has long been presumed.
And with Eberechi Eze set to take spending beyond £250m this summer, are the Gunners at risk of joining Chelsea and Aston Villa among the clubs penalised by UEFA?
Revealed: Arsenal at real risk of FFP breach without player sales
Under UEFA’s Squad Cost ratio rule, Arsenal are not permitted to spend more than 70 per cent of revenue plus a three-year average of profit on player sales on wages, transfers and agents’ fees.
Unlike the Football Earnings test – which imposes a maximum loss limit of around £75m over a rolling three-season assessment window – Squad Cost ratios are assessed by UEFA on a calendar year basis.
In 2023-24, the last published financial year, Arsenal’s revenue was £613m, while their three-year average profit on player sales was £28m, giving them relevant turnover of £641m.
As a point of order, profit on player sales is calculated based on sale fee minus the player’s amortised book value.
Had the 70 per cent squad cost ratio been in full force in 2023-24, they would have been allowed to spend no more than £448.7m on player and staff wages, amortised transfer fees, and agents.
Arsenal’s wage bill in 2023-24 was £328m. Generally, about 75 per cent of a club’s wage bill is paid to players and the manager, so their relevant outlay in this area was approximately £246m.
Meanwhile, their amortisation costs for the year – which is how clubs account for transfer fees over a player’s contract length – were £171m. Agents’ fees are included in that figure.
In total, therefore, Arsenal were likely at around £417m in terms of their squad cost, which is about £30m under the maximum permitted. Not exactly a huge margin for error.
So what about now, after Arsenal have spent another £250m and signed several players on eight-figure salaries?
We don’t yet have 2024-25’s figures, but TBR Football is using projections from football finance expert Greg Cordell to inform our calculation of the Gunners’ capacity.
Arsenal’s revenue is forecast by Cordell to have been around £675m. Their estimated player sale profits meanwhile were about £51m, thanks to the ‘pure profit’ disposals of academy graduates Emile Smith Rowe and Eddie Nketiah.
