Financially, we’re in the best position…

As the announcement that Portsmouth have become the first Premier League club to go into administration and news that Man United’s debt is approaching the 1 billion mark, it’s amazing to hear the financial results that have come out of the club today.

Our original debts at the time of the stadium stood at around £390m, with a 25 year plan to clear out the debts. News today from the official site has informed us that after just 5 years in the Emirates, we have managed to reduce our debt to £203.6m (that was in November 2009 too), which means we’ve nearly halved our debt in 5 years, and puts us about 8-9 years ahead in terms of debt management.

That is seriously amazing news to hear, and Peter Hill-Wood said this:

“I am pleased to report that the Group has delivered another profitable set of results for the first six months of the financial year.

There has been remarkable progress at Highbury Square over the last twelve months and it is clear that the next couple of years will see our property activities delivering surplus cash. This is very good news, although I would not want to speculate on the exact quantum or timing of this.  How we will use this surplus remains undecided but, in addition to investing in the team, I think we will examine investment in Club projects and infrastructure, both in and around Emirates Stadium, which will provide a long lasting benefit to the Club and our tremendous, loyal supporters.

Looking ahead, our strong financial base allows us time to take a measured and diligent approach to determining the Club’s direction beyond our move to Emirates Stadium and into the next phase of growth.”

Now of course, we’ve probably not spent as much as we would have liked to on “top, top” players, but we’re if it were not for the horrendous injury run we’ve had, there is no reason to say that we’re not competing at the top, year in and year out. We may opt against adding a player or two “just for the sake of it”, but the theory is that as soon as we remove the debt completely, then the profit we make every year can go to player transfers.

The summary on the Arsenal web site indicated this:

  • Profit before tax of £35.2m (2008 – £24.5m) with increased contributions from both the Group’s football and property businesses.
  • Sale of 261 apartments at Highbury Square generated revenue of £96.6m (2008 – £58.4m) with all proceeds used in repayment of the project’s bank debt.
  • The Group’s property business recorded a pre-tax profit of £9.3m (2008 – £4.9m).
  • Pre-tax profit from the Group’s core business of football increased to £25.8m (2008 – £19.7m).
  • Completed first stages of a programme of capital investment in the appearance and “Arsenalisation” of Emirates Stadium.
  • Further significant investment in determined policy of re-signing first team players to new long-term contracts.
  • By 30 November 2009, the Group’s total net debt had been reduced to £203.6m (31 May 2009 – £332.8m).
  • Since 30 November, there have been a number of further positive developments in relation to the Group’s property projects:Of the 655 private apartments in the Highbury Square development, sales have now completed on 524 units with a cumulative sales revenue value of £217.0m.
  • The balance on the Highbury Square bank loan has been further reduced, from £35.7m at 30 November, to £12.9m (31 May 2009 – £123.6m).
  • Sale of part of the Queensland Road development site means that the Group’s other property activities are now debt free.

Some of the highlights of the report indicate some significant reductions in loans – notably, the balance on Highbury Square is nearly zero (will be by the summer) and all other debts are paid off. We will go into next season with only one outstanding debt, being the loan for the stadium.

One very interesting thing is that the groups total net debt had been reduce to £203.6m by November 2009 and since November 2009, the notes say there have been a number of “positive developments” in relation to the property projects. The total revenue has now reached £217m and another £75m is expected before summer.

Many people believe that 100% of player sales go into a “special pot” only reserved for player purchases – this is true in that sense, but this pot is also used for the re-signing of players and player wages, something which people forget. The re-signing of Van Persie and other keys players for example is the same money that we received for the sale of Kolo Toure.

In a world dominated by short term gain and a must win now or else attitude, it is refreshing to see our beloved club bucking the trend and striving long term to be the biggest and the best. Come on you Arsenal…

  • dampatti

    The day Pompey go into administration, we post these figures. I love it to be honest. The empty trophy cabinet for the last few years will be worth it once we regain control of our destiny. United are absolutely screwed in the long term. Chelsea’s oil money won’t last forever, what happens then? City, the same. The future is Arsenal, both in terms of young footballers maturing and being financially secure. In fifteen years time, after several more Pompey style disasters, Arsenal will soldier on and continue to dominate. Congratulations to Mr. Hill-Wood, Mr. Wenger and all those involved in giving my club a long term future. The future is blinding.

  • sycicsid

    This is how to run a football club. We didn’t buy a cup and go into administration like Pompey, we don’t run the club at a loss for their sugar-daddy, like Chelsea and City, and they haven’t had an American buyer come along and borrow heavily to buy the club and struggle to pay off the interest like Liverpool & Man U.

    Never mind the next decade, Arsenal are set-up for as long as the Emirates will stand. This was £35m in SIX months while paying off debt.

  • devday

    Dampatti – exactly what I think and well phrased!

  • devday

    @sycicsid – spot on.