Arsenal has returned to the Champions League for the first time since 2016/17, when Liverpool was missing, and they are already reaping the benefits
While Arsenal may have lost a title fight that they led for 248 days last season, it was a season that will undoubtedly be remembered as transformative for the club.
The Gunners have had their noses pushed out of the Champions League discourse for several seasons now, having not competed in the competition since the 2016/17 season. They’ve become accustomed to Europa League games and have been forced to watch as the likes of Liverpool, Manchester City, and Chelsea have experienced significant, money-spinning success in European football’s best knockout club competition.
Next season, Liverpool will be envious, as a fifth-place result in 2022/23 means they will be out of the Champions League for the first time since 2016/17, the same season in which Arsenal last appeared.
Qualification for and eventual triumph in the Champions League has been extremely beneficial to the Reds both financially and in terms of raising their global profile and signing stronger players. If the Europa League is a one-off event next season, as is hoped, the harm will be minimal; however, if it continues for several seasons, the difficulties that the Gunners encountered in closing the gap without the riches of the Champions League may begin to bite.
Arsenal’s pay expenditure in the Champions League last season, 2016/17, was £199.4 million. In comparison, Liverpool’s was £207.5m, a difference of slightly more than 4%. In the finances for the fiscal year 2022, the Reds’ pay cost was the second highest in the Premier League, at £366 million. Arsenal, on the other hand, paid £212 million. That implies Liverpool’s salary bill has climbed by 76.4 percent while Arsenal’s has only increased by about 6.3 percent.
The Reds’ increased wage spending has allowed them to compete for top-four football on a regular basis, and persistent qualification for the Champions League has played a big role in allowing for that increase year on year, albeit it hasn’t been the main driving force.
Arsenal is now in the same position that Liverpool was after ending their own hiatus from the Champions League, as well as the £140 million sale of Philippe Coutinho to Barcelona in 2018 that allowed them to spend big money on players like Virgil van Dijk and Alisson Becker.
The Gunners are bidding for Declan Rice for £100 million and are considering spending more than £60 million on Kai Havertz. Mikel Arteta’s men have an opportunity right now to capitalize on the lucrative nature of the Champions League, which will generate at least £50 million in revenue even if they fail miserably this season. Liverpool has twice earned more than £100 million in a single fiscal year as a result of its qualification and subsequent performances.
When it comes to the earnings and sustainability of the Premier League, Arsenal has the ability to spend and the flexibility to maneuver. UEFA established new financial sustainability requirements last year, allowing teams to spend no more than 70% of their revenue on squad investment, with a three-year grace period to comply.
Football revenue at the Emirates is expected to exceed £400 million for the first time in the club’s history in the coming fiscal year. The Gunners lost £45 million in the most recent fiscal year, but with Champions League football, it is expected that they will be back in the black by the time the 2023/34 financial statements are issued, especially given the club’s recent success.
Arsenal’s profit to turnover ratio, a key component of both the Premier League and UEFA’s financial standards, was 73% in the 2021 accounts, a bit higher than the acceptable 70% number that Liverpool has consistently sailed under in previous years. In 2022, that figure was 58%, indicating that there was plenty of space for the club to increase pay spending significantly. There would still be a transfer expense, but it is amortized over the life of the deal, so £100 million for Rice over five years would be £20 million each year. According to the most recent records, the club’s player amortisation numbers for previous year were £124.5 million, which was the fourth highest in the Premier League.
Arsenal, like Liverpool in 2017, appears to be on the verge of reestablishing themselves as a top-four force capable of competing in the Champions League on a regular basis. That presents an issue for the Reds, especially given that the ‘big six’ has now become the ‘big seven’ with Newcastle United’s vast Saudi Arabian money behind them. Then there’s the possibility that Chelsea’s expensively assembled squad will bounce back under Mauricio Pochettino next season and fight for titles once more. It will be a congested field, and some will have enough money to cause problems for Liverpool again next season.