Morning! First proper blog since returning from Egypt.
Cairo is a brilliant, mental, crazy place that I would advise anyone spending 3-4 days in to properly acclimatise to the city. Sharm el Sheikh on the other hand was bland, boring and disinteresting. It had no culture and nothing of interest to really do. No real “local town” to immerse yourself in. The Caribbean trumps Sharm a million to one.
David Ornstein did a Q&A yesterday in The Athletic where he answered fan questions. These sessions are more like a podcast, used to drive subscribers to the media outlet, and are more what Ornstein’s opinion is rather than him sharing information he has – although his opinion comes from a a knowledge base often a lot higher than your standard podcaster.
During the Q&A, Ornstein spoke about departures saying “so much of this [summer business] will be contingent on exits”. He then went on to name the 6 men that Arsenal could look to cash in on. None of them were groundbreaking names:
Aaron Ramsdale
I get some fans still have a love for Ramsdale. My view has always been people like him more due to his character rather than his ability. Rambo is a decent keeper, but I just feel David Raya is that level ahead.
After a shakey start, Raya has settled down now and is a secure choice between the posts. He is superior to Ramsdale in almost every area.
Selling Ramsdale for in excess of £40million and buying Raya for £27m makes complete sense.
With his departure, we would need to sign a second choice keeper – but we need to do that if Ramsdale stays and Raya is not made permanent. Keeping both is an unlikely option.
That new keeper will probably cost the surplus between Raya and Ramsdale, which will still mean balanced books rather than having the negative outlay of a new 2nd choice keeper.
I would expect the likes of Newcastle and Brentford to both be in for Ramsdale. Maybe Chelsea and Brighton as well.
Kieran Tierney
Absolutely love Tierney and I think he can be credited for a lot of the culture change at Arsenal, and was clearly a positive impact on young players come through alongside Rob Holding. The pair provided positive professional role models to youngsters as an alternative to his brash, egocentric team mates. However I think his time at Arsenal has come to an end.
I have never doubted Tierney’s talent. He is a fantastic, old school left back. But that is not what Arsenal need under Mikel Arteta.
Last season, when called upon to play the inverted role, Tierney struggled. He had neither the technical ability, awareness or physical attributes to play the role. You could question as to why Arteta would ask him to play a role he was not suitable for, and whether the Spaniard should have tweaked the tactics slightly to accommodate him replacing Olexandr Zinchenko.
Over the summer, the recruitment team addresses the issue by signing Jurrien Timber. We also have Takehiro Tomiyasu and Jakub Kiwior who can play on that left hand side. That left Tierney as 4th choice and was a big reason for his loan move.
Out on loan to Real Sociedad, he has picked up 2 injuries to add to his ever-elongating list. That makes it 9 spells on the sidelines since joining us in 2019.
Tierney joined on a 5-year deal in 2019 for £25m. In 2021 he signed a new 5-year extension. That means he has around £6million in book value left, so any sale above this would represent a profit.
Despite his injuries, someone will take a risk on Tierney. He turns 27 this summer and you can see someone like West Ham, Aston Villa or Newcastle taking a punt. I would be surprised if he leaves for less than £20m.
Nuno Tavares
The Portuguese left back was a punt that did not work out. You can see why scouts across Europe were excited about him; Nuno Tavares is physically and technically brilliant. But he has a lot of rough edges which he has not been able to iron out.
At times for Marseille last season on loan, Tavares looked a world beater. Then he would turn to Sunday League level. All within the same game!
Nottingham Forest have an option to buy for around £12million, but considering he has hardly played for them and their impending financial sanctions, I would be surprised if a deal happens.
A move abroad (potentially back to France), could be best for him as I just can not see a Premier League club moving for him. Arsenal will do well to recoup the £8m we paid for him (although we have already made some of this back in loan deals).
If you account for what we have received in loan fees, we only really need to sell Tavares for around £2m to see a “book profit”.
Albert Sambi Lokonga
Lokonga is finally fulfilling some of his potential in recent weeks whilst on loan at Luton. This has lead some Arsenal fans to call for him to have a second chance at the club. This can not happen.
To put it simply, being good enough for Luton does not mean you are good enough for Arsenal; and we now need to be looking at recruiting players better than the Belgium (Martin Zubimendi) to continue moving forward as a club.
With just 2-years left on his contract, Lokonga remaining at Arsenal would also mean a new 5-year deal. That would be a huge risk after 2 years of underwhelming football and a good half dozen games for Luton.
The good news is that his form has put him in the news, and you can certainly see someone like Everton signing him to replace Andre Onana, or Luton making him their key signing if they stay up.
