The European Blueprint – How Market Strategy Can Help Arsenal Keep Up With the Big Gunners

Despite last night’s positive performance at the Hawthorns, Arsenal are threatening to slip behind the domestic competition both on and off the pitch.

For clubs like Manchester United, Manchester City and Chelsea, flexing the financial muscles has become a familiar custom, wrapping up the transfers of Sancho, Grealish and Lukaku respectively for enormous fees in recent weeks.

The Kroenkes, however, have been far from tight-fisted so far in the market. The loathed owners have parted ways with around £130 million to strengthen the first team ranks already, with the suggestion of one more potential arrival in the pipeline before the curtain call.

These additions still fall some way short of the anticipated ‘squad overhaul’ prophesied by many following Arsenal’s slump to a dismal eighth place last season, a proposition that has proven difficult given the lack of outgoings as of yet.

Trouble offloading assets is far from a new phenomenon for the board. The Arsenal faithful will remember having their fingers well and truly burned with the free departures of both Alexis Sanchez and Aaron Ramsey in recent times, two of the clubs greatest players during the Emirates era. Edu has since voiced his commitment to offering long-term deals to players approaching contract expiry to protect value, hence the latest extension for Granit Xhaka following the breakdown in talks with AS Roma for a transfer to the Italian club.

Whilst this adapted strategy certainly represents progress on the naïve business Arsenal fans have become accustomed to in recent times, the club will without doubt need to be much more shrewd moving forward to keep pace with the Premier League’s heavy hitters.

So what sort of business model could see Arsenal keep up with the financial firepower of their rivals?

Let’s first take some inspiration from Germany. 

Borussia Dortmund are, at least historically, far from a rich club. In fact, the German outfit were staring down the barrel of bankruptcy as recently as 2004, owing out over £100 million in debt and reliant on some serious trust from investors to steady the sinking ship.

In a bid to reverse fortunes, the transfer strategy of signing star players and offering lavish contracts was quickly abolished, replaced with an enhanced emphasis on youth development and opportunistic spending. The vision of newly appointed chief executive officer Hans-Joachim Watzke was to sign and develop young players collecting modest wages, with the primary focus on resale value and squad reinvestment in an attempt to financially stabilise the club for years to come.

More recently, Dortmund have splashed over £40 million on two players already in the 2020/21 summer window, and are still able to boast a profit of over £50 million following first team sales. They also lay claim to the most valuable asset in world football, a young Norwegian forward who has conceivably added another 0 onto his price since signing for a mere £18 million from Red Bull Salzburg in late 2019.

Some huge names in world football have come through the ranks at Borrussia Dortmund before moving further afield for huge fees. Jadon Sancho, Pierre-Emerick Aubameyang, Christian Pulisic, İlkay Gundogan and Henrikh Mkhitaryan have all departed the club in recent times for a combined total of around £254 million, and profit of £205 million.

Those impressive figures represent players heading to the Premier League alone. Dortmund’s most valuable sale of all time actually came from Ousmane Dembele, who cost Barcelona an eye-watering £121.5 million in 2017 after signing for Dortmund for £31.5 million just a year prior.

Profit is profit, but what’s all the more impressive is the high domestic and European performance levels maintained on the pitch. Borrusia Dortmund haven’t been out of the top four in the league since 2015, and managed to pick up back to back Bundesliga titles between 2010-2012 under current Liverpool manager Jurgen Klopp. Since becoming re-acquainted with the Champions League in 2011, Dortmund’s European success includes reaching the knockout stages 7 times, including 4 visits to the quarter finals and beyond.

Whilst a formidable model from a business standpoint, how is it that Dortmund have managed to maintain their European pedigree whilst constantly selling their best players?

Lining up young, talented replacements before you sell.

Let’s travel to Italy to take a closer look at this strategy.

The Italian Serie A is a league in financial turmoil. Even the Scudetto winners Inter Milan are being forced to offload assets at a frightening rate just to avoid liquidation, and the total debt amassed for all teams is believed to be around the €4 billion mark.

One club that sits in a relatively comfortable position throughout the Italian crisis is Atalanta B.C.

Gian Pierro Gasperini – “I feel at home here, and I only see Atalanta getting stronger in the future. Two years of Champions League football has helped us to improve on both a technical and mental level. The club has grown both financially and gained experience. The Percassi family has become even better and stronger. And I see financial problems among our competitors, while our balance sheet is very strong. Now it’s time to make the most of our advantage.” (L’Eco di Bergamo)

Since the arrival of Gian Piero Gasperini in 2016, Atalanta’s competitive performance has soared season on season. With balanced expenditures and a truly exceptional academy setup, the Nerazzurri were a club waiting to blow, and the additional revenue gained from re-entry to Europe, as well as impressive domestic campaigns, has helped bridge the financial gap to Italy’s elite.

