The £94m figure that will help Arsenal seal deal for Marcus Rashford

Marcus Rashford of Manchester United
-Credit: (Image: 2024 Robin Jones)

When it came to the mad scramble to be compliant with profit and sustainability regulations earlier this week, a number of Premier League clubs had work to do.

Chelsea, Aston Villa, Everton, and Newcastle United were among the teams who adopted the strategy of player trading academy graduates between clubs for large fees, with such players delivering pure profit for accounting purposes, allowing clubs to rake in some much-needed revenue ahead of the end of their financial year on June 30.

For Arsenal, there was no such concern. The Gunners’ financial year came to an end on May 31, and on the back of a season when the club enjoyed Champions League football and a significant boost in terms of merit payments from the Premier League for finishing second, not to mention greater commercial revenues, PSR wasn’t something that they had to be unduly worried about.

While the significant spending on the likes of Declan Rice, Jurrien Timber, and Kai Havertz added almost £40m in annual amortisation costs to the balance sheet for the 2023/24 financial year, the sales of the likes of Folarin Balogun to Monaco for around £26m helped offset that.

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Arsenal’s amortisation costs for the 2022/23 financial year was £139m, the fourth highest in the Premier League, with Manchester United’s £170m the highest. Adding in the £40m from the purchases of Rice, Timber, and Havertz would see that increase significantly for the 2023/24 period, but it will be offset in some degree by player exits during the period as well as the extension of player contracts, something that reduces the annual amortisation cost of a player with book value due to it being spread over a longer period of time.

There has been some rumour and speculation that a number of players could be up for grabs this summer from the Gunners, some with significant profit attached to them, such as the likes of Emile Smith-Rowe and Kieran Tierney. Sales such as those would help bring in welcome money to put in other areas.

Arsenal have been linked with a move for Manchester United’s Marcus Rashford, with the Old Trafford club considering their options when it comes to the 26-year-old striker after a disappointing campaign in 2023/24.

Rashford, whose sale would represent pure profit for Manchester United, has a market value of £60m according to Transfermarkt, and that seems a reasonable valuation given his age, profile, and contract length, even if it comes on the back of a poor season.

But what would it do to Arsenal’s own financial picture with regards to PSR and UEFA’s squad cost ratio rule which all clubs competing in European competition need to abide by?

According to estimates by football finance expert Swiss Ramble, Arsenal, who posted losses of £52.1m and £45.5m in the last two seasons, are comfortable when it comes to PSR.

Clubs are allowed to lose £105m over a three-year reporting period, but investment into such things as infrastructure, the women’s team, the academy, and community initiatives are all allowable deductions when it comes to PSR.

Based on projected improved revenues and in the profit and loss column compared to last year, Swiss Ramble’s estimates have Arsenal’s PSR cushion at £94m, meaning that the club could have posted losses of £136m for 2023/24 and still be compliant, using predicted allowable deductions of £42m. The success on the field means that kind of scenario is extremely unlikely.

When it comes to squad cost ratio, which currently stands at 80% wages and amortisation against revenue, but will be reduced to 70% from 2025, Arsenal are estimated to be around the 68% mark, but with increased amortisation and payroll costs that could rise, meaning the increasing of commercial revenues is paramount, as is the pursuit of the riches that competitive success delivers.

In terms of a deal for a player like Rashford, taking on a £60m fee over the maximum allowed period of five years for amortisation wouldn’t be too much of a pain for the Gunners to take, adding around £12m per year to the balance sheet. The wages of a reported £325,000 per week would be a significant undertaking, though, adding nearly £17m to payroll costs.

A deal is very much doable for Arsenal, and given the desire to double down and ensure the resurgence of the past two or three seasons under Mikel Arteta continues for the long term, the Gunners are well positioned to strengthen when compared to some of their rivals.

For the likes of Manchester United, selling a player to their rivals whom they want to overtake might not seem the best course of action, but they have more pressing concerns when it comes to rebuilding and re-strategising, and creating significant player trading profit is something that they will be keen to address having fallen well short of their ‘big six’ counterparts in recent years.