Arsenal are set to unlock a £150m transfer prize with Emile Smith Rowe on the verge of joining Fulham.
Smith Rowe, 23, is a Hale End graduate and supporters will be sad to see one of their own leave the club.
However, most fans agree that it is the right time for the attacking midfielder to move on and get the regular football that he has missed at the Emirates in recent seasons.
Fulham are believed to have offered Arsenal £30m for Smith Rowe, rising to £35m with add-ons.
In what is becoming a major trend across the Premier League, he is not the only homegrown player who could be on his way out Arsenal this summer.
Reiss Nelson and Eddie Nketiah have both been linked with moves away from Arsenal too, with valuations of around £30m and £50m respectively.
Why are clubs seemingly prepared to let academy products leave before other players? The answer lies in the Premier League’s Profit and Sustainability Rules (PSR).
Emile Smith Rowe to provide £150m PSR boost
Under PSR, clubs are allowed to lose a maximum of £105m over a rolling three-year period.
However, the calculation cannot be made simply by looking a club’s publicly available accounts, as a number of costs are deductible from the equation.
What’s more, the PSR calculation is based on amortisation rather than the headline transfer fee figures – such as the £30m quoted for Smith Rowe.
Amortisation in football refers to the process of spreading the cost of a player’s transfer fee over the length of their contract – or up to five years – for accounting purposes.
When a club receives a fee, however, it is registered upfront for PSR purposes.
So, when a player is sold, they free up up to five times the amount they were sold for in PSR headroom.
PSR is also calculated based on profit on players sales, as opposed to just the total fee.
For academy players like Smith Rowe therefore who have no original fee associated with them, any sale price is registered as pure profit.
So, Smith Rowe’s £30m upfront fee will theoretically allow Arsenal to make £150m of amortised signings this summer without effecting their PSR calculation – for this year at least.
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TBR Analysis: Are Arsenal PSR-compliant?
Arsenal owner Stan Kroenke has always emphasised sustainability, which has left the club in a positive position in terms of PSR.
Most analysis suggests that they could afford to post around £90m worth of losses in the 2024-25 financial year and remain compliant with PSR.
That means that, with Riccardo Calafiori set to become their first signing of the window, Arsenal fans can expect more spending throughout the summer.