Arsenal FC: 2023/24 Financial Results
Overview of P&L, Investment, Cash Flow, and Debt
This entry reviews Arsenal FC’s 2023/24 financial results, which encompass a period in which the Gunners finished second in the Premier League (PL), reached the UEFA Champions League (UCL) quarterfinals, and suffered early elimination in each domestic cup competition.
The review will cover the following dimensions:
Profit and loss account statement;
Fixed asset investment (player and infrastructure);
Cash flow statement;
Financial debt and transfer debt.
Legal Entity Reviewed
The interchangeable references to Arsenal FC, Arsenal, or AFC in this post refer to Arsenal Holdings Limited, a UK-incorporated holding company that indirectly owns 100% of share capital of (i) the men’s and women’s football clubs (each highlighted in blue) and (ii) legal entities that engage in modest property development activities.
Section 1: Profit/(Loss) Statement
Arsenal’s revenue and key profitability metrics are summarized below, with each metric exhibiting year-over-year (YOY) improvement versus 2022/23:
Revenue increased by £149.0m (32.1%) to £613.5m through standout growth in each core segment (28.3% or more for each).
Adjusted EBITDA increased by £21.5m (18.2%) to £139.6m, attributable to increased revenue of £149.0m less a £127.5m increase in cash operating expenses (wages: +£93.1m; other: +£34.4m).
Adjusted EBIT improved by £6.4m to a loss of £49.7m, reflecting the increased adj EBITDA of £21.5m less increased non-cash flow expenses of £15.1m (player amortization & impairment: +£13.9m; depreciation: +£1.2m).
Pre-tax loss of £17.7m (note: also overall result), representing a £34.4m YOY improvement driven by increased adj EBIT (+£6.4m) and significantly higher player sale profit (+£40.3m), partially offset by increased net interest expense (+£12.2m).
Total Revenue
Arsenal’s revenue of £613.5m (note: £616.6m when including property development income) represents the second consecutive year with growth exceeding 25.0%, resulting in total growth of 66.2% versus 2021/22 (£369.1m).
Across 2018-2023, Arsenal’s revenue was lowest among the ‘Big 6’ domestic peer group. With the big leap for 2023/24, the club’s revenue will exceed that of Spurs and Chelsea and be in line with Liverpool (and slightly above if including property development revenue).
Revenue Segment: Commercial
Arsenal’s commercial revenue increased by £48.9m (28.6%) to £219.6m, driven by (i) the upsized Emirates contract, (ii) the new training centre naming rights deal with Sobha Realty, (iii) increased breadth of secondary partnerships through several new deals (including, but not limited to, Google Pixel, Persil, Betway, and Hotels.com), (iv) improved retail operations, and (v) increased pre-season tour income.
The club’s focus on increased breadth of commercial partners is illustrated in the table below, which lists the 27 commercial partners identified on Arsenal’s official site (principal: 4; official: 18; regional: 5) as of 23 February 2025, of which 13 were announced across the last 24 months. Given that 4 of the new deals were signed early in the 2024/25 period, this growth driver is expected to be present in 2024/25 as well.
Prior to strong YOY growth each of the past two years, Arsenal’s commercial revenue exhibited a compound annual growth rate (CAGR) of 4.7% from 2015-2022, which was notably below the growth rate for each Big 6 club except for Manchester United (3.9%), who had commercial revenue nearly double Arsenal’s in the base year.
The combination of a comparatively lower base in 2014/15 and modest growth over the ensuing 7 years results in Arsenal being lowest among the Big 6 cohort for commercial revenue despite the rapid growth for 2022-2024 (which has effectively entailed Arsenal playing catch-up to domestic peers).
Revenue Segment: Broadcast
Arsenal’s broadcast revenue increased by £71.1m (37.2%) to £262.3m, primarily driven by the club participating in the UEFA Champions League (2023/24) rather than the far-less-lucrative UEFA Europa League (2022/23).
Note that when normalizing for common UEFA participation, AFC’s broadcast income exhibited a CAGR of 4.0% from 2016/17 (most recent prior season with UCL participation) to 2023/24, which is generally in line with the weighted-average growth rate for PL (2.5%) and UCL (~ 6.0%) broadcast rights over the period.
