ARSENAL were once UEFA Champions League perrenials, 17 consecutive seasons in the competition helping to make them one of European football’s more respected business models. When the Arsène Wenger era started to stagnate, Champions League qualification almost became the club’s main [consolation] target, but things went haywire when Arsenal suddenly became a Europa League club. It got worse, for in 2021-22, for the first time since 1995-96, the Gunners failed to qualify for any UEFA competition.

The absence of broadcasting revenue from Europe was always going to hit the club’s finances in 2021-22. Although a pre-tax loss of £ 45.5 million was a marked improvement on the £ 127.2 million deficit of 2021-22, the figures suggest the club still has significant upside both on and off the pitch.  It was the fourth successive season in which Arsenal have made a loss, an unlikely scenario a decade ago.

Revenues went up by 13% from the previous season to £ 369.1 million, notably match day income, which rose by 2010% on the empty stadium year of 2020-21. The club’s commercial income was slightly higher at £ 143.7 million, but broadcasting was down by 21% to £ 146 million, some £ 50 million lower than the record of £ 199 million, received in 2017. The other big six clubs, between them, earned a total of almost € 400 million from European broadcasting.

The return of fans played a big part in the recovery and Arsenal’s average gates – just shy of 60,000 – were the second highest in the Premier League. The big crowds and the pricing structure means Arsenal’s matchday stream accounts for almost a quarter of total earnings, compared to around 15% for Chelsea and 18% for Tottenham.

Commercial income, which was buoyed by the Amazon production, All or Nothing, went up to £ 142 million, but this is an area that Arsenal trail quite dramatically behind their peer group in the Premier League. Manchester City’s commercial activity totalled £ 300 million-plus in 2021-22, for example, and Manchester United earned more than £ 100 million more than the Gunners.

With something of a clear-out going on at the Emirates, it was no surprise that the wage bill dropped by 11% to £ 212.3 million. With revenues up, this meant the wage-to-income ratio fell by 15 percentage points to a more sustainable level. Arsenal continue to allow some player contracts to run off, thereby missing out on possible transfer income, but this can also have a positive affect on total wages. In the past year, David Luiz, Hector Bellerin, Alexandre Lacazette and Pierre-Emerick Aubameyang have all departed, all of whom would have been paid top wages.

Arsenal’s key figures, last five seasons

£m	2021-22	2020-21	2019-20	2018-19	2017-18
Revenues	369	327	343	395	388
P&L pre-tax	(45.5)	(127.2)	(54)	(32)	70
Wages	212	237	225	232	223
Ratio	58%	73%	66%	59%	58%
Net debt	204	199	108	42	(15)

There does seem to be a change of mood at Arsenal and this bodes well for the club’s finances in 2022-23. There is less noise around “Kroenke Out” these days, which does show success on the field can deflect the wrath of dissatisfied customers, albeit temporarily. However, it should be noted that Kroenke’s KSE Inc. has lent the club more than £ 30 million at favourable terms in order to fund Arsenal’s transfer activities and provide working capital. Moreover, Arsenal also have a £ 70 million facility from Barclays to call upon.

Arsenal need to reverse the relative lack lustre growth at the club since 2017. Their revenues have declined in that time while their chief rivals have all seen healthy growth, ranging from Manchester City’s 35% increase to Tottenham’s 18% hike. Understandably, the club’s decline on the field is aligned to this fall, each a factor of the other, most notably the loss of Champions League football and some poor decisions in the transfer market. And with the pandemic coming along in 2020, the malaise that surrounded the club was very poorly timed.

The club has made some progress in the transfer market, with a stronger emphasis on younger players. In 2021-22, their profit from player sales was £ 22.2 million, better than 2020-21’s £ 12 million, but way off the £ 120 million profit made in 2018.

As for purchases, in 2021-22, Ben White (£ 50m Brighton), Martin Ødegaard (£30m Real Madrid), Aaron Ramsdale (£24m Sheffield United) and Takehiro Tomiyasu (£ 16m Bologna) were all signed. Each player was in his early 20s and most have already made an impact at the Emirates. Arsenal spent another £ 115 million in the summer of 2022, signing Fábio Vieira (£ 30m Porto), Gabriel Jesus (£45m Manchester City) and Oleksandr Zinchenko (£ 30m Manchester City). Arsenal, over two seasons, have been one of the biggest spenders in the Premier League. They have the youngest squad in the division with an average age of 24.5 years, 70% of which are foreign players. They also have sought-after talent in the form of England’s Bukayo Saka and Gabriel Martinelli of Brazil. Coach Mikel Arteta has survived a sticky period to become one of the most popular in the Premier League, although as everyone knows, football is a fickle game.

The signs are that Arsenal’s finances will recover further in 2022-23. A return to Europe will be lucrative, especially if they do maintain their top four position and qualify for the Champions League and this, in turn will create more commercial and matchday income. It is not unreasonable to anticipate a rise in revenues to more than £ 400 million in 2022-23 and while they may not return to profit (success also brings wage demands), the loss will again be eroded. By that time, Arsenal could be celebrating the return of serious silverware to their side of North London. If nothing else, the Gunners are one of Europe’s most exciting and stimulating teams at the moment – should that bring success, the club’s financial position will surely be more robust. We may even hear a chorus of “for he’s a jolly good fellow”.