Believe it or not, the general improvement in on-pitch performances has also helped lighten the mood inside the Emirates. Financially, it is a club’s wage bill that tends to dictate where they’ll finish in a given season, yet Arsenal have been bucking that trend — and in a good way, too.

Arsenal’s wages had hovered around the £230million mark for years, increasing just £11.5m between 2018 and 2023. That was, in part, due to their lack of Champions League football and the attendant contractual bonuses qualifying for it brings. Matters changed in 2023-24, as the return to Europe’s elite competition coincided with a £93m (40 per cent) increase in the wage bill. Squad investment and renewed terms for star players including Bukayo Saka and William Saliba pushed staff costs to a record high.

Even so, that still only served to bring Arsenal closer to their rivals. The wage bills at Manchester City and Chelsea have topped £400million in recent years, while Liverpool (£387m last season) are closing in on that mark, too. Arsenal are spending more than they ever have on salaries, yet still trail several clubs they have surpassed on the field recently.

In the past two seasons, Arsenal under Arteta have significantly over-performed their wage bill. In 2022-23, they finished as runners-up with only the Premier League’s sixth-highest staff costs. Last year, they were second again with the fifth-highest.

That’s only a partial telling of the achievement too.

Consider that in each of those seasons, Arteta’s men provided the sole meaningful challenge to Manchester City’s domestic dominance and did so, particularly in that first year, with a wage bill that was hardly in the same ballpark as the champions’. In that treble-winning season for City, their wage bill was £188million ahead of Arsenal’s. That gap narrowed significantly last season, both as City’s staff costs fell slightly while Arsenal’s jumped, but was still £85m.

In each of those years, Arsenal had more administrative staff than City — underlining the stark difference in how much the clubs were paying their players.

From transfer misers to one of the biggest spenders

Arsenal’s spending in the transfer market has ramped up in recent years, another sign they are stepping out of the long shadow of their stadium build.

While net spend isn’t actually all that useful a metric on its own, it is telling that in six of Arsenal’s first seven years playing at the Emirates, their net transfer spend sat in the bottom half of the Premier League. In those circumstances, continually qualifying for the Champions League year-on-year was no mean feat.

Since the 2018-19 season, with KSE assuming sole ownership, Arsenal have undertaken a clear shift in strategy, parting with a net £857.2million transfer spend. That’s the second-highest in English football, only trailing Chelsea, and not far shy of trebling the club’s net spend in the previous six years (£310.5m). On a gross basis, Arsenal have now spent £991.7m in the past five years, a sum which puts them ahead of both City (£970.3m) and neighbours United (£918.3m). Chelsea’s £1.458bn spend from 2019 to 2023 is still way off in the distance, but, at the Emirates, a club who were once relative misers in terms of transfers have considerably loosened the purse strings.

Up to the end of May last year, Arsenal’s existing squad had been assembled for £882.4million. That’s a big figure, though a look around the division helps explain why the club have felt the need to invest so heavily.

Even with the second-highest transfer outlay of recent years, Arsenal’s squad is only ranked fourth when it comes to the cost of assembling it, with each of the two Manchester clubs’ historic spending ensuring theirs were still costlier than the one at Arteta’s disposal. City and Chelsea had each spent over £1billion on their existing squads at the date of their most recent accounts, while the cost of United’s ticked over that mark in the first quarter of the current season.

Arsenal’s transfer spending has been lofty, but they’ve also been playing catch-up.

Shareholder loans are low-interest and now top £300m – but is that the whole story?

Recent months have seen a growing focus on shareholder loans, with Premier League clubs voting in November to bring them into line with how other associated party transactions (APTs) are treated.

Clubs will be required to account for shareholder loans at fair market value (FMV), meaning those that don’t currently do so stand to take a hit in the form of increased interest costs. That will impact not only a club’s bottom lines but, by extension, their PSR calculations too.

Arsenal now owe £324.1million to KSE, with the owner having provided another £61.9m in cash loans last season.

The club would therefore seem ripe for punishment under the amended APT rules. Yet Arsenal voted in favour of the changes. Manchester City, with no shareholder loans on their books, voted against them. If that seems strange, consider the nuances of these new rules. The APT amendments — which adapted prior regulations recently struck down as ‘void and unenforceable’ — dictated that only loans drawn down from owners after November 22, 2024, are required to be recorded at FMV. Any monies drawn down before then, while potentially subject to an FMV assessment, would not require adjustments to club figures.