Revenue Segment: Matchday
Despite staging only one more home match in 2023/24 (25) compared to 2022/23 (24), matchday revenue increased by £29.0m (28.3%) to £131.7m. Indicative drivers (beyond the additional home match) include a stronger competition mix (higher-demand UCL fixtures) and general price increases.
Adjusted EBITDA
Adjusted earnings before interest, tax, depreciation and amortization (adj EBITDA) is generally viewed as a proxy for recurring cash profit.
Arsenal’s adj EBITDA of £139.6m in 2023/23 represents the second-highest level in the club’s history and, despite the YOY decrease by 2.7%, the associated margin of 22.7% is deemed very strong by PL standards as only 6 of 20 PL clubs (including AFC) had a margin above 20.0% in 2022/23.
Arsenal’s adj EBITDA for 2023/24 is higher than the figure posted by Man City (£117.2m) but modestly below Man United’s (£147.7m). Once each Big 6 club has published, Arsenal will be no worse than 3rd among the cohort for the metric (LFC and CFC will be lower).
Also, note that as of latest published data, AFC are the only club among the Big 6 cohort to exhibit positive adj EBITDA growth since 2018/19.
Arsenal’s wage bill increased YOY by £93.1m (39.6%) to £327.8m, with substantial growth driven by the net impact of squad changes from substantial squad investment in summer 2023, full-year wages in 2023/24 for notable Jan ’23 acquisitions, contract modifications for key senior squad members (including Bukayo Saka in May ’23, William Saliba in Jul ’23, and Martin Ødegaard in Sep ’23), and growth in non-playing staff headcount (+101 YOY to 608 excluding temporary staff).
Due to YOY wage growth (+39.6%) outpacing revenue growth (+32.1%) on a relative basis, AFC’s wage-to-revenue ratio increased from 50.5% to 53.4%. However, despite the increase, the 2023/24 ratio is extremely healthy by league and industry standards (median of PL clubs in 2022/23: 72.2%; weighted-average for PL clubs in 2022/23: 66.6%).
The wage bills for Arsenal and local rival Tottenham Hotspur have been well below the rest of the Big 6 cohort in recent years, but AFC’s wage bill converged notably towards the other four in 2023/24 (while THFC’s edged down based on club data supplied to and reported by Deloitte in the consultancy’s most recent Football Money League report).
Other operating expenses (OOEs) include, but aren’t limited to, costs associated with staging matches, commercial operations, property and equipment maintenance, utilities, transportation & accommodations, and professional advisory services (legal, consultancy, etc).
Arsenal’s OOEs increased YOY by £34.4m (30.8%) to £146.2m, which represents a new club high and is effectively double total OOEs in 2021/22.
Arsenal do not provide meaningful segmentation for this class of costs (standard for PL clubs), but the club did disclose a £7.7m increase with respect to cost of goods sold (COGS) for retail operations (2022/23: £19.7m; 2023/24: £27.4m).
Note that recent rapid growth in OOEs is not unique to Arsenal as inflationary pressures have hit clubs hard more generally, with OOEs across PL clubs (in aggregate) increasing by 26.8% YOY from 2021/22 to 2022/23 and up double digits YOY for 3 of the other 4 PL clubs to publish 2023/24 results thus far (MCFC: +10.1%; WHU: +26.8%; BFC: +38.9%).
As a percentage of revenue, Arsenal’s OOEs remained relatively static YOY (2023/24: 23.8%; 2022/23: 24.0%). Note that AFC’s OOE-to-rev ratio is largely in line with the weighted-avg of 24.4% across the other four PL clubs that have released 2023/24 results thus far (MCFC: 26.5%; MUFC: 22.6%; WHU: 22.3%; BFC: 25.5%).
Adjusted EBIT
Adjusted earnings before interest and taxes (adj EBIT) is generally viewed as a proxy for recurring day-to-day profit/(loss).
Arsenal’s adj EBIT improved by £6.4m to a loss of £49.7m, reflecting a £21.5m improvement in adj EBITDA versus a £15.1m increase in player amortization & impairment (+£13.9m) and depreciation expense (+£1.2m).
