We start this morning with some tripe from John Cross in the Daily Mirror.
“Arsenal transfer budget revealed” is the headline.
What this means is that the Mirror are missing their monthly advertising revenue target and have asked John to make up a story that will get the hits. These days newspapers rely on website hits rather than copies sold for their profit.
So John has written a lovely piece which says that Arsenal have “around £40million to spend this summer”.
John knows full well that this is not how transfers work, how budgets work.
As we explained last summer, it is not Football Manger where a manager gets given £40million to spend on players.
The actual amount available to spend on new players is the difference between costs and revenue. With that difference being how much you can increase costs by. These costs are not only the amortised transfer fee, but also wages, agent fees, bonuses, etc.
Using John Cross’s logic that we have “around £40million to spend this summer” could mean that we buy 20 players on a free transfer and still have ““around £40million to spend this summer”. It simply does not take into account the wages associated with bringing these players in.
The actual figure that Arsenal have to spend is more complicated than a newspaper headline. It is up to the accountants to work out what we can spend based on their predicted revenue and costs of the club.
Next season we have £40million in additional sponsorship revenue to hit the books. This would allow us to buy (in simple terms) two £40million players on 5 year contracts paying £200,000 a week.
We then have expiring contracts.
Petr Cech, Nacho Monreal, Stephan Lichtsteiner, Aaron Ramsey and Danny Welbeck are all set to leave the club following the expiration of their contracts. Between them they earn ~£435,000. That is £22.5million in costs saved.
So we have additional revenue of £40million and cost savings of £22.5million. Straight off the bat that would indicate that we have around £60million to spend over the next 12 months. But as previously explained, this is not £60million available for transfer fees, but £60million a year that can be spent on amortised transfer fees, wages, agent’s fees, etc.
This summer we need a central defender, left back, central midfielder / 2nd choice right back (purchase one and Ainsley Maitland-Niles covers the other spot), winger and a reserve goal keeper. That is 5 signings.
With the funds we currently have available, we can recruit the majority of what we require without having to sell.
The way I see things, we get the reserve goal keeper, left back and central midfielder using the funds free’d up by those players leaving for nothing.
£22.5million a year was a huge amount to be spending on 5 squad players. It could easily be spent better on 3 players.
None of those leaving need to be replaced with a first choice player (bar perhaps Monreal) so you would expect the squad keeper, left back and central midfielder to be costing no more than £90,000 a week each. That comes to £270k, or £14million between them.
That would leave us with £8.5million to spend on transfer fees. That is not £8.5million to be spent this summer but £8.5million to be spent in each year of their contract. If we give all 3 players a 5-year deal, that will give us £42.5million to spend on 3 players. Pretty much £15million each.
Can we find a back up goal keeper, squad left back and squad central midfielder (or right back) for £15million on £90k a week? I am sure we can.
That then leaves a winger and central defender, who will be marquee big signings.
We still have the additional £40million in sponsorship available that would allow us to sign the aforementioned two £40million players on £200,000 a week.
We can then raise further short term funds by cashing in on the likes of David Ospina, Shkodran Mustafi, Calum Chambers and Mohamed Elneny.
Between them they earn £200,000 a week. That would free up further mid-term funds for increased wages over time and a bit more on the amortised transfer fees.
We would raise around £40million by selling all four. As the incoming transfer fee would be short term revenue – it will not be a yearly income – you would pretty much set it against a new signings.
So this would leave Arsenal being able to perhaps sign a £60million central defender and a £40million winger. On top of this we have the £40million worth of other players coming in.
That would see out total summer transfer spending be close to £140million – which if every player was on a 5-year deal would see amortised transfer costs increase by £28million.
As for the extra Champions League money, I would imagine this would replenish our emergency fund pot.
These days you can not guarantee Champions League football every year, so it would be dangerous to budget transfers over a 5-year period based on having Champions League football.
You are better off leaving Champions League football money unspent, building up, to cover the costs when you do not have Champions League football.
So circling back, the £40million quoted by John Cross is rubbish. Someone made up for hits.
He really is becoming a gutter journalist.