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Financial Fair Play - Analysing Arsenal- Reasons Behind the Perceived Lack Of Spending




Financial stability has long been an issue within the football industry. In recent years there has been an increasing trend of football clubs losing money, whilst this worrying trend is nothing new to the football industry UFEA decided that they needed to intervene in order to stop this downward spiral. In 2010 Financial Fair Play (FFP) was approved by UFEA and then the following year in 2011 the first assessments began, UFEA state that “Financial fair play is about improving the overall financial health of European club football.” (UFEA.com, 2015). The main purpose of FFP is to prevent the build-up of unsustainable debt, this is achieved by enforcing the rule that clubs can spend up to 5million more then they earn within the set assessment period (Three Years). Other purposes are to reduce and eradicate any form of financial foul-play such as non-payment of liabilities and financial doping, this includes excessive spending on players (Müller et al, 2012).

On top of the FFP regulations many leagues have their own financial regulations, this case study will be looking at what regulations the English Premier League has implemented and what effects that has had on clubs. Specifically focusing on the Profitability and Sustainability Rules (PSR) and the Short Term Cost Control regulation (STCC)



Case Study

In the world of Financial Fair Play (FFP) there have been many case studies that have focused on several teams, most notably Manchester City and Paris Saint Germain. The aim of this case study is to identify a new team for analysis, the team chosen is English Premier League club Arsenal.

During the most recent January transfer window it was made clear by Arsenal that they could only afford loan deals and where unable to explore the possibility of permanent deals (Steinberg, 2019), could this lack of spending power be a result of financial fair play? Or a team that has failed to adapt to the new regulations? The Premier League have what can be considered to be their own version of the UFEA FFP regulations. They can be divided into two main sections; Firstly, Profitability and Sustainability Rules (PSR), similar to FFP the aim of this rules is to ensure that clubs do not obtain uncontrollable debts by stating that clubs are only allowed to lose £105 million within a 3-year period. Secondly, Short Term Cost Control (STCC), this rule was first enforced in 2013 but has since been updated in 2016 in correlation with the new 3 three TV deal (Thompson. 2016). This rule prevents clubs from increasing their wage bill exponentially each season, thus ensuring that clubs wage bills do not grow to an unsustainable level. Currently clubs are only permitted to increase their wage bill by £7 million per season, however this figure can be increased if the club increases their 3 core revenue streams, including match-day income, player sales and increased commercial deals. In recent years Arsenal have been one of the healthier clubs within the Premier League in regard to financial stability, this is evidenced by the fact that since 2002 they have only failed to achieve a pre-tax profit once in that period. This is a clear indication that PSR isn’t an issue for them, however there could be a case that the STCC rule is becoming an issue for Arsenal in regard to player acquisitions.



The problems started for Arsenal when they failed to obtain a top 4 position in the Premier League, this resulted in them missing out on the highly lucrative champions league place for the 2017/18 season (McMahon, 2018). As a result, Arsenal found themselves in somewhat of a financial quandary in regard to their high-profile player contracts, specifically the new contract given to Mesut Ozil and the arrivals of Henrikh Mkhitaryan and Pierre-Emerick-Aubameyang. The problem stems from the fact that Arsenal have become a yo-yo team but not in the usual sense of the saying; Arsenal have gone from a team that was constantly secure in the top 4 of the Premier League to a team that is in one year and out the next, this has had knock on effects on their ability to meet the Premier League financial regulations. From a brief look at Premier League accounts Arsenal have the 5th largest wage bill in the Premier League, meaning that any set back on revenues with have a strong effect. As stated earlier clubs have the ability to increase the standard £7 million wage increase by increasing revenues, however since Arsenal have lost important Champions League revenues this has offset any gains from other revenues that factor into the STCC calculations. As a result of this Arsenal will be close to the standard £7 million wage cap increase, meaning that Arsenals’ buying power has diminished as they have no room to increase their wages. McMahon (2018) predicted that if Arsenal failed to obtain a Champions League spot for the 2018/19 season they would have to start “robbing Peter’s to pay Paul’s” this is suggesting that Arsenal would have to sell players in order to start signing players, it can be argued that this prediction is valid. However, this issue is not specific to Arsenal and it can be argued that the majority of clubs competing in the Premier League would be affected in the same way as they all have to comply with the same regulations. Unless of course you are a team that is privileged enough to be able to be able to regularly increase the revenues involved within the STCC calculations, such as Manchester City. It can be deemed that they have a competitive advantage over their competitors as they have the ability to increase their revenues in a way that Arsenal cannot. Since the City Groups acquisition of City, they have been able to increase their wages rapidly through the use of increased sponsorship deals that are factored into the STCC calculations, whether these sponsorship deals should be allowed is another debate.

