How will Arsenal fare after the Coronavirus pandemic ends?

It is that time of year when the football news columns are rife with speculation surrounding the summer transfer market. However, this year the speculation has been centred upon anticipating the impact that Covid-19 will have on the market. Rumours with regards to specific players being transfer targets seem to hold less weight when football hierarchies across the world are still coming to terms with the extent of the financial impact. So, I thought I’d take a look at some of the predictions, and then assess how well Arsenal are positioned to deal with the new market.

A new dawn for the business of football:

If there is one common consensus in the footballing world, its that for the foreseeable future the transfer market will be very different. Every club has seen match-day revenues dry up overnight and at Arsenal, that means they are currently losing income at a rate of some £25 million a month. And while the extent of the losses will be eased slightly if the rest of the season can be played out, it is now almost a formality that the entirety of next season will be played behind closed doors.

For the transfer market, this means that only a very select few clubs will be in any position to spend significantly in the summer window, think Manchester City, PSG, and maybe Newcastle. Essentially unless your club is owned by the sovereign wealth fund of an oil-rich nation, your clubs spending power will be significantly hampered for the next few windows.

Clubs across Europe are facing steep losses in income and seeking to cut costs. Even England’s wealthiest club, Manchester United are trying to temper fan expectation for the upcoming window.

“I cannot help feeling that speculation around transfers of individual players for hundreds of millions of pounds this summer seems to ignore the realities that face the sport,”

Ed Woodward, United’s executive vice-chairman

The first major knock-on effect of this will be a huge drop in player values across the board. KPMG’s Sports Advisory Practise has produced a detailed report predicting players values across Europe will decrease by a total of £6 billion. That’s a decrease of 17.7%, and is an optimistic estimate, with the assumption being that the leagues are all completed this season. 

So, what does this mean for the market? Well in an interview with Sky Sports, former Liverpool and Tottenham director of football Damien Comolli forecasted an unprecedented change in the football business. 

“There will be situations where clubs with a little bit of cash will be able to sweep the market by investing in young players. There will be situations where clubs will have no money at all.”

“For the first time, on a global scale, we will see clubs swapping players like they have been doing in Italy… We will be seeing a lot of loans, I am convinced about that because clubs looking to save money on their wage bill won’t be able to sell players.” 

“There will also be an interesting trend with free transfers. The free agents at the top 20 clubs in the world are becoming very hot property because there is no transfer fee attached to their names.”

Finally, Comolli is also confident that the days of £100 million transfers fees are gone.

So those in the know are forecasting a market consisting of smaller fees, swap deals and loans, as well as fierce competition over free agents and the most talented young players. 

How will Arsenal fare with the new financial reality? 

On one hand, Arsenal will be hit harder than a lot of their closest rivals. Match-day income is a big part of the problem for Arsenal. According to Deloitte, match-day income accounted for 25% of total revenue in 2019. This is a significantly higher proportion than any of the other ‘big 6’ clubs, with Tottenham (18 %) the nearest comparison. Furthermore, Arsenal’s squad needs a lot more work than some of their rivals, after having missed out on Champions League qualification for the past three seasons they are currently languishing 9th in the Premier League table. Arsenal’s playing squad is in desperate need of restructuring, and many thought the club would seek to move on quite a number of players this summer. However, the value of some of those players will now have been slashed significantly, and potential buyers will be few and far between. 

Furthermore, Arsenal invested vast sums into last summer’s transfer window, with many reports suggesting that they had already brought forward cash from this summer to facilitate the spending. This meant that even before the crisis, Arsenal had posted their first operating loss since 2002, with a post-tax loss of £27.1 million for the year 2019. On top of this Arsenal owe significant outstanding transfer payments, to the tune of £77 million, due to be paid in instalments for signings already made such as Nicholas Pepe and William Saliba. 

On the other hand, however, the age profile of Arsenal’s squad is a source of real optimism. Clubs across the continent will now be forced to give more first-team chances to youth players due to the extreme constraints on their finances and ability to purchase new players. Fortunately for us, we have one of the best crops of young players I can recall Arsenal producing. This season has seen 4 Hale End academy graduates being promoted to significant roles in the first team. Bukayo Saka, Joe Willock, Reiss Nelson, and Eddie Nketiahhave all received significant game time in the Premier League, as well as the cup competitions. We also have Emile Smith Rowe impressing out on loan at Huddersfield as he looks to overcome his injury troubles. To have 5 academy players ready to play a significant role in the first team will make Arsenal the envy of many of their rivals. In fact, only Chelsea can match us for youngsters with first-team experience.

Add to this last summer’s purchases of Gabriel Martinelli and William Saliba. Martinelli has had a scintillating first season in English football and looks destined to play a key role for Arsenal going forward. To steal a classic Arsene Wenger adage, Saliba will be “like a new signing” when he returns from his loan and looks set to step straight into our backline. On top of this Matteo Guendouzi has already made 80 appearances for Arsenal and should stand to benefit from Arteta’s more disciplined and structured coaching. Finally, we also have Konstantinos Mavropanos putting in solid displays while on loan in the 2. Bundesliga. 

Arturo Fernandes, head of Portugal’s Agents Association, in an interview with BBC Sport, confirmed that many teams will have to put faith in youth next season. 

“I remember the period between 2008 and 2010,” he said. “I remember the fantastic Espanyol of Mauricio Pochettino and young players like Jose Callejon. I remember the fantastic team of Sporting Lisbon with Paulo Bento as coach, and players like Joao Moutinho and Miguel Veloso.

“Why? Because they were in big crises with money so gave the opportunity to cheaper players, the young players from the academy. It would be great for these players and for the clubs because they will find, in three or four years, that their biggest profit will come from these boys.”

The Covid-19 pandemic will impact upon football’s transfer market dramatically. Small fees, swaps, loans, and free agents will become commonplace. But with clubs being forced to put faith in their youth players, as they represent the best value for money in a time of crisis, Arsenal are in a better position than most with their hugely talented group of young stars. Make no mistake, Arsenal’s financial situation is dire, and those in charge will have to be smarter in their transfer dealings than ever, but if it means we get to see players like Saka, Martinelli, Nelson and Saliba develop into a “golden generation” of Arsenal, then I for one don’t think it’s a bad thing at all. 

Let me know your thoughts on Arsenal’s transfer strategy going forward, either in the comments below or on Twitter @OnsideArsenal.