If you’ve followed Arsenal on social media - not just the official channels, but all things related to Arsenal - you’ve no doubt stumbled across the excellent Swiss Ramble. He’s an accountant who does a lot of deep diving into the available financial numbers for Premier League teams, unpacking the inscrutable finances of these multi-billion-dollar enterprises and making some of it make sense to those of us not well-versed in the financial world.
Today, Mr. Ramble (I don’t know him, so I don’t feel comfortable enough to call him Swiss) slices and dices the numbers behind Arsenal’s summer spending spree. He goes into a lot of detail about how a reported £45M budget can turn into over £100M in spending.
His first point, which bears repeating, is that the club never once said “our budget is £45 million”. That number came from outside speculation, based on Arsenal’s cash reserves and potential income from theoretical player sales and...probably other stuff. None of which, as usual, was based in reality. That’s example one from the summer illustrating the “don’t believe everything you read about transfers” point.
He then goes into a lot of detail about ten (!) separate ways to answer the question “what is Arsenal’s transfer budget”. I won’t go into a great deal of detail about them here, except to note that even something simple like “total transfer fee spent” can vary depending on whether you take performance incentives into account, and to further reinforce that net spend is a worthless measuring stick.
Why is net spend worthless? Look no further than the Nicolas Pepe transfer for the answer to that. His transfer fee of £72 million was, as widely reported, broken up into pieces, the first of which was this summer’s £20 million first payment. So, when talking about this summer, does “net spend” mean £72M or £20M? That depends on who you ask. Most media sources just add up total spend-as-overall-cost-of-player and subtract total payments received from that, and that’s net spend. But that’s not accurate.
It’s not accurate also because that installment payment thing works the other way, too - a lot of clubs finance player sales over time like Arsenal did with Pepe, so the incoming pounds are not absolute either, they’re often fractions of what is reported.
There’s a ton more to the Swiss Ramble thread than what I just summarized, including a look at the impact of wages on overall spending, but to summarize it here would be to oversimplify it to a ridiculous degree, so I’ll let you read the thread. One conclusion that can be safely drawn from Ramble’s excellent work is that the financial side of the game is not as simple as “how much did you spend on buying players” minus “how much did you make on selling players”.
As you can see from Ramble’s thread, there’s way more complexity to it than that, and that complexity is worth examining, because it gives a much more accurate picture of how Arsenal does business than a simple “here’s a pot of money, subtract out as you go” type analysis, which is often what the transfer market is reduced to in the media.