The £13.9m YOY increase in player amortization & impairment is attributable to a £32.0m (23.0%) increase in player amortization and £18.1m (100.0%) decrease in player impairment, with the notable increase in player amortization reflecting the scale of player investment across transfer windows in January 2023 (partial year impact in 2022/23 versus full year impact in 2023/24) and summer 2023.
For a more complete view of player-related expenses, a commonly evaluated industry ratio is total wages plus player amortization & impairment (WAI) to revenue (note: for PL clubs the ratio includes non-player wages due to lack of reporting segmentation).
Arsenal’s WAI-to-revenue ratio slid down YOY from 84.4% to 81.3%, which is (i) largely in line with 2023/24 figures for domestic peers Manchester City (80.8%) and Manchester United (83.4%) and (ii) slightly stronger than ratios for West Ham (90.6%) and Brentford (90.0%), the two other PL clubs to publish results to date (note: WHU and BFC generate materially lower revenue than Big 6 clubs).
Pre-Tax Profit/(Loss)
Arsenal’s pre-tax loss of £17.7m represents a £34.4m YOY improvement, driven by a £40.3m increase in player sale profit and £6.3m improvement in adj EBIT, partly offset by a £12.2m increase in net finance costs.
While the 2023/24 pre-tax result represents the 6th consecutive year Arsenal posted a loss, the result isn’t bad by recent standards among the club’s domestic peer group and is £113.0m better than the 2023/24 result posted by Manchester United.
Note that Arsenal’s increased player sale profit YOY is part of a broader (early) trend across the division:
Each of the 5 PL clubs to publish 2023/24 results to date have posted material YOY increases (AFC: +£40.3m; BFC: +£19.6m; MCFC: +£17.3m; MUFC: +£17.0m; WHU: +£79.3m).
Aggregate player sale profit of £349.0m across PL clubs reporting to date represents a £173.6m (99.0%) YOY increase.
Indicatively, PL clubs (including Arsenal) have increased focused on
With respect to net finance costs increasing YOY by £12.2m to £18.4m, note that £6.5m of the increase is driven by notional interest on player transfers paid in installments. On a cash basis, net finance costs increased by (a far-more-modest) £3.5m to £7.8m, driven by higher borrowings during the period and a higher rates on borrowings.
Note on Compliance with PL and UEFA Regulations
Arsenal are required to demonstrate compliance with two sets of financial regulatory tests:
P&L Profitability and Sustainability Rules (‘PSR’).
UEFA Financial Sustainability Regulations (‘FSR’), comprised of a break-even rule, squad cost rule (‘SCR’), positive net equity test, and overdue payables test (note: 4x per year for overdue payables test).
Based on my rough estimates with respect to PL PSR compliance, Arsenal exhibited notable cushion from the three-year adjusted loss threshold of £105.0m and the club are not facing any forward-looking challenges for this regulatory test.
With respect to UEFA FSR, the most noteworthy requirement is the squad cost rule (SCR), which entails an 80.0% threshold for squad costs (player wages and head coaches including exceptional; player amortization and impairment) as a percentage of adjusted revenue (operating income; player sale profit) for 2023/24 that reduces to 70.0% for periods thereafter.
Based on my (again, rough) estimates, AFC’s 2023/24 SCR of ~ 64.0% is indicatively well-within the 2023/24 threshold and also has reasonable cushion to the long-term target threshold.
Section 2 – Fixed Asset Investment
Arsenal’s net fixed asset investment for 2023/24 was £205.4m, (i) reflecting net player spend of £189.6m and net infrastructure spend of £15.8m and (ii) representing the second consecutive year where net investment by cost exceeded £200.0m.
The £189.6m player net spend in 2023/24 reflects:
Gross spend of £255.7m (note: club record), primarily driven by acquisitions of player registrations for Declan Rice from West Ham United, Kai Havertz from Chelsea, and Jurrien Timber from Ajax, versus
Net fee income from disposal of registrations of £66.0m, primarily attributable to the sales of Folarin Balogun to Monaco, Granit Xhaka to Bayer Leverkusen, and Matt Turner to Nottingham Forest.
