On October 26th The Guradian published an article titled “Ivan Gazidis heckled at Arsenal AGM as he defends club’s spending”. In which there was a rather long and precise quote given by Gazidis defending Arsenal’s transfer spend over the last three years and going even further back. The quote;
“There are many agendas at play and many stories during a transfer window – only a fraction of which are accurate. In that environment, it becomes very difficult to see clearly through the noise. Fortunately, there is one very accurate and objective way to assess how well and how consistently clubs perform in this area [transfers] over time.
This method is accurate enough to be the industry standard way to analyse the efficiency of spending of football clubs. It is very simply to compare team performance by a series of objective metrics, usually league position or points against expenditure on transfers.
No club has a perfect record every year under this scrutiny but Arsenal has probably been, of the big clubs certainly, the most consistently over-performing team over time. That is despite the criticism we get and the emotion here in the room and despite some very loud subjective narratives and a great deal of inaccurate information. In fact, on an objective basis, we perform very well and have over a long period of time.”
Immediately I thought “what are they smoking”? Because I know for a fact that Arsenal have spent more (net) on transfers over the last three years than both Chelsea and Tottenham. Using transfermnarkt.co.uk as my information source I compiled transfer spending among the top six clubs (Arsenal, Chelsea, Liverpool, Man City, Man U, and Tottenham) going back to 2002.
So, the first thing you have to know is that Arsenal have spent (net) £224m on transfers over the last four seasons (from 2013/14 to 2016/17). I didn’t include this season’s transfer business because it hasn’t concluded and I expect at least one or two sales and purchases this January.
The top four spenders (in millions) over the last four years are:
Man City – £437
Man United – £372
Arsenal – £224
Liverpool – £97
Chelsea – £67
Tottenham – £5
And the points earned over the last four years are:
Chelsea – 312
Man City – 309
Arsenal – 300
Tottenham – 289
Liverpool – 282
Man United – 269
But Gazidis was very specific about this “objective metric” of points per transfer spend so, I did the maths (I divided points by spend) and the final column for the last four years looks like this:
Tottenham – 57.8 (points per million pounds spent on transfers)
Chelsea – 4.7
Liverpool – 2.9
Arsenal – 1.3
Man United – 0.72
Man City – 0.71
Using Gazidis’ own method Arsenal have really not been that efficient over the last four years. However, those four years have been an outlier in terms of transfer spending.
First, Chelsea have been extremely efficient in getting top dollar for their sales and this has allowed them to bankroll massive expenditures on new players without net spending hardly anything. Chelsea have also managed to stockpile players all over the world because of their massive spending in years before these last four.
Also, Arsenal are in a totally anomalous period. Arsenal’s net transfer spend from 2002 to 2017 is £226m. Their net spend over the last four years accounts for £224m of that! Arsenal went from a club which literally spent nothing on transfers to a club which spent £224m on transfers. It makes sense to me that Arsenal are not the most efficient team in that scenario.
If we look at complete net spend from 2002 to 2017 and divide it by the points earned then we find that Arsenal are in fact the most efficient transfer spend per points earned club.
Arsenal – 5.3
Tottenham – 4.4
Liverpool – 2.6
Chelsea – 1.7
United – 1.6
City – 0.9
If we are generous to Gazidis then we would say that he was probably thinking about Arsenal’s performance relative to transfer spend from 2002 (when Arsenal used to win the League) to the present. In which case he is right.
I also wanted to look at net spend spend. In other words how much the clubs spend on everything. Some of the clubs finances are straightforward – Arsenal’s are particularly easy to find – but Man United proved to be a bit of a problem when looking through the Companies House web site. So for these numbers the method I used was to gather the annual reports that the Guardian publishes on club’s finances. The Guardian gives turnover and profit or loss for each club from 2011 to 2016. Adding the turnover plus (or minus) loss (or profit) gave me a “total spend” number which should encompass all of the spending a club does – player acquisition, salaries, agents, coaches, staff, etc.
Dividing points by total spend gives us a much smaller number but over the last three years Tottenham still come out on top:
Tottenham – 0.479 (points earned per total pounds spent)
Liverpool – 0.259
Arsenal – 0.234
Chelsea – 0.216
City – 0.211
United – 0.160
I was unable to find these Guardian articles any further back than 2011 but I am confident that if we were able to piece together total spend from 2002 to present Arsenal would come out on top as the most efficient club in the Premier League.
If I’m generous to Gazidis I would say that he’s right: Arsenal are historically the most efficient team in the top six of the Premier League. However, he’s clearly wrong over the last four years no matter how we break it down, Arsenal have been inefficient with spend relative to points.
There are also a number of other problems with what Gazidis said. This first is that fans literally don’t give a fig about their club winning the “Net Spend Points Efficiency Trophy”. I’ve never met a single Man City supporter or United supporter who said “Man, I wish our club were more efficient with the money.” And never once has a Spurs supporter lorded their “fiscally conservative” approach over Arsenal.
The second is that Arsenal are highly inefficient in a lot of other ways. Take the expiring contracts of Alexis and Ozil. Those two players represent £75m of Arsenal’s £224m net spend – 33% of Arsenal’s spending. And that £75m is literally going to walk out the door for free. One of the things that makes Chelsea and Tottenham so efficient is that they don’t let valuable players run down their contracts and leave for a free.
But worse: not only is Arsenal going to lose £75m in players, but the replacement value for those two is absurd. One can only speculate but it wouldn’t be unreasonable to suggest that to buy similar players now would easily cost double what Arsenal originally paid for them.
This makes Arsenal’s final problem even bigger. Arsenal have managed to keep a large cash position at the club at exactly the same time when the value of cash is rapidly disintegrating and the value of players is rapidly rising. Using the annual reports filed with the Companies House I’ve discovered that Arsenal went from having £100m cash on hand in 2008 to £227m in 2016.
This cash in hand position that Arsenal have taken is literally the most inefficient thing that they could be doing. In the season that Arsene Wenger, Ivan gazidis, Chips Cheswick, and Stan and Josh Kroenke only bought Petr Cech, Arsenal had £228m in the bank. That season Arsenal would have won the League if they had bought a second striker, Lacazette for example. Maybe he would have cost a record £100m but Arsenal would have still had £128m leftover.
This cash in hand position that Arsenal have taken is the biggest shame and is the one thing that all fans should be united against. There is literally no reason for this club to be penny pinching on transfers. If you want Lemar, you go get Lemar. You pay over the odds and maybe even sell Alexis for less than you want in order to recoup some of that value.
You spend that money because that money in the bank isn’t making the squad better. That money in the bank is rapidly devaluing as player values are rapidly rising, thus reducing Arsenal’s ability to buy players in the future. Money in the bank isn’t making the fans happy. It isn’t helping Arsenal win trophies. It didn’t help to keep Alexis and Ozil happy. That cash doesn’t play good defense. That cash doesn’t score goals. And it sure isn’t making Arsenal more efficient. Arsenal’s massive cash on hand position is a disgrace.
And Ivan knows it. That cash in hand makes Arsenal the most inefficient club in the Premier League.
Sources: The Guardian, Transfermarkt.co.uk, my personal database