While Arsenal may have lost out in a title race they led for 248 days last season, it was a campaign that will likely prove transformational for the club.
The Gunners have had their noses pushed out when it comes to the Champions League conversation for some seasons now, having been absent from the competition since the 2016/17 campaign. In that time they have become accustomed to Europa League football and forced to watch on as the likes of Liverpool, Manchester City and Chelsea enjoyed considerable, money-spinning success in European football’s elite knockout club competition.
Next season it will be Liverpool who will be looking on in envy as a fifth-placed finish in 2022/23 means they will be absent from the Champions League for the first time since 2016/17 - the same season where Arsenal made their last appearance.
Champions League qualification and, ultimately, success has been very good for the Reds financially and, in terms of growing their global profile, attracting better players. Should the Europa League be a fleeting affair next season, as is the hope, then the damage will not be lasting, but should it roll on into a number of seasons then the problems that the Gunners faced in terms of trying to close the gap without the riches of the Champions League could begin to bite hard at Anfield.
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Arsenal's wage bill during their last season in the Champions League, 2016/17, stood at £199.4m. In comparison, Liverpool’s sat at £207.5m, a difference of a little over four per cent. Fast forward to the accounts for the 2022 financial year and the Reds' wage bill was the second largest in the Premier League at £366m. Arsenal's, on the other hand, was £212m. That means Liverpool’s wage bill has increased by 76.4 per cent over the same time period when the Gunners’ only rose by around 6.3 per cent.
The Reds' acceleration in wage spend has allowed them to be regular competitors for top-four football, and consistent qualification for the Champions League has played a not so insignificant role in allowing for that increase year on year, although it hasn’t been the only driving force.
Now, Arsenal find themselves in the kind of position that Liverpool were after ending their own hiatus from the Champions League, and also the £140m sale of Philippe Coutinho to Barcelona in 2018 that allowed for the transfer outlay on transformational players like Virgil van Dijk and Alisson Becker.
The Gunners have agreed to pay West Ham United £105m to sign Declan Rice. That comes after they bought Kai Havertz from Chelsea for £64m. They are also in talks to sign £40m-rated Ajax defender Jurrien Timber.
There is an opportunity for Mikel Arteta’s men at the moment to make the most of the lucrative nature of the Champions League, which will add at least £50m in revenues even if it ends in abject failure this season. Liverpool have twice managed to draw in more than £100m in a financial year from their qualification and subsequent performances.
Arsenal have the ability to spend and have room for manoeuvre when it comes to the Premier League’s profit and sustainability. UEFA introduced new financial sustainability regulations last year that sees clubs allowed to spend only 70 per cent of their revenue on squad investment, although they have a three-year grace period to comply with the new rules.
Football revenue at the Emirates is predicted to rise considerably in the next financial year to pass the £400m mark for the first time in the club’s history. The most recent financial year saw the Gunners post a loss of £45m, but with Champions League football it is likely they will move back into the black by the time the 2023/34 financial accounts are published, especially given the increase in merit payments from the Premier League related to their second-placed finish.
In the 2021 accounts, Arsenal’s profit to turnover ratio, a vital component of both the Premier League and UEFA’s financial regulations, sat at 73 per cent, a little over the recommended 70 per cent figure that Liverpool have consistently sailed under in recent years. In 2022 that figure was 58 per cent, meaning that there was plenty of wriggle room for the club to add significant wage spend. There would still need to be transfer outlay, but that figure is amortised over the length of a contract, so £105m for Rice over five years would be £21m per year. The most recent accounts had the club’s player amortisation figures at £124.5m, the fourth highest in the Premier League for last year, but a figure that can be helped down by contract renewals for players whose transfer cost is still on the books and also disposing of player registrations through sale.
Arsenal, like Liverpool in 2017, look like they could be about to embark on their own journey toward establishing themselves once more as a top four force that competes regularly in the Champions League. For the Reds that poses a problem, especially given that the ‘big six’ has now turned into the ‘big seven’ with Newcastle United’s huge Saudi Arabian wealth behind them. Then there is the potential for Chelsea’s expensively assembled side to bounce back under Mauricio Pochettino next season and challenge for honours again. It will be a crowded field, and some have the money to make themselves a problem for Liverpool again next season.