Borrusia Dortmund’s strategy of buying potential at low-risk wages/fees to then sell on at a sizeable profit is once again apparent here in Atalanta. Amad Diallo, Cristian Romero, Pierluigi Gollini and Timothy Castagne are a few of the names that have headed to the Premier League from Atalanta in the last two summer windows alone. Having cost the Italian side only £24 million in total, the sum accumulated from their sales has been around £93 million.

This figure once again excludes the fees amassed from sales to other leagues, with the likes of Frank Yannick Kessié, Alessandro Bastoni and Dejan Kulusevski all leaving for domestic rivals, the latter costing Juventus upwards of £30 million despite only making 3 substitute appearances in his time with Atalanta.

A short while after wrapping up a £43 million deal with Tottenham to sell Argentinian defender Cristian Romero this summer, Atalanta unveiled their own new signing –  Juventus’ talented Turkish centre half Merih Dehmiral, for £21 million.

In similar fashion, when Inter Milan registered interest in marksman Duván Zapata as a replacement for departing forward Romelu Lukaku, Atalanta reportedly agreed a deal in principle with Chelsea for young centre forward Tammy Abraham. Only after Inter switched their attention to Edin Dzeko did Abraham sign for Jose Mourinho’s Roma.

Although sides like Dortmund and Atalanta are selling clubs, pro-activity in the market and effective academy promotion ensure that they are never short in the first team. Replacements are always already at the club, or in the late stages of negotiations, when these teams sell. This promotes continuity and consistency in the dressing room and on the pitch, allowing for a steady stream of income at the club without sacrificing performance levels. Ousmane Dembele leaves Dortmund, Jadon Sancho joins. Jadon Sancho leaves Dortmund, Donyell Malen joins. All the while Dortmund make hundreds of millions.

The strategy, although effective, is not without its risks. Heading back to the Emirates, we can see how important impeccable recruitment will be to the future of Arsenal football club.

It may seem like stating the obvious to suggest that clubs should be targeting cheaper players with potential and resale value, but you’d be surprised at how many sides – Arsenal included – get it completely wrong. Arsenal fans will have far from fond memories of names such as Stephan Lichsteiner, Sead Kolasinac, Petr Cech and Willian in recent times, who have proven to be nothing other than a burden on the club despite arriving for minimal or no transfer fee.

But we can see something of a shift in the way Arsenal target players in recent times. Kieran Tierney, Gabriel Martinelli, Gabriel Magalhães and Albert Sambi Lokonga are all players who have, or almost definitely will, raise their transfer value considerably from the time of signing. These are players who have all arrived at the club for fees of less than £25 million each, and collected minimal wages whilst showcasing their talent on the Premier League stage. 

There are bound to be some slip ups along the way. Buying based on potential is naturally a risky game, but with low transfer fees and wages, it doesn’t always cost a lot to find out. Take for example Matteo Guendouzi and Lucas Torreira. These were two inexpensive players who have had good seasons with Arsenal in the past. Now having fallen out of favour, it is likely the club will recuperate their original investment despite what many would consider a ‘failed move’ in the long term.

Arsenal have all the foundations of a club that can compete with the best. Hale End is producing some of its best ever talent in Emile Smithe-Rowe and Bukayo Saka, both joining the first team fray and making a lasting impression. The academy production of sellable assets is just as important, with youngsters like Joe Willock, Eddie Nketiah and Ainsley Maitland-Niles helping generate the club extra income. Miguel Azeez and Folarin Balogun will likely be the next duo to prove their worth in the first team, so the stream of both income and players continues.

Edu and co will, however, need to be a lot smarter in their external recruitment. If Arsenal want to bridge the financial and performance gap between the top clubs in England, they can’t afford many more expensive slip-ups. The £72 million outlay on Nicolas Pépé appears all the more absurd with each uninspiring performance, and the obsession with signing ageing players for free on bumper contracts has to end. 

Wrapping up the deals for both Martin Ødegaard and Aaron Ramsdale, as much as it may pain some Arsenal fans to admit, is intelligent business from the club – and a grand step in the right direction. Norway captain Ødegaard had only six months to adapt to the Premier League and new team mates last season, but managed to impress in his short stay, improving with every game he played. At 22 there is almost certainly more to come from the playmaker, and the £30 million fee could look like a bargain in years to come. Ramsdale clearly has plenty of ability and will only improve over time. Using our back-up goalkeeper slot to help fill homegrown criteria is also a smart move from the board.

This theme of young, talented signings isn’t isolated in the last week. Albert Sambi Lokonga, Nuno Tavares and Ben White have all arrived this summer in an encouraging window for the Arsenal faithful, offering a clear long term vision of building with the future in mind. It’s no secret that the squad still requires a whole lot of work, but targeting this profile of player should improve in-house personnel as well as providing sellable assets for years to come.

In short, following the model of both Dortmund and Atalanta may well be what keeps Arsenal afloat in the ‘top European club’ conversation. Although this window seems an underwhelming one for some, it’s a necessary step towards returning Arsenal to former glory. It’s a bit of a storm at the moment, but patience, belief and effective planning will get us back to where we need to be.