Accounting for Arsene: Does Arsenal’s Fall From Grace Hurt Their Bottom Line?

Arsenal are at risk of missing the Champions League for a second season in a row. For Arsenal fans it feels like a punch to the gut and a worry for the future. For neutral fans it allows the banter to continue and a deviation from the norm we have seen for over a decade. For an accounting major like myself, I wonder what the ramifications are on Arsenal as a business. Is a deviation from millions of dollars guaranteed each season something that will hurt Arsenal?

Public companies are required to have annual reports with audited financial statements presented to shareholders. Arsenal are publicly traded but unlike Manchester United, their share price is astronomical (over $21,000 per share) and it is advised by the club itself  to not purchase shares to make a profit. Despite its oddities as a public (I would argue it is a semi-public company with a high share price and only 4% not owned by a select few people) company, it still has shareholders and therefore an annual report, where nerds like me can look at their financials!


Their latest financial data from their 2017 annual report showed revenue of over $590 million. That includes payments made from participating the Champions League last season (and crashing out in the Round of 16) of around $76 million. In the Europa League this season, they could make around $15-50 million, possibly more, depending on where they finish in that competition. Expenses for Arsenal were around $520 million. So, 590 minus 520 leaves Arsenal with a “profit” of around $70 million. The difference between Champions League income and Europa League income could be anywhere between $30 to $60 million, leaving Arsenal still with a profit, if all other expenses and revenues unrelated to participating in the Champions League/Europa League are similar.

One source of revenue negates all of that: the broadcasting revenue from participating in the Premier League. That number will rise for Arsenal around $80 million year-over-year, an addition to the already astronomical amount Premier League clubs receive from these broadcasting deals. That basically negates the loss of Champions League football. Not to mention, as cynical as it sounds, Arsenal save money by not having to pay bonuses for Champions League qualification. If you play Football Manager, you sometimes notice a clause in players contracts that qualifying for a continental competition, in this case the Champions League, allows them to awarded a bonus. Arsenal dodged having to pay that last season, and likely will avoid paying that this season.

Not to mention, Arsenal have cash, and low debt. Arsenal boast around $145 million in cash and cash equivalents on hand. In their May 2017 financial report, they mention that the club has previously fully self-insured against a season without Champions League football. The idea that they could miss out on two or more seasons of Champions League football will truly test if their “insurance” is built to last. It is important to note that the $145 million of cash does not include  cash “designated as debt service reserves.” This means that before Arsenal begin to burn through their cash (if they don’t spend that much on players), then that cash amount will not decrease until their “debt service reserves” are depleted. As of now, and according to my analysis in this article, Arsenal are turning a profit for the foreseeable future, meaning their debt will have no need to be serviced since there is no debt. Please note that player transfer fees are amortized

This article does not take into account things such as lower game attendance, higher player wages, and loss of merchandising revenue as well as other long-term factors of missing the Champions League can affect. When it comes to merchandising it appears possible marginal loss of revenue as a result of a lack of success is completely negated by Arsenal dominating emerging markets. Places where economies are growing: Asia, Africa, India, and so on are being dominated by many big teams. Out of that will come sponsors, supporters, and more broadcasting deals. Arsenal apparently do well in Africa especially in Nigeria, although I don’t have data to support that, it is simply anecdotal.

It appears mega-deals from broadcasting and globalism means that Arsenal, the world’s 5th richest club according to Forbes, are “too big to fail.” Lack of success doesn’t mean that Arsenal will struggle financially. Hell, Arsenal will likely continue to turn a profit and allow Wenger to use his often-mentioned “war chest.”


Players of the 90’s: Matt Le Tissier

It may surprise the current generation to know, but there was a time when the Premier League had significantly less foreign imports than it does now. In the early days of the league, high-priced foreign talent was not nearly as prominent as it is now, with a lot of home-grown talent making its way to the forefront of the English game and making names for themselves as they went.

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Dark days over at Charlton?

We shall quickly sum up our “banter years” under Roland by date and events that happened, Chairman Roland and CEO- Katrien had previously dropped some clangers and here’s some of there best moments and important dates along the way.

30th of November 2014 – Chris Powell, who recently left the club, has worked with a few fans to produce a podcast called “getting to know the network.” During the wonderful work made by the fans they discovered an email sent by the new chairman to Chris Powell explaining the new tactics and players he should use in the near future, in the process outing Charlton fan favourites Yann Kermorgant and Chris Solly, instead bringing in players of the chairman’s liking.

Duchatelet encouraged Powell to pick certain players in a second email

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Ipswich Town Need Change!

It has been sixteen long years since The Tractor Boys last graced the promised land – the Premier League. It was a short but sweet stay, playing in Europe for the first time since the mid 80’s, but the next sixteen years have seen the Blues stuck in the second tier of English football. A new owner came in, but investment has dried up, mid table finishes have dominated the last decade, its time for change at the club.

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Ticket prices : Surely twenty is plenty?

A Couple of seasons back, the Premier league announced for the 2016/17 season, there would be a price cap for away fans, you see before away fans were being charged as much as the home club would set. For example, you could be paying £50+ to go and see Man City, that’s expensive enough, but when you’ve got to throw on the money for travel etc it starts to get outrageously expensive. So a price cap was set for £30, meaning that no matter who your team played it would only cost £30.


Football fans protesting for cheaper tickets.

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