Financial Fair Play is a many-headed beast, with Arsenal forced to fight on multiple fronts.
If we’re being accurate, ‘Financial Fair Play’ or ‘FFP’ hasn’t existed for several years now. In the Premier League, it’s Profit and Sustainability Rules (PSR), while in Europe it’s Financial Sustainability Regulations.
To complicate matters, UEFA’s rules – with which Arsenal must comply due to playing in the Champions League – are split into three separate systems relating to A) solvency, B) stability and C) cost control.
The Premier League meanwhile, whose current rules are relatively simple and based on a club’s bottom line, are considering introducing two new financial control mechanisms: anchoring and, like UEFA, cost control.
Arsenal have never been particularly close to breaking Premier League PSR, under which clubs are permitted to lose up to £105m over a rolling three-season period.
Despite losing £329m since they last turned a profit in the 2017-18, the Gunners have always fallen comfortably within the £105m threshold when allowable expenses like academy and women’s team investment, infrastructure spending and community programmes are factored in.
Under the UEFA system, however, it hasn’t been smooth sailing. In 2021-22, European football’s governing body placed the North Londoners on a watchlist of 20 clubs at risk of breaching their rules.
At that time Stan Kroenke was underwriting significant losses to bring Champions League football back to the Emirates Stadium, which Mikel Arteta eventually delivered in 2023-24.
Back at Europe’s top table, Arsenal are now on much surer footing financially and set to post a healthy surplus when they release their 2024-25 accounts next February. Commercial and matchday income are soaring, as are proceeds from UEFA’s central pot thanks to the new 36-team Champions League format.
But UEFA has now moved to a system which doesn’t consider a club’s profit-and-loss account alone – and in this new FFP paradigm, Arsenal aren’t as safe as has long been presumed.
And with Eberechi Eze set to take spending beyond £250m this summer, are the Gunners at risk of joining Chelsea and Aston Villa among the clubs penalised by UEFA?
Under UEFA’s Squad Cost ratio rule, Arsenal are not permitted to spend more than 70 per cent of revenue plus a three-year average of profit on player sales on wages, transfers and agents’ fees.
Unlike the Football Earnings test – which imposes a maximum loss limit of around £75m over a rolling three-season assessment window – Squad Cost ratios are assessed by UEFA on a calendar year basis.
In 2023-24, the last published financial year, Arsenal’s revenue was £613m, while their three-year average profit on player sales was £28m, giving them relevant turnover of £641m.
As a point of order, profit on player sales is calculated based on sale fee minus the player’s amortised book value.
Had the 70 per cent squad cost ratio been in full force in 2023-24, they would have been allowed to spend no more than £448.7m on player and staff wages, amortised transfer fees, and agents.
Arsenal’s wage bill in 2023-24 was £328m. Generally, about 75 per cent of a club’s wage bill is paid to players and the manager, so their relevant outlay in this area was approximately £246m.
Meanwhile, their amortisation costs for the year – which is how clubs account for transfer fees over a player’s contract length – were £171m. Agents’ fees are included in that figure.
In total, therefore, Arsenal were likely at around £417m in terms of their squad cost, which is about £30m under the maximum permitted. Not exactly a huge margin for error.
So what about now, after Arsenal have spent another £250m and signed several players on eight-figure salaries?
We don’t yet have 2024-25’s figures, but TBR Football is using projections from football finance expert Greg Cordell to inform our calculation of the Gunners’ capacity.
Arsenal’s revenue is forecast by Cordell to have been around £675m. Their estimated player sale profits meanwhile were about £51m, thanks to the ‘pure profit’ disposals of academy graduates Emile Smith Rowe and Eddie Nketiah.
So far in 2025-26, their player sale profits are a mere £2.2m, with Nuno Tavares and Marquinhos the only departures this summer. As things stand, that gives Arsenal a three-year player sale profit of £41m. That is – roughly – the figure that will be added to their revenue in the calendar year 2025 to work out their ratio.
Cordell has Arsenal’s transfer amortisation at around £182m and their wage bill at £328m for 2024-25, giving them a squad cost of £510m for the season.