Or at least they don’t right now. City’s seemingly never-ending courtroom tussles with the Premier League took on a new dimension recently, with the club seeking to have those November amendments declared null and void too.

Any further changes from that challenge remain to be seen but, at the moment, Arsenal’s existing £324.1m owing to their owners won’t incur increased costs. Any amounts drawn down since November 22 last year will have to be accounted for at FMV, but only those additional drawdowns. What could have amounted to a sizeable sum — at one point, there were suggestions that interest costs adjustments might be backdated across the entire span of the loans, something City (and any others in support of their view) are expected to push for if the November amendments are declared unlawful — getting whacked onto the club’s PSR calculation will instead be much smaller, if present at all.

If that seems unfair, then it’s worth considering what that money borrowed from KSE was actually for. Or the bulk of it at least.

The loans came on board in the 2020-21 season, but weren’t new debt. Before that season, Arsenal were already carrying £218million in debt, £187m of that being bonds related to the Emirates Stadium build. Those bonds were linked to gate revenues, which nosedived due to the pandemic. KSE stepped in and refinanced the loans, incurring a £32m break cost (the amount the club were charged for ending the loans earlier than planned) in the process, meaning just about all of Arsenal’s debt is now owed to their owners.

Before that refinancing, KSE was already owed £15million, and the total amount due to the owners has risen from £201.6m in 2021 to £324.1m at the end of last season. That extra £122.5m has primarily gone toward squad strengthening, so there’s an argument Arsenal have gained a sporting advantage. Yet that would ignore the price of KSE restructuring those debts in 2021; the £32m in break costs is currently far more than the club would have incurred in interest if the additional amount loaned since had been recorded at FMV, though that argument will wane the longer the shareholder loans remain in place.

What’s more, the loans from KSE aren’t interest-free.

In each of the past four financial years, Arsenal have incurred interest costs on ‘Other’ items (which includes the KSE loans), with these hitting £7.8m last season. As a percentage of the average loan balance across last season, that’s an effective interest rate of 2.7 per cent. Not market rate, granted, but not a free ride either.

What next?

Despite another annual loss, Arsenal’s most recent accounts reflect a club on the up.

With revenue soaring and those losses coming down, all as the team become much more competitive on the pitch, it’s clear the Arsenal of today are some way removed from the situation when KSE first assumed full control six and a half years ago.

Whether the relative largesse of the period since then continues remains to be seen. It is no secret that KSE, like other Premier League owners with sporting interests on both sides of the Atlantic, are keen to reach a point of sustainability. There’s little likelihood of their £324million loan being repaid any time soon, but Arsenal’s transfer activity this season points to slowing activity. They spent a net £21m in the summer, then nothing in the winter window.

Even so, it seems unlikely they won’t invest in the squad again for next season. Football is increasingly an arms race, so it would make little sense for KSE and Arsenal to spend as much as they have in the past half-decade only to then turn the taps off completely. For all the club’s growth, they’ve still not won top honours at home or abroad, outside the 2019-20 FA Cup; reining in spending would make that task rather more difficult, and you can be sure their competitors wouldn’t follow suit.

Promisingly, Arsenal’s day-to-day operating cash flow has ballooned recently, increasing the likelihood the first team can remain competitive even if KSE chooses to slow its own input. The club’s £176.1million cash generated from operations in 2023-24 might well be a Premier League high for that season, and takes them past the most recent figures at historically strong cash-generators Tottenham (£131.2m) and Manchester United (£121.2m).

Much of that increased cash came via their Champions League return. Arsenal’s upcoming two-leg quarter-final against Real Madrid might not be viewed with much envy, but getting to the last eight is estimated to have made the club at least another €100million (£84m/$109m) in prize money. Get past the reigning champions and they’ll bank a further €15m for reaching the semis, with €18.5m on offer for a spot in May’s final and a further €6.5m if they were to win it all.

Even if they go out against Madrid next month, this season looks to be the most lucrative European campaign in Arsenal’s history. Their estimated prize money from UEFA competition over the past two seasons, £164.4million, is almost as much as the previous six combined (£165.8m).

Arsenal fans might ask why the club didn’t invest in much-needed striking options in the winter transfer window.

It’s a valid question but they have spent sizeably in recent years. Perhaps no deal made financial sense in the winter. Those supporters can expect more spending from their club this summer.

(Top photos: Getty Images; design: Eamonn Dalton)