Nicolas Pepe’s decline in value a key factor in Arsenal’s £52m losses

Nicolas Pepe playing for Arsenal during the 2020-21 Premier League season

Nicolas Pepe’s dramatic decline in value contributed to around £18 million of Arsenal’s losses last season, which stood at more than £52 million overall.

Arsenal’s latest financial accounts, for the year ended May 31 2023, show that “impairment write-downs on certain player registrations” amounted to £18.1 million.

These losses are believed to be primarily related to Pepe, who became Arsenal’s record signing when he joined the club for £72 million in the summer of 2019.

The winger soon fell out of favour at the club and eventually had his contract terminated in September last year, before he moved to Trabzonspor. He has since scored two goals in nine games for the Turkish side.

The total cost of Pepe’s ill-fated transfer to Arsenal from Lille is thought to be significantly more than £100 million, including his transfer fee and wages.

The move for Pepe was led by Raul Sanllehi, Arsenal’s former head of football, who abruptly left the club in August 2020.

Earlier in that same summer, former head coach Unai Emery said he had wanted Arsenal to sign Wilfried Zaha from Crystal Palace instead of pursuing a deal for Pepe.

Arsenal’s latest accounts show that, excluding the exceptional costs of the impairment write-down, they made a loss before tax of £34 million last season, down from a loss of £45.5 million the previous year.

This improvement in underlying results was largely the consequence of their return to Europa League football and their excellent campaign in the Premier League, in which they finished second.

Football revenues for the year rose to £464.6 million, up from £369.1 million in the 2021/22 season.

Arsenal’s finances have been significantly boosted this season by qualification for the Champions League for the first time since the 2016/17 campaign. The extent of that boost, which will become clear in next year’s accounts, will depend on how far Mikel Arteta’s side progress in the competition.

Arsenal want to return to a “self-sufficient” financial model but know that consistently qualifying for top European competitions is the only way to do so. This need to have a team good enough to reach the Champions League has driven their huge investment in Arteta’s first-team squad in recent seasons.

The deal for Pepe is regarded by many as perhaps the worst in the club’s history. Following Emery’s sacking in November 2019, the winger showed glimpses of his talent under Arteta without ever producing the consistency that was expected of him.

He scored 16 goals in all competitions in the 2020/21 season but soon lost his place in the side, in part because of the rapid development of Bukayo Saka. In 2022/23, Pepe was loaned to Nice.

Arsenal’s transfer record has since been broken again by the £105 million deal that brought Declan Rice to the Emirates Stadium from West Ham United.

Pepe is therefore now the second most expensive player in the club’s history, marginally ahead of Kai Havertz, who cost £65 million when he moved from Chelsea last summer.

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