In recent weeks, one thing that has come to mind more often than not when discussing Arsenal finances is how we have criminally undersold players.

There has been a lot of talk about how Stan Kroenke needs to invest in the team – pumping in his own money. Many people are pointing to Liverpool, claiming that they have owners who are bank rolling the club to success.

This is completely fictional. The Liverpool owners are no different to Stan Kroenke. They believe in a self-sufficient model, making the money that the side brings in available for transfers.

The four main sources of income for all clubs are TV revenue, gate receipts, commercial revenue and player sales.

Due to the expansion of their new stadium, Liverpool’s match day revenue would have closed up on Arsenal. Arsenal’s lack of Champions League football would also mean that the TV figure is reversed. Ultimately, over the last 18 months, Liverpool and Arsenal have bought in similar revenue.

So how have Liverpool bank rolled the signings of the likes of Virgil van Dijk and Alisson?

The simple answer is through buying and selling well.

Over the last 5 years, Liverpool have spent nearly £200m more than Arsenal. the total expenditure of both clubs is:

Liverpool: £633m
Arsenal: £434m

It is the net spend which is interesting though, as Arsenal have actually outspent Liverpool:

Arsenal: £255m
Liverpool: £211m

The high spend for Liverpool has been driven by player sales – they have raised £422m over the last 5 years. This is against Arsenal who have raised just £179m.

Liverpool have sold very well. But Arsenal have also sold very poorly.

Selling poorly is not a new thing for Arsenal. It has been going on for over a decade.

Think back to Partick Vieira. We only received £13,700,000 for the club captain when selling him to Juventus. A year later we sold Thierry Henry to Barcelona for just £16,100,000.

We allowed both player to enter the last year of their contract. Both were sold a year too late, reducing their transfer fees from close to £40m to less than £20m.

Then you have Robin van Persie. The Premier League top scorer sold for just £22,000,000 to Manchester United. Again, he was 12 months away from his contract running out.

We then have the likes of Wojciech Szczęsny and Serge Gnabry. We got less than £15,000,000 combined for the pair. Like those before them, both were allowed to leave on the cheap due to their contract situation. Had they not had 12 months left on their contract, we probably could have commanded closer to £50million for the pair (Szczęsny £30m; Gnabry £20m).

We then have even more recent deals.

The club lost Jack Wilshere on a free transfer and are set to lose Aaron Ramsey on the same. We also had to let Alexis Sanchez go to Manchester United last January.

Wilshere, Ramsey and Sanchez gone, and all we got in exchange was Henrikh Mkhitaryan.

That trio is around £100m worth of talent. Lost had they been sold a year earlier. Add in Danny Welbeck and you are talking about over £100m in players over a 12 month period.

There are two main issues the club face. and need to change.

The first is the wage bill.

The total that we spend on wages is not to dissimilar to Liverpool – they spend £210m a year on wage; Arsenal £199m.

Arsenal have the 5th highest wage bill in the league, so reducing it is not really up for discussion if we want to compete.

The problem Arsenal have is that over the last 5-or-so years we have given some very average players a high salary.

Arsene Wenger and Ivan Gazidis had a fairly socialist outlook when it came to the wage bill. They believed that the lowest and highest earners should not differ by too much.

This led to us underpaying the top players (prior to Mesut Ozil) and overpaying poor players – the likes of Carl Jenkinson on £45,000 a week.

This mean that when it came to selling the likes of Lucas Perez, Kieran Gibbs and Francis Coquelin, we were not able to command big transfer fees.

Those players did not want to take a wage drop (for obvious reasons) when leaving the club. This results in the buying club offering Arsenal less in transfer fees so that they can cover the cost of higher wages.

If Arsenal are going to compete again, they need to start making more money from player sales. This can only be done if we have better control over the wage bill.

The second factor is we have let too many players enter the last year of their contract.

From van Persie to Ramsey, allowing a player to enter his last 12 months either means we have to take a reduced fee (in van Persie’s case) or no fee at all (Ramsey, Welbeck, Wilshere).

Poor player sales has cost us big in the last 5 years.

Gnabry, Sanchez, Szczęsny, Wilshere, Welbeck and Ramsey have all left (or are set to leave) the club. Between them we have received less than £15million and Mkhitaryan.

Close to £200m has walked out of the door.

Had we sold a year earlier, got a market-rate transfer fee, we could have gone out and bought Virgil van Dijk, Alisson and Mo Salah.

We did not sell a year earlier, and it has led to an underfunded squad.

It is clearly not good enough.

Back in October Raul Sanllehi spoke about the situation:

“In general, I do believe that a player’s contract should never go to the last year, as a policy,” said Sanllehi in a wide-ranging interview with the Sunday Telegraph. “But I don’t think I am inventing the wheel. Anybody could agree on that. Normally, the contracts of the players are for five years. You need to have a clear idea of what you want to do with that player when he is in the third year, at the latest.”

It is clear that Arsenal are changing, but the damage in the short term has already been done. A lot of these contracts, a lot of the deals, were prior to Sven Mislintat and Raul Sanllehi coming in. But it is time to draw a line in the sand.

We have seen the likes of Bernd Leno and Lucas Torreira come in on fairly low wages. Matteo Guendouzi is reportedly only on £15,000 a week.

It will take a while for Arsenal to turnover the playing staff. We need to cut our losses on the likes of Jenkinson, Welbeck and Petr Cech, and replace them with cheaper, better options.

Moving forward I back Mislintat and Sanllehi to sort out the state of our squad – to stop losing players on the cheap or for free. To sell high and reinvest.

Like Liverpool selling Coutinho and Saurez, we might have to sell a star player or two – the likes of Lucas Torriera – to fund further transfers. To reinvest again.

Poor transfer dealings have led to Arsenal losing up to £200m in revenue over the last 5 years. The past is the past and there is no point dwelling on the mistakes made too much.

Back the new management team to get things right.

Keenos

Follow @KeenosAFC