The Truth About Our Transfer Budget You may have read the news that our transfer budget is £13m this summer, and after careful review of some very interesting statistics from various places (all will be revealed later), the figure of £13m is very actually very accurate. Let’s explain. Every year we have to generate £25m in additional funds to help finance the stadium loan, and after we pay this off, we can spend the rest of the money on transfers. Last season, we made £25m from the sales of Hleb, Hoyte, Diarra and Gilberto – this figure also includes the additional revenue we received by other players moving on from other clubs, including a hefty amount for the transfer of David Bentley to Sp*rs.
Player trading again proved a very profitable activity generating a surplus of £18.5m (£19.6m) with gains on the sales of Hleb, Hoyte and the on-sale of Bentley. Expect some Diarra on-sale money in the next reporting period. Wenger has been criticised for making a profit from player trading, but this is a useful revenue stream and could be part of a broader strategy when reviewing the composition of the squad and likely distribution of wages. Money payable in the future on players fell to £23.5m (£30.7m) of which £10.9m (£20.1m) is described as “probable” based on the expected future number of first team appearances.The profit based on the football side of things before player sales was £23.5m last season. The actual football turnover increased by 10% (from £89.3m to £98.4m) and this happened for several reasons including more games, higher TV distributions, the 2008/09 season ticket price increase and the € / £ exchange rate effect on Champions League money. The official comment for the shareholders was:
The football operating profit (before debt service costs), excluding player sales and the cost of writing down the squad (basically depreciation of intangible assets – a non-cash cost) was £23.5m (£21.9m).Now, there is a lot of non-football activity which is why you’ll see higher figures, such as the recent report in the Telegraph. So, looking at these numbers, you’ve got £23.5m from last season, a surplus of approximately £18.5m from player sales, as discussed above, and thus this totals £42m. The £18.5m is the surplus which means it takes into account the signings of Nasri, Ramsey and Silvestre. Now… since the summer, a cash payment of around £18m would have been allocated to the Arshavin transfer and according the the way in which the club’s finances work, any monies outstanding due in future payments for players should be kept in the bank. So, take the £18m and add in the £10.9m held, and you’ve got yourself £29.9m, which when taken off the original value, leaves £13.9m. But, I hear you ask, what about the money from this season? We’ve got to the Champions League semi-final and the FA Cup final. Well, the accounts I’m referring to in this article are from the six month period ending in November 2008, which do take into consideration some of the annual profit. I haven’t received the accounts for the May 2009 data, and therefore we can only speculate. Based on last year’s figures, we can assume we will have post season profit of around £36m. Now, of course, this figure may be less due to the current climate, and I would be surprised if we were talking about £31m. Now out of this years profit, we’ll be looking to spend about £23m of it on servicing the stadium debt, and the statement from AST reads:
£22.6m (£23.1m) held in specific debt service reserve accounts related to the new stadium financing.Which leaves a surplus of course. This surplus however has been allocated to the signing on fees of re-signing key players, such as the recent contract extension of Theo Walcott and the forthcoming negiotiations with Robin Van Persie and Cesc Fabregas amongst several other players. With the recent changes in the law, it’s essential for clubs to re-sign their players every 2-3 years depending on age, and naturally this brings about more signing on fees. So where does this leave us? Well, it’s still leaves us will approximately £13.9m left in the coffers, but the good thing (I suppose), is that this value is the value after the Arshavin transfer, is not related to future fees, includes the yearly cost related to the debt and also is after the resigning of the contracts for key players.