Note that per subsequent events, 2024/25 player net spend through mid-Oct ‘24 was £20.9m. Given this disclosure in conjunction with Arsenal’s largely static winter transfer window, the player net spend figure for 2024/25 is set to be considerably below recent-historical levels.
Arsenal’s 2023/24 player net spend of £189.6m is the highest among the Big 6 cohort (and non-Big 6 PL clubs) to have published thus far, eclipsing Manchester United’s net outlay of £173.3m.
Arsenal’s heavy squad investment in recent years has resulted in squad cost increasing by 50.7% from £558.7m at end-May ’21 to £882.4m at end-May ’24.
Arsenal’s squad cost was 5th among the Big 6 cohort from 2018-2023, tracking modestly below Liverpool’s over the period. For 2024, the club’s squad cost has converged somewhat towards the figures for the Manchester giants and may end up exceeding the figure for Liverpool.
Section 3 – Cash Flow Statement
Arsenal’s 2023/24 cash flow statement is summarized below:
Cash Flow from Operations (CFO) increased by £34.8m (26.1%) to £168.2m, reflecting a £22.0m improvement in adj EBITDA (+£21.5m) and net property income (+£0.5m) and an incremental £17.1m working capital benefit, partially offset by a £3.5m increase in net interest payments and £0.8m reduction in tax receipts.
Note that this analysis categorizes cash interest payments and receipts as operating activities, while the club categorizes payments as a financing activity and receipts as an investment activity.
Cash Flow from Investing (CFI) was an outflow of £206.1m, representing a £39.8m (23.9%) YOY increase driven by a £43.9m increase in net cash player spend (2023/24: £193.4m; 2022/23: £149.4m), partially offset by a £4.2m reduction in capital expenditure (2023/24: £12.7m; 2022/23: £16.9m).
Cash Flow from Financing (CFF) entailed an inflow of £61.9m via incremental net owner loan funding, representing a £16.2m YOY increase from this source.
The £61.9m in cash from owners fully covered the CFO + CFI deficit of £37.8m and funded an incremental £24.1m of cash to the balance sheet.
Cash Flow from Operations
Arsenal’s operating cash flow of £168.2m for 2023/24 represents a new club record, reflecting CFO before working capital movements of £140.9m (adj EBITDA: £139.6m; net property development income: £1.3m), a working capital release of £35.2m, and net cash interest payments of £7.8m.
The working capital benefit is primarily driven by an increase in operating creditors by £27.6m, with the largest factor an increase in accruals and deferred income (+£16.4m YOY; note: presented in accounts as a combined line item).
Cash Flow from Investing (CFI)
Arsenal’s 2023/24 cash net player spend of £193.4m represents a new club record and reflects cash payments of £247.7m versus cash receipts of £54.3m.
Note that as of end-May ’23, Arsenal’s transfer installment payables due within one year were £150.3m versus transfer installment receivables due within one year of £15.5m (net: £134.8m). Implicitly, these figures imply a 2023/24 cash payment outlay of ~ £97.3m for ‘within-year’ activity (~ 38.1% of gross spend of £255.7m) and associated cash receipt outlay for ‘within-year’ activity of ~ £38.8m (~ 58.7% of net fees from sales of £66.0m).
Arsenal’s capital expenditure (capex) for 2023/24 of £12.6m is strongly in line with norms across 2014-2023 (average: £12.7m; median: £13.1m).
With Arsenal’s 2023/24 outflow from CFI exceeding the inflow from CFO (note: deficit of £37.8m), the club has now exhibited a cash flow before financing deficit for the 6th consecutive year (albeit with a very modest deficit in 2021/22).
Cash Flow from Financing (CFF)
Across the 6 consecutive years of CFO + CFI deficits:
The first 3 years (2018-2021) were funded by consumption of cash reserves, which reduced by £212.6m from end-May ’18 (£231.3m) to end-May ’21 (£18.8m).
The latter 3 years (2021-2024) were covered in entirety by net owner loans (deficit: £74.5m; net owner loans: £122.6m), which also moderately funded an increase in cash reserves as of end-May ’24 (£61.9m).
