The Truth About Our Transfer Budget…

And it's definitely time to calm down, and that's meant on my part, with a recent flurry of blog posts regarding some funny stories involving Arshavin and Kroenke as well as the new kit release. Today, I will restore normality and go back to the nice discussion we've all been having regarding the future of Arsenal in terms of players in and players out.

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.

What can £13.9m buy you nowadays?

That’s the next question, of course. And we’re on the look out for 2 players in reality, those two players being a central defender and a central midfielder. And in all honesty, £13.9m is enough to do this.

We also have a deal in place with Milan for the purchase of Philippe Senderos, believed to be in the region of £6m – if this goes through, we’ll increase of transfer budget… and although no deal in place, there is a lot of speculation about the potential sale of Adebayor, which would certainly raise some more money.

So based on these facts (and they are published facts), we’ve got some money and some options – that’s the reality.

How best do you think we can use it to really challenge next season?

If you haven’t already done so, make sure you enter the competition to win a copy of The Italian Job: Inter 1 – 5 Arsenal…

Thanks to Nigel Phillips and AST and  for providing the data financial information for this article.]]>

  • Fo

    < ![CDATA[Some amazing stuff there, it makes perfect sense... I wonder why newspapers and other people don't do their research before they publish numbers.

    £13.9m to spend after contracts is a decent amount of cash. It looks like Senderos will leave which will top it up to £20m.

    £20m to buy 2 players? That should be possible using Arsene's network!!!]]>

  • Pete

    What if we buy just one player, an experienced defending midfielder, and use Song as mainly as a central defender but also as a back up defending midfielder?

  • Fo

    < ![CDATA[Like spend £15m on Yaya or Veloso of someone and not buy any defenders? Maybe that could work!

    Does anyone know if Pedro Botelho is going be in our first team next season?

    We've got Traore back too, who I understand will play in midfield, so no need for Diaby to play out there!]]>

  • zohaib

    < ![CDATA[I like your idea Pete. And given our financial situation, at present, it looks like a likely scenario.

    Although Song isn't a world-class defender, he's no worse than Silvestre, so he could prove a decent 4th choice CB, behind Toure, Gallas and Djourou.

    Ideally, however, we still need a world-class CB and DM if we want to win some trophies.]]>

  • Fo

    < ![CDATA[I agree Zohaib, would prefer to sell Senderos for £6m and then have £20m to spend on two world class players - a defender and midfielder...

    Then we'll be very serious challengers!]]>

  • Pete

    Cheers guys. Ideally I’d like two world class players coming in too, a central defender and defending midfielder. But I guess it depends on who we can get for the money available to us and who is available. If we only have £13 million, I think I’d rather it be spent on one world class player (especially if they’re able to play both positions) than just good players.

  • Berth

    < ![CDATA[What about Player endorsement and merchandise; Dev.

    Pete by the way your idea makes perfect sense but like Zohaib said, we really have to get a quality DMF and a class CB before we have a shot at a trophy.]]>

  • Berth

    We could equally sell Diaby as well , though Wenger wouldn’t think so.

  • JDD

    < ![CDATA[sell senderos for 6mil and we will have 20mil
    unfortunately sell adebayor i say unfortuneately because i like him but after his recent comments 'i will leave if im booed' and 'my future does not belong here' also the fact that bendtner has scored only 1 less than him in all competitions with 1 game left if we sell him 4 around 20mil then we will have around 40 mil

    chiellini-14mil
    alonso-14mil
    lucio-8mil
    van der vaart-8mil
    pogrenbyak-10mil
    huntelaar-15mil
    david villa-20mil
    matuidi-8mil

    we could buy two maybe three of these players]]>

  • JDD

    or we could just buy a world class dfm and play gallas and toure at the back with song as a back up for both positions because i think song could become a top player in either position

  • yemi

    < ![CDATA[Guys, i also so this, you might check it out too. http://www.tribalfootball.com/wenger-assured-potential-%C2%A350m-arsenal-transfer-warchest-246028

    As for me, i would prefer one solid CD, one solid defensive midfielder and one sharp attacker. If we could get players in the range of 7million each to fit this positions then all well and good.
    Players that might not be world class in terms of popularity but who can match anyone in the world.