He has a book value remaining of around £4m. I would expect him to be sold for around £20m which would represent a £16m profit in this years accounts.
Emile Smith Rowe
Long term readers will know that Emile Smith Rowe has been on my “out” list for a few years.
It is not that I do not rate him, it is just that he can not stay fit. And the hype he had around him 2 years ago meant we could have got in excess of £40m.
Smith Rowe has always had his injury problems. He has issues as a kid and these have continued into adulthood. He reminds me a bit of Darren Anderton – you know there is a player there but he just can not stay fit.
The Englishman turns 24 in July and it will be two injury interrupted seasons since his breakthrough in 2021/22. I think we need to move forward from him. Make the sale, bank the 100% profit and get in someone who is physically more reliable.
Despite his injury record, plenty of Premier League teams will be in for him, and you can certainly see him going for above £30m – Crystal Palace (Smith Rowe is Croydon born), looks a good option if either Michael Olise or Eberechi Eze depart.
That £30m+ will be 100% book profit as he has come through the academy.
Eddie Nketiah
I have defended Nketiah over the years, pushing him as a good option for a 2nd choice striker. However, he has not kicked on this season and, with Gabriel Jesus’ injuries, I think we need a new front line forward.
An incoming first choice striker would see Jesus forced into a new role at Arsenal where he becomes the back up forward across the front 3. That would leave Nketiah as 3rd choice at best, an clearly surpluses to requirements.
Like Smith Rowe, as Eddie is from the academy any sale would be a 100% book profit.
West Ham, Crystal Palace, Everton, Brentford and Bournemouth could all be in the market for a new striker this summer. I can see a fee of a minimum of £20m. This could quickly rise above £30m if there is enough interest.
Book value
For those that do not understand, a players book value is how much of his initial transfer fee has not yet been fully amortised. For academy players, they have a book value of £0m.
A players transfer fee is amortised over the length of their contract. If they sign a new deal, the outstanding fee yet amortised is then spread out over the length of their new contract.
For example, Kieran Tierney joined in 2019 for £25m on a 5-year deal. His fee would have been amortised at £5m a year. In 2021 he signed a new 5-year deal. At this point £10m of his fee would have been amortised, with £15m remaining. This would then be amortised at £3m a year over the next 5-years. As of the end of this season, we would have accounted for £19m of his initial £25m fee (£10m + £9m). That leaves £6m to be amortised.
When you sell a player, the remaining book value must be fully accounted for in the same year as they were sold. The incoming transfer fee then establishes whether you make a book profit or loss on the player.
So for example, we signed Nicolas Pepe for £72m, and his contract was being amortised at £14.4m a year. Had we sold him after 2 years for £30m, we would have ended up having a £43.2m cost hit our accounts, with only £30m of incoming transfer fees. That means we would have made a £13.2m loss in the year we would have sold him. The result of that is we would have less money to spend, despite making the sale!.
Final thoughts
Ramsdale’s departure will provide the cash for David Raya and also pay off Rambo’s remaining book value. With Raya’s fee then being amortised, we should be able to get in a second choice keeper without seeing a yearly expenses on fees increase. The 3 deals will almost be “net zero”.
If we then sell the other 5 mentioned in the blog for the prices rumoured, it will account for around £100m book profit. That clears us nicely of any PSR concerns and is cash we can immediately re-invest into new signings.
For 2023 we made a £38m loss. That will turn into around a £60m profit for 2024 due to Champions League football. Whilst some of the expected profit will be used for transfer fees, we will need to start banking the cash again to cover the next rainy day.
We have lost £328m in the last 6 years and seen our cash balance drop nearly £200m to finance these losses. Last year we borrowed £63m and we have debt increases from £197m in 2018 to £276m in 2023.
No Champions League football in those 6-years has cost us over £500m in revenue, whilst player sales have also been poor during the period – just £44m made in player sales in the last 3-years.
Whilst this might all sound like bad news, the additional Champions League revenue and some good player sales should allow us to spend in excess of £120m again (after Raya), whilst still putting some cash away for that rainy day.
My bet is a new striker (£50-70m), Zubimendi / Douglas Luiz (£50m) and David Raya (£27m), will be our transfer dealings for this year. Any further new signings will only come if we sell those listed above for more than what is expected!
Nearly the weekend…
Keenos
She Wore A Yellow Ribbon 
Pingback: Ornstein's Projections: Summer Exodus and Strategic Overhaul of Arsenal
ESR should remain at arsenal
Only that – sell elneny retain our blood
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I’m keeping Ramsdale, ESR and Nketiah. We need these young hungry bloods during the difficult times. And they already know the Arteta way. Always ready, always contribute and always professionals. We need these three.
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