Arsenal are also in the unique situation were their highest paid players do not start every game and it can be argued that Arsenal are failing to get return on their investments correctly. Mesut Ozil and Henrikh Mkhitaryan are 2 of Arsenals highest paid players yet both of them have started in less then half of Arsenal’s games this season due to not suiting the new managers style of play, this strongly suggests that Arsenal have made poor strategy decisions in terms of wages. As the STCC calculations include player sales it is important that clubs retain the value for their players in case they are in a situation where they need to sell. It can be argued that the fact that Mesut Ozil is not performing to his maximum potential coupled with his high wages does not make him a prime target for other clubs, this is an issue for Arsenal. Ozil’s wages are a big percentage of Arsenal’s overall wage bill and therefore under STCC this restricts the amount of wages they can offer to potential new players during negotiations. This has resulted in Arsenal losing a more frequent first team player, in Aaron Ramsay, as they can not afford to offer him the wages that he feels he deserves because of Arsenals decision to offer Mesut Ozil a new contract the season before, whilst also greatly effecting their ability to attract the best players to the club. If Arsenal feel that they are not going to fully utilise Mesut Ozil correctly then it would be greatly beneficial for them to sell him on, however this could prove to be tricky as it is highly unlikely that Ozil will get a better contract elsewhere than the one he has at Arsenal.

This situation outlines the importance that clubs ensure that all players are either showing value for money in terms of their wages on the pitch or the club has the potential to make a return on their investment. Whilst this has always been the case throughout football, it has been maybe all the more important since the introduction of the STCC regulations, in order to avoid the situation that Arsenal are currently in.




To conclude, it can be deemed that the introduction of the STCC regulation has increased the importance of obtaining a Champions League spot, especially for teams that already have existing high wage bills. It is also vital that clubs ensure that all their commercial dealings are maximised and that they are negotiating contracts that not only benefit the player but the club as well. In the case of Arsenal, whilst it may seem at the moment that they spending power is minimal there are signs to suggest things may turn around soon. In 2019 some major deals for Arsenal are coming to an end, including that of kit manufactory Puma. This means that Arsenal will be in a position to try and leverage better more lucrative deals that would result in them have more wages available to them as it is these deals that are factored into the STCC calculations. Couple this with the fact that it is expected that many players will leave Arsenal next season as whenever a new manager starts at a new club it is expected that they will play their own way and make their own mark on the team, this usually results in many players being sold. With Unai Emery only having one season so far at Arsenal it can be argued that the minimal outgoings are a sign that he is giving everyone a chance to prove themselves before deciding who to sell. With Petr Cech announcing his retirement and Arron Ramsay leaving to join Juventus, Arsenal are already in a better position.

From the point of view of the Premier League the STCC regulation is serving a very important purpose, it is ensuring that wages associated to any club do not become uncontrollable and that clubs are running more efficiently. For any team wages are one of, if not the highest, expenditures they have and in the past have led to the downfall of many teams (Portsmouth for example). Therefore, it was vital that the Premier League ensured that all clubs were protected from this happening to them. Whilst the intentions of the regulations can be seen to be positive, since the inception there has been a variety of different criticisms. The wide spread criticism includes illegally limiting the internal markets, preserving the status quo of the top teams and failing to reduce club debt. However, it has to be argued that FFP has achieved what it set out to do in ensuring the long-term sustainability of football clubs. It is important to keep the literature regarding FFP update as much as possible, thus creating strong trends as FFP can still be considered to be a new concept.




McMahon, B. (2018). Can Arsenal Afford Ozil, Wilshere, Mkhitaryan (And Auba) In Light Of Premier League Salary 'Cap'?. [online] Forbes.com. Available at: https://www.forbes.com/sites/bobbymcmahon/2018/01/23/can-arsenal-afford-ozil-wilshere-mkhitaryan-and-auba-in-light-of-premier-league-salary-cap/#5e838a741eec [Accessed 11 Feb. 2019].

Müller, J., Lammert, J. and Hovemann, G. (2012). The Financial Fair Play Regulations of UEFA: An Adequate Concept to Ensure the Long-Term Viability and Sustainability of European Club Football?. International Journal of Sport Finance, 7(117-140).

Steinberg, J. (2019). Unai Emery says Arsenal can make only loan signings in January. [online] The Guardian. Available at: https://www.theguardian.com/football/2019/jan/10/arsenal-loan-signings-only-january-unai-emery-ever-banega [Accessed 11 Feb. 2019].

Thompson, E. (2016). Premier League update their FFP rules. [online] Financialfairplay.co.uk. Available at: http://www.financialfairplay.co.uk/latest-news/premier-league-update-their-ffp-rules [Accessed 11 Feb. 2019].

UEFA.com. (2015). The official website for European football – UEFA.com. [online] Available at: https://www.uefa.com/community/news/newsid=2064391.html [Accessed 7 Feb. 2019].



This article was written by Connor Eade of SBI's marketing team.



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