Why Wenger Can Spend £100M in January

The Arsenal board and Wenger have constantly talked about the UEFA Financial Fair Play rules and how the Arsenal model is the model other clubs are striving for (financially if not trophy wise).  Arsenal are of the opinion that our prudence in the transfer market will eventually ensure we are a successful club both on and off the field.

Let us look at the Financial Fair Play rules.  This state that a club over a three year cycle can only lose €15M.  What is excluded from the profit and loss are non-football related items.  Any profits from our property ventures or income from hotels that some clubs have are disregarded. Any interest payments that relate to the football infrastructure, i.e. stadium or training ground development are ignored.

The next aspect to look at is how are transfers treated.  When a club buys a player, say Gervinho for £10.7M, this £10.7M is charged to P&L over the duration of Gervinho’s contract (4 years).  This means that for the next four years we will charge the P&L £2.675M per annum.  This summer we spent £48M on players and our standard contract is 4 years, so for the next 4 years we will write-off the transfer fees at £12M per annum.

In terms of sales of players, the transfer fee is taken to P&L less any value in the balance sheet.  So when we sold Clichy for instance, his book value was nil, so the P&L is credited with £7M for the year 2011/12.  Our sales this summer amounted to £73M.  As all the players had a balance sheet value of nil, the 2011/12 accounts will show a profit of £73M.

Looking at the accounts for the year ended 31 May 2011, Arsenal’s football profit is £16M per annum before player trading, this position will not change until 2014 when our sponsorship deals with Nike and Fly Emirates expire. This means we can spend £16M per annum on transfers before falling foul of UEFA’s Financial Fair Play rules, in effect our purchases this summer mean we have used ALL of our allowable transfer expenditure for the next three seasons.

However, due to our profit on sales of £73M this summer we can spend a further £100M on players and still be within UEFA’s rules.

So assuming we have no transfers out (highly unlikely with the contract position of our players), Wenger has £100M to spend on players this January and the club will stay within the UEFA Financial regulations.

If we take another look at the accounts as at 31 May 2011, when some season ticket money have been received, but before any transfer money and also before the £25M sale of Queensland Road and before new sponsorship deals with Bettson, Indesit, Citreon, Thomas Cook, O2 and Carlsberg were agreed, Arsenal Football Club had £160M in cash at the bank.  Yes just to repeat that £160M in the bank.

Anybody who tells you the club does not have money is lying, we have more money that nearly all the clubs in the Premier League.

Wenger has the resources to go out and buy players in January and still stay within UEFA’s financial rules and  I expect he will.  The last two times we bought players in January was when we competing with Aston Villa for fourth place and we bought Arshavin and when bought Adebayor, Diaby and Walcott we were in fight for fourth place with Spurs.

Posted on October 4, 2011, in Arsenal, Arsenal News, Transfers and tagged , , , , . Bookmark the permalink. 15 Comments.

  1. Bilyaminu Tambuwal

    Hope wenger will use this money deligently in buying top players that will bring positive development to the club, Up Gunners!

  2. Wenger had better open dat cheque book and buy quality players..

  3. I believe arsenal will come out of this situation, its just a matter of time. I also believe arsenal will finish among the top four above totenham and Liverpool. I believe in Arsene Wenger, i also believe that he will turn things around. That time his critics will bury their head in shame.

  4. Chinedu uniport

    Congrats Afc is rich,but like wenger,I don’t fancy the idea of buying players & keeping them on the bench & I also believe in youths(but in a more matured way than we are doing it) & I believe in diversity of wings like(couquelin@6,rosisky@2,gibbs@11),so… In january ,my wish list for arsenal survival – hazard,m.villa,vertoghen,gourcuff,granero & a quality striker 2 pair Rvp.Sell or loan – diaby,squillacci,koscieny,ramsey,arshavin,rosisky,djourou etc 2 pave way for the new guys.

  5. Very interesting to hear about the true financial state of the club. Let’s hope Arsene will spend some of that money on big players in the next transfer window!!

  6. Spend 70mils on Ericksen, Vertogen n Mvilla and see how the team will look good all of a sudden. It is simple aritmetic. And may be 10mil on Samba. We have got to manage this team till January and then show the world our ace. About time, Wenger!!!

  7. 4get! Wenger is a miser, the guy likes seeing money rot in the bank than buy players. Ofcos, he’s a great tactician but who needs someone 2 buy him players.

  8. I strongly believe that Wenger can still do something better for it is not yet lat for the team it is just amatter of buying atleast two more experience defenders atleast one more midfilder to help Song and Govinho and Van percie also needs someone like Fabrigas and another striker otherwise wings is verry ok with Walcot and Arshavin. Otherwise I think it is still verry much early for Wenger to loss hope. The only mistake in the team is that when there are playing all players are running forward and this make it verry easy for the opponents to get averry easy score through the counter atack atherwise I wish to see my former Arsenal team I knew in 2005.

  9. I believe the manager as well as the board know precisely what to do. I am sure no one wants to be a failure.

  10. Every huge deed to be done must have come from a wise decision that involves influential people. So, if it fails, the burden should be lighter and people will have a hard to pin-point out.

  11. I doubt if we will finish top 4 this season. Everyone is waiting for our “so called” players to come back. My question is , what players? Diaby? Kosielny? Squilaci?
    The team we played on Saturday , will be pretty much our strongest team we will have available this season. Wilshere won’t be back very soon. So , only Vermaelen really to come back. I know Diaby and Kosielny is injured , but are they better than what played on Saturday? We won’t field a stronger team than we did on Saturday this season. That was as good as it is going to get for us. That is how bad our squad is. We need to buy players , but Wenger won’t. Not sure if it is the Board or Wenger , or maybe just the playing field that changed with regards to wages since City came on board. Maybe we can’t compete financially.
    Very tough being a Gunner. Can Usmanov help us?
    Lots of questions.

  12. that great to know this..i believe the manager can do something as well…what ever happen at arsenal i still support the team…AW is a great manager… i know he want to buy some great player.. just wait and see… arsenal success as a football club… still on profit…

  13. Good article (and intresting comments too)!

  14. whilst i’m not too sure if we actually have 100+ mill in the bank, let’s say we do for argument’s sakes – if you checked on the financial statements we’re 285 MILLION in DEBT. Some are fixed rate bonds(which are less risky – but debts nevertheless) and over 50 million are on flexible rate – the interest rates are on the low side due to the recession – and as soon as the Central Bank raise the rates we’d be pretty exposed – so I think it’s a good idea to NOT go and blow $$$’s.

    Saying that though, I wouldn’t mind seeing a striker arriving to help RVP – and please get id of Chamakh, Walcott, Rosicky and Arshavin!

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