However, six players have left, which TBR Football has calculated as reducing Arsenal’s amortisation by around £26.2m.
Against that, the £255m Arsenal have spent to sign Eze, Viktor Gyokeres, Martin Zubimendi, Noni Madueke, Christian Norgaard, Christhian Mosquera, Kepa Arrizabalaga will add £51.5m annually.
That’s a net increase of £25.3m which, based on Cordell’s projections, means Arsenal will be running amortisation of £207.3m.
Wages meanwhile will have increased from a projected £346m in 2024-25, given the profile of signings they have made. Their squad cost therefore is likely to be in excess of £553m.
With a three-year player sale profit of £41m as things stand, then revenues of around £700m would give them a squad cost limit of £518.7m, which is less than their forecasted spend.
Of course, it’s a calendar-year test, not a season-by-season one, so adjustments would need to be made there, and a number of assumptions have been made about their squad costs.
However, even with a significant margin for error, it’s easy to understand why, despite being safe under Premier League PSR, the likes of David Ornstein have relayed that the club believes things are much tighter at UEFA level.
Arsenal finished 2nd in the Premier League and reached the semi-finals of the Champions League in 2024-25. Although the aim is to go one better in 2025-26, that’s a high watermark financially.
And yes, there will be natural growth in matchday and commercial income, but that could quite easily be wiped out by a poor campaign in Europe. Fundamentally, there is no guarantee that revenue will rise from £675m.
And without sales before the transfer deadline on 1 September, that would put them at real risk of a breach.
And because it’s a calendar year test, that means the remaining 10 days of the summer transfer window are all they have to generate player sale profits. January will be a new assessment window – too late.
How would UEFA punish Arsenal?
UEFA are starting to bare their teeth when it comes to their financial rules. However, their punishments are not as draconian as the Premier League’s where a points deduction is de rigueur for clubs in breach.
The good news for Arsenal is that they are at no risk of breaching the Football Earnings test, only Squad Cost. And it is the latter element of UEFA’s rules which carries a more modest punishment.
UEFA have reached financial settlements with Aston Villa and Chelsea, who they deem to have broken both the Football Earnings and Squad Cost rules. In the breakdown of their decision, UEFA gave the clubs fines of around £9.5m and £6.2m respectively for the Squad Cost portion.
That, however, was for the calendar year 2024, when the squad cost rules were still being phased in and stood at 80 per cent, not 70 per cent. It is not known how much more punitive UEFA will be now that the rules are in full force.
That said, some clubs are treating the squad cost element of the rules as something akin to a luxury tax, a system Kroenke will be familiar with given its implementation in the NBA, where his Denver Nuggets play.
A single breach is unlikely to lead to a significant reprisal, though repeat offenders are at risk of a sporting sanction. Either way, it’s a fate Arsenal are cognisant of and want to avoid.
“The big issue is sales,” says Liverpool University football finance lecturer Kieran Maguire, speaking exclusively to TBR Football about Arsenal’s position under UEFA’s squad cost rules.
“It is a player trading model that the clubs operate. That involves both the in and the out-door.“
While Arsenal don’t have much time remaining to do transfer business, they certainly have saleable assets.
Fabio Vieira, Reiss Nelson, Oleksandr Zinchenko, Albert Sambi Lokonga, Jakub Kiwior, and Gabriel Jesus have all been linked with exits in recent weeks.
As a potential ‘pure profit’ sale, Nelson – who at one stage was in advanced talks to permanently join Fulham, having spent last season on loan at Craven Cottage – will perhaps be one of the most urgent cases.
“The problem when you recruit players and increase the size of the squad is A) bigger wage and amortisation costs B) having players further down the line who are nowhere near the first team but are on first-team contracts.
“That creates unhappiness in the squad. Their priority is to play football, not make money. So Arsenal need to consider all options in terms of generating incoming funds.
“They need to take the pressure off FFP and in the car park, because there are too many cars for the spaces available.
“There has to be an additional focus on sales at Arsenal. They have got some pretty considerable wages off the books, however. But you have to look at things holistically.
“Any player sale profits meanwhile are going to be averaged out over three years.”
