Arsenal: Behind the Numbers-Part 1 of a Special Report

The Emirates Stadium

Triplec1988, Proud member of The Gooner Forum

Over the past few summers growing criticism has surface in both the media and the ranks of fans regarding Arsenal’s spending habits and transfer activity.  Fans have grown anxious for Arsene and the board to splash out the cash and bring in a big name to prove that we are serious about challenging for the Premier League and the Champions League.  What Arsene and the board are aiming at though is something bigger than a huge transfer and substantial wages to bring in one star.  They are laying the foundation for the future success and stability of the club, a noble feat that will take both time and patients on the part of supports but will be invaluable for the club’s long-term future.

Arsenal Holdings PLC, the group that runs the board and owns the club, embarked on an audacious new project a few years back: Bring the Gunners into a new, state of the art facility, which has become known as The Emirates.  While it was accepted that much debt would have to be incurred to undertake the project, the board recognized that the benefits far outweighed the costs.  And while the financial strains of the move might be being felt, the benefits of the new stadium and resulting development of Highbury Square are also starting to work their way through the book, as noted in the end of year financial report for May 2007.

As the report states, Arsenal Holdings PLC saw a 40% increase in group turnover, or income (before taxes) in the first year after the move to The Emirates.  Much of this, as the board noted, was due to higher attendance (some 59,850 average attendants) for the first season as well as a number of non-Arsenal events hosted at The Emirates.  The club saw TV deal revenue fall, but noted that merchandise sales were up.  Furthermore, growth in commercial revenue was up as well £29.5 million as a result of Arsenal taking on Emirates Airlines as the shirt and club sponsor as well as continued work with the clubs other commercial partners such as EDF energy and Coca Cola.  It should also be noted that match day revenues for Arsenal’s first year at The Emirates were £90.6, more than twice of what was achieved during the clubs final year at Highbury.

While the group’s revenue was up, so were operating expenses.  This is attributed to a slight jump in pay-roll expenditures as well as the increase in the scale of operations of the group as a result of the move to the new venue.  The board also saw a jump in revenue due to profit from player trading.  At the end of the group’s fiscal year (May 2007), the board showed an increase in cash reserves to £77.2 million.  This is perhaps where the media might have gotten the rumored £70 million in available transfer funds.  However, it must be noted that the £77.2 million represents all of the group’s actual cash reserves, not just what has specifically been allocated for transfers.  This is what is available for debt repayment, wage negotiations and player transfers.  This number also does not reflect anything from this most current season due to the fact that this season’s report is not due to be released until September of this year.

As far as debt goes, the club noted that the total cost of the move to The Emirates Stadium was around £430 million, which was in line with the group’s forecast. Part of the long-term investment was financed by borrowings and during the 06/07 fiscal year, the group successfully completed the refinancing of these borrowings into £260 million of long-term fixed rate debt in the forms of bonds issued to investors rather than keeping the debt as bank debt.  In doing this, the group was able to achieve a lower longer-term interest rate, thus reducing future interest and payments.  It should also be noted that the repayment of the debt is over a substantial period of time, allowing the group the spread out the cost of repayment.

After a review how the move to the new stadium has effected the financial position of the club, what can we expect for the future stability and growth of the club and the group?  Come back next Tuesday, when I will take a look as the prospects for the future and what both the Club and the supporters can expect to happen in the wake of our move to The Emirates.

Don’t forget to join us at The Gooner Forum and have your say on all things Arsenal.

8 Responses to Arsenal: Behind the Numbers-Part 1 of a Special Report

  1. JP says:

    about nine months too late mate..

  2. alanc says:

    as you said in the last paragraph the debt is spread over the longterm(25 years)
    at 19 million both time and payment was confirmed by fizman last week on arsenal.com and tv now this is what bothers me we have over 70 million in cash reserves and this does not include this years figures including the biggest tv deal in history of prem league a decent champions league run again around 90 million from Emirates income season 07/08 and diarra money 5.5 million from his move to pompey on top of that we have our two biggest wage earners of the bill henry 10million and freddie 4 million a season now i know we have debt to pay out of the 70 million(even if we paid the “mortgage” of 19 million for 06/07 prior to the release of that figure) so what bugs me is how we are being treated like assholes who have no brains i’ll put it like this the normal person has a debt of say 250,000 for a house they say earn between two bread winners 45k a year they pay the mortgage but they still have 2 cars eat well go on holidays pay for season tickets and get the kids ps3 etc.. in otherwise the club has a long term mortgage that is paid with loads to spare and are still raking it in HOW THE FUCK ARE WE STILL CRYING POVERTY PLEASE TELL ME!!!!!

  3. Sinbad says:

    But What about the money we made from the sale of players? Where is all the money going coz its not on new super super players is it?

  4. Dave says:

    Please explain why we should spend big to beat Liverpool. Not all big names provide Torres first seasons eg Reyes. We have a small squad but a guy like Diarra won;t hang around to challenge for start. Do you really think that Gattuso or Messi or Ronaldino would like to sit on our bench . We have the smallest squad in the league, but still people leave because they want first play.
    I agree that a guy like Gerrad would be great so would torres, as would Ronaldo but I am actually quite happy with our team.
    WE WERE NEVER EXPECTED TO COM THIRD. Yea we should have won the league , if not for Eduado maybe we could have . If Hleb did not each so much Ice cream we could have. If Jens had not made his blunders we could have. please support the team at least 90% give their all every week.
    I doubt that Flamini wodul have had such a great season next year, and Hleb is over rated and only plays for scouts.
    Roll on to the 2009 Double

  5. mjc says:

    Alanc: and when your “normal person” goes out to buy a new car, does he walk onto the forecourt and say: “I’m loading I am – money’s rolling in – charge me what you want for my new car – I can afford it…”

    Or does he he plead poverty a little to get the best deal?

  6. alanc says:

    mjc good tought you seem to think crying poverty is best way to get value for money but the bottom line is we dont even go to the garage or noot the bmw/mercedes one we go to the lada/skoda one anyway the point is we never seem to spend any money over the past 10 years are total gross transfer spend is under 50 million that is a joke and yet i get the same propoganda when i have to renew my seats each season we will get “super” players in and you will like this and that its left a bitter taste in my mouth because we are getting the wool pulled over our eyes.you see we have the money and we need players maybe 3/4 top players and we will go close look at utd last year they won the title and went out and got hargreves/nani/anderson and tevez at a total of around 70 million now our figures and utd’s are very much the same maybe they make 5 million more in profit tops so how come they can win league and then improve even more you see arsenal’s board are in comfort zone once we get in the champions league each year and spend fuck all they must love wenger for that.i’ll leave with this thought for you all remember 95 when bergkamp and platt signed the buzz waiting for the season we won the double and 02 when sol,van bronk../jeffers etc signed we win double now some of the players were not great but the transfers gave the fans and club a great lift as the season started,transfers are great for making team stronger and lifting the buzz for the season start

  7. alanc says:

    sorry we did not win the double in 95/96 but the buzz when the arrive was tops but what i meant to say was summer 97 overmars/petit/etc.. again top buzz and then we win the double you know what point im making

  8. Good article, well written. I hope the second installment is as informative. I also hope more of our fans will take the time to actually read it instead of indulging in the the hysterics of transfer speculation.

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