    I dont mind zaki coming in]]>

  • Fo

    Berth, I think Dev was concentrating on the overall facts – I think football profit covers most of the topics.

  • devday

    Yemi, take TribalFootball with a pinch of salt, you’ll see a whole load of crap on there – this article was written in conjunction with the official Arsenal accounts as summarised by the shareholders.

  • Fo

    < ![CDATA[Anyone prefer getting Senderos back?
    Anyone seen him in action at Milan?]]>

  • yemi

    I know dev just that there is no smoke without fire !!!

  • Toby

    < ![CDATA[JDD,

    David Villa just said that his release clause was around 150 miillion euros and i think getting him for £20 million would be a tad optimistic.

    Fo,
    Having Senderos is exactly what we don't need, we already have Toure, Gallas, Djourou, Silvestre and Song, that would all be put above him, and with the supposed extra £6 million that we would get for him it would not be worth it. What we do need is a world class centre back. (Although I have not really seen much of Senderos this season, partly due to the fact that he has not played much, but i am assuming he has not become a superstar within under a year)]]>

  • Gooner Get Ya

    < ![CDATA[20m (including Senderos money) would still not be enough for 2 class players in any position. We need another 10-15m in my opinion. If we are looking at players like Barry for example you are looking at 15-18m for him alone.

    If Ade does go which is looking very possible he would fetch in the region of 20-25m. There was talk that Inter are interested what about a swal deal with Ibrahimovic 27, good experience and a top class forward?...just a thought.]]>

  • http://myspace TRUEGOONER

    sorry u lot i dont know what u are thinkin £20million to spend on players …wt do u want to win the uefa cup???? sorry but if we are to have any chance of winning any real silverware i.e champios league and premiership we are going to need way more then that…..we need to get rid of half wits like sivestre bedntener adebayor and eboue…..we havent won nothing for 5 years and even them scumbags chelsea are gnna be the best team in london the way were going i dont see how u cant see it…..lets face it some of the players in our team are not even f.a cup winning quality…teams like chelsea and manchester united…and all other top europeans teams have qualityy which we are severley lacking dont get me wrong van persie and arshavin are brilliant players but fabregas is getting abit suspect i dnt think he wants to play for us anymore and adebayor is disgraceful does he even try anymore???? bentner is bent by name and bent by nature….denilson is not strong enough for the premiership…eboue = headless chicken…silvestre = man u reject…… we need to sign quality players

    xabi alonso
    veloso
    yaya toure
    sergio aguerro
    karim benzema
    thats jus for example not none of these 5 million pound lets giv em a season or 2 and see them fail

  • http://myspace TRUEGOONER

    we also need a goalkeeper badly and a replacement for gallas

  • http://kierandelaney.net kierandelaney.net

    Amazing logic TRUEGOONER. Are you suggesting we send out Fabregas with a pair of tights, a gun and a map of London banks?

  • Frederico

    13 million, what a joke. Arsenal board please wake up and see what your competition is doing. They mean business with the game, you on the other hand only care just about business. If we fall to mid table it would be a hard recovery. The young boys and mediocre older players just wont cut it… WAKE UP!!!!

  • Frederico

    Truegooner is right, if we aspire to be the best, we must have a good collection of the best players in the world.

  • Debs

    Well Frederico, we all want to have the best players at Arsenal, but there’s not much we can do about it at the moment, because guess what, we’ve not got that type of money. We’ve not got anyone bankrolling us, so unless we get some anonymous HUGE donation, it’s not going to happen anytime soon, and we’ve just got to do the best with what we’ve got.
    Simple as.

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