Arsenal could spend £204m as transfer budget laid bare

Arsenal could theoretically have as much as £204m to spend in the transfer market this summer.

The view among most supporters is that Mikel Arteta’s squad does not need major surgery but rather a few choice additions to reach the next level.

After running Man City close in the Premier League title race in the last two seasons, the Gunners have been linked with the likes of Bologna defender Riccardo Calafiori to shore up their defence.

Former Arsenal and now Borussia Dortmund forward Donyell Malen has also been raised as another who could make the move to the Emirates.

But their ability to act in the transfer market is anchored to their position under the Premier League’s Profit and Sustainability Rules (PSR).

Club are allowed to lose £105m over a rolling three-year period under the system.

And with Arsenal have announced combined losses of £204.9m across 2020-21, 2021-22 and 2022-23, they are notionally over the limit.

However, the truth is more complex. And the reality of the situation is that Arsenal actually have huge headroom to spend this summer.

Arsenal have £94m PSR capacity

According to projections for Arsenal’s 2023-24 accounts from football finance expert Swiss Ramble, Arsenal can post a £94m loss for the season without breaching PSR.

In reality, the Gunners loss will be far smaller. Probably in the £10-20m bracket.

What’s more, when PSR-deductible costs are removed, the loss could in fact be eliminated entirely.

While it is not an exact science and Swiss Ramble was careful to stress that his figures are estimations, that gives Newcastle ample headroom to spend this summer.

They will be able use the £94m of PSR headroom even before any player sales, if the owner chooses to bankroll the spending.

Homegrown trio could boost budget to £204m

Under the PSR system, academy player sales are classed as pure profit in accounting terms, whereas other outgoings are offset against their book value.

Three London Colney products could reportedly depart the club this summer.

The first, striker Eddie Nketiah, is apparently valued at £50m by Arsenal.

Fellow potential leavers Emile Smith Rowe and Reiss Nelson meanwhile have been linked with £30m moves.

Arsenal supporters might be reluctant to see three of their own depart the club, but that would be £110m in total.

Adding that figure to the £94m PSR capacity, Arsenal could theoretically spend £204m on new recruits in the coming weeks and months.