Following the arrival of Martin Zubimendi from Real Sociedad, Arsenal are now closing in on another blockbuster deal for Viktor Gyokeres.
The Sporting CP striker has an electric goalscoring record in Portugal, 97 goals in 102 games to be precise, and Viktor Gyokeres might be wearing Arsenal colours next season if all goes to plan.
Of course, the Swede’s proposed move to north London has now slightly overshadowed Zubimendi’s actual arrival, who should represent a transformative addition.
But if Arsenal are able to sign Viktor Gyokeres after the Spaniard, how much money will be left for further additions?
That’s a question TBR Football Head of Football Finance Adam Williams has now attempted to answer.
Can Arsenal still afford Rodrygo after spending big on Viktor Gyokeres?
Arsenal are expected to pay around £65m for Gyokeres in the coming days or weeks, adding to their Zubimendi spend.
And given that Arsenal still ‘dream’ of signing Rodrygo from Real Madrid, the Gunners might not be done just yet.
But how realistic is it for Andrea Berta’s side to spend big again on player like Rodrygo?
“There are a few different elements to consider when we’re looking at how much a club – in this case, Arsenal – can and will spend in a transfer window,” Williams explained.
Rodrygo in action for Real Madrid against FC Salzburg
Photo by Robbie Jay Barratt – AMA/Getty Images
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Arsenal’s headroom under Premier League PSR
Williams: “In terms of PSR, that’s a non-issue as far as the Premier League is concerned.
“At least, that’s the case in the current three-year period over which the Premier League monitors this stuff.
“The £18m they lost in the last financial year will swing back to a healthy profit when you add allowable expenses like depreciation, investment in the academy and women’s team and so on.
“In 2024-25, they will generate a pretty good profit before those add-backs.
“So with Premier League PSR, there are effectively no limits on how much they can spend.”
What about UEFA FFP?
Of course, it’s not just Premier League PSR that will be in the back of Arsenal’s mind, there’s also UEFA FFP to consider.
But fortunately for Arteta, that shouldn’t be a concern when it comes to adding further quality to his squad before the end of August.
Williams continued: “UEFA PSR is going to be tighter, though I don’t think it’s an immediate concern, more just something they need to be actively mindful of.
“Under UEFA’s Football Earnings test – which is the component of UEFA’s PSR equivalent that Villa and Chelsea have just been penalised under – you’re allowed to lose up to around £75m over a rolling three-year period.
“But given that Arsenal are fine under the Premier League’s £105m cap, there will be no problems here.
“But there is another element of UEFA’s rules: the Squad Cost ratio. Under this system, you’re not allowed to spend more than 70 per cent of revenue plus a three-year average of your player sale profits on player and manager wages, agents’ fees and transfers.
“Player sale profits in this system are based on amortised book value, not the numbers we see in the headlines.
“This is also an annual test. i.e., 1 January to 1 January, not season-by-season. And it’s assessed every year, not on a rolling three-year period.
“It’s harder to work out what their cap is because the calendar-year assessment period straddles two financial years, so we can’t delineate between what costs were in which part of the financial year based on the accounts.
“But let’s use their 2023-24 figures by way of example. Their revenue was £614m and their player sale profits were £51m, so that’s £665m. 70 per cent of that is £465.5m – that’s how much they can spend on the three categories I mentioned.
Chelsea, Man United, Arsenal, Tottenham, Man City, Liverpool matchday income chart
Chelsea, Man United, Arsenal, Tottenham, Man City, Liverpool matchday income chart Credit: Adam Williams/TBR Football/GRV Media
“Their player amortisation was £171m and their wage bill was £328m, so that’s a total of £499m, which on face value would have been over the £465.5m cap.
“However, their wage bill wasn’t all spent on the players and the manager – non-football staff made up a big chunk of that too.
“Let’s say we deduct 20 per cent, so their football wage bill was around £262m. That gives them a total squad cost for the year of £433m, so underneath the cap but not with a huge amount of wriggle room.
“These are only rough numbers, but they give you a flavour of their limitations. Based on the fines Chelsea and Villa have received, it’s not going to be the end of the world if you’re above that 70 per cent cap.
“At the moment, it seems to be functioning like a luxury tax like we see in Major League Baseball, but if you’re consistently over the limit then UEFA are going to clamp down.
“Revenue will have risen faster than costs in 2024-25, I think. So, they should have more room for manoeuvre this year anyway, but it’s something they’ll be mindful of.”
So how much actual cash do Arsenal have to spend on Rodrygo?
It’s believed that Real Madrid would sell Rodrygo for around £75m this summer, a reasonable sum for one of the world’s most decorated attackers.
And judging by Williams’ calculations, a deal might be feasible, even if Berta might need to ship a player out first.
Williams explained: “The third consideration is cash. You can have all the PSR headroom in the world, but it’s useless if you don’t have the cash to actually spend.
“The football finance expert Greg Cordell – whose work you should check out – predicts that Arsenal will have had around £70m in the bank at the end of the financial year, which was 30th June.
“When they sign Gyokeres and Norgaard, their net transfer spend will be around £140m for the summer.
Sporting Clube de Portugal striker Viktor Gyokeres celebrates scoring a goal
Photo by Diogo Cardoso/Getty Images
“We don’t know the structure of those deals, but for the sake of argument let’s say they’ll be split into three annual instalments, so around £47m has actually left the bank balance of £70m.
“In theory then, they could afford another player for a transfer fee of £69m on a three-year instalment plan of £23m annually.
“In reality, they’ll be cash-rich at the moment because of the first tranche of Premier League prize money, season ticket renewals, annual or bi-annual payments from sponsors and so on.
“Against that, they have quite high transfer debt, which is fine but they need to plan to cover those payments too, as well as other running costs.”
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Owner funding from Stan Kroenke and potential sales
Of course, there is then simply the option of the club’s owners, the Kroenkes, injecting more money into the club to fuel a mad end to the summer transfer window.
However, Williams wasn’t sure that would be the reality, “I don’t think Stan Kroenke will want to put any more money into the club via equity or loans. He’s injected £324m in recent years.
“Therefore, I’d personally be surprised if we saw much more significant investment after the deals we have mentioned are done without outgoings.
“If there are sales, then we could see one more blockbuster signing maybe, but they will want to player-trade smartly.
“That’s the name of the game these days, otherwise your transfer debt and cash burn are going to accelerate past your incomings to the point that it’s unmanageable, especially if you drop out of the Champions League for one or two seasons or there is another unforeseen expense.”
All in all, it’s a relatively healthy situation for the Gunners, who are in full ‘win-now’ mode.