Section 4 – Debt Measures
This section discusses (i) financial debt, (ii) transfer debt, and (iii) and football net debt.
Financial Debt
Financial debt summary as of end-May ‘24:
The balance on the loan from KSE UK Inc (parent entity) increased by £65.1m (25.2%) to £324.1m.
Note that the owner loan is repayable on two years notice, with the club receiving no notice to date.
External debt edged up by £0.5m to £17.7m.
Net financial debt increased by £41.6m (17.8%) to £275.0m, reflecting the £65.6m increase in gross debt less the £24.1m increase in cash reserves.
Excluding owner debt, the club’s position reflects a net cash surplus of £49.1m (+£23.6m YOY).
The limit was raised on the club’s revolving credit facility (RCF) from £70.0m to £100.0m during the period. As the RCF is cleaned down as of end-May each year, immediate liquidity access increased YOY by £54.1m (+£30m unused on RCF; +£24.1m in cash).
Arsenal’s net leverage ratio, measured as net financial debt divided by adj EBITDA, remained unchanged YOY at 2.0x, reflecting proportionate increases to the numerator and denominator. This ratio is deemed healthy as it indicates ability to repay indebtedness from organic cash generation in a relatively short period of time, even in the unlikely scenario that all owner debt is called.
Transfer Debt
Arsenal’s gross transfer debt increased YOY by £28.3m (11.8%) to £267.8m, with transfer payables due within one year climbing from £13.6m (9.0%) to £163.9m.
Transfer receivables increased as well (+£11.8m to £38.5m; current portion +£6.5m to £21.9m), albeit by less than the increase in payables.
Reflecting YOY movements for payables and receivables, net transfer debt increased by £16.5m (7.8%) to £229.3m, with a relatively hefty £142.0m on net due during the 2024/25 financial period.
Given Arsenal’s (i) sizeable net payables due during 2024/25 and (ii) relatively modest transfer spend during the current period (summer net spend of £20.9m; static winter window), I expect that net transfer debt will be a bit lower than £229.3m as of end-May ’25.
Across the Big 6 cohort, Arsenal’s notable recent growth in net transfer debt isn’t unique, with (i) aggregate cohort net transfer debt more than quadrupling from £257.9m in 2020 to £1,047.5m in 2023 and (ii) each Big 6 club to report thus far for 2024 posting a YOY increase.
This broader trajectory is obviously unsustainable going forward, but it highlights the scale of reliance on transfer debt to facilitate player spend even among the PL clubs that generate (by some margin) the most revenue in the division.
Football Net Debt
Football net debt (FND) is an industry-specific figure that aggregates net financial debt and net transfer debt to provide a more complete view of debt obligations of football clubs.
Arsenal’s FND increased by £58.1m (13.0%) to £504.3m. However, it is noted that Arsenal’s FND excluding owner loans at end-May ’24 is a significantly lower £180.2m (and decreased by £7.1m YOY).
Based on adj EBITDA growing relatively faster than FND, Arsenal’s FND to adj EBITDA ratio edged down from 3.8x to 3.6x. Excluding owner loans the ratio improved from 1.6x to 1.3x, which is deemed conservative.
Contingent Transfer Obligations
Arsenal’s maximum contingent transfer fees payable edged up slightly from £18.6m at end-May ’23 to £19.5m at end-May ’24.
While AFC’s contingent payables increased slightly, it is noted that the potential liabilities are conservative among its domestic peer group, indicating a preference for more cash flow certainty in player trading.
Conclusion
Based on summary characteristics discussed in this entry and highlighted below, Arsenal’s 2023/24 financial results are deemed positive overall.
Further, with (i) revenue likely to climb in 2024/25 (albeit at a slower pace than the past couple years), (ii) the club’s commitment to cash cost discipline, (iii) transfer debt likely to be materially lower as of end-May ’25 compared to end-May ’24, and (iv) UCL qualification for 2025/26 a near certainty, I expect – at least on a preliminary basis – the financial story for 2024/25 (and capacity to invest in summer 2025) will be positive as well.