Financials show why Arsenal have fallen so far behind

This morning the brilliant Swiss Ramble on Twitter has published his year summary of Premier League Clubs financials

The financials highlight just why Arsenal have fallen so much.

Arsenal’s revenue for 2018/19 was the 6th highest in the Premier League. The worst of all top 6 teams.

The bottom two are Arsenal and Chelsea, who were both in the Europa League. However the revenue drop is not just because of European broadcasting revenue.

Arsenal are bottom of the table when it comes to commercial revenue. Nearly £80million behind league leaders Liverpool.

Poor sponsorship deals is the key reason why we have fallen behind.

Whilst Ivan Gazidis often boasted about “record breaking” deals, the reality was often different.

For 2018/19, Arsenal had the 5th worst sponsorship revenue.

In 2018/19 Arsenal were coming to the end of their deals with Emirates and Puma.

For 2019/10, the new Adidas is set to increase revenue by £30million. The new Emirates by £20million. However when projected against new deals for other clubs, Arsenal still only have the 5th highest sponsorship deal.

And the big difference is that Arsenal’s £40million from Emirates includes stadium naming rights – whilst Manchester City receive £20million on top of kit sponsorship for this and no other club has taken advantage of the lucrative market.

We are still missing out on £10-15million training ground naming rights. Although in a post-Covid19 world, these sort of deals will not be as lucrative as once was.

Another concern is Arsenal also lag behind on non-sponsorship commercial revenue.

In 2018/19, we generated around £41m outside of sponsorship.

Manchester United made £111million elsewhere, With Liverpool, Chelsea and Tottenham all being above £60million

Arsenal are not generating enough from naming rights for either the stadium or training ground and “other commercial deals” are the lowest in the top 6.

Arsenal have also been poor when it comes to selling players in recent years – bringing in just £12million in player sales for 2018/19.

Once again, we are outside the top 4.

All this reduced revenue leads to Arsenal having less money to spend

Arsenal have the 5th highest wage bill in the Premier League, spending around £80million less on wages than Liverpool and Manchester City.

Remember earlier in the blog when we spoke about commercial revenue? We were also £80million behind Manchester City and Liverpool.

There is a direct link between commercial revenue and wages.

With player contracts being signed for 4 or 5 years, and commercial deals similar, clubs know they will receive the commercial revenue each year – unlike broadcasting and player sales which fluctuate.

Commercial deals is guaranteed money over a period, meaning clubs know they can pay that money out on wages without having to be concerned by a drop in revenue.

How can Arsenal expect to compete for the title when they are paying so much less in wages?

It is actually ironic that many fans complain we pay too much in wages to players, when the actual truth is very different. We need to pay more.

The £80million we pay less than Liverpool is the equivalent of £1.5million a week.

Arsenal could sign an additional 7 players on £200,000 a week for that.

That would be an additional 7 1st XI players, improving 2 thirds of the team.

In turn that pushes 7 players currently starting for us onto the bench, and you lose 7 players at the bottom end of the squad.

Imagine 7 new first team players. We would be challenging again.

And when it comes to buying players, we are also 5th when it comes to spending.

So we spend less on transfer fees, we spend less on wages. It should not then be a surprise that we have a worse squad of players than those above us.

On the pitch, Arsenal and Mikel Arteta have a lot of catching up to do, but we are being hampered by our off-pitch activities.

It is a simple equation.

The more money you make, the more you can spend. The more you can spend, the better the players you have. Better players leads to success.

It is unreasonable to expect us to compete on the pitch when we are so far behind off the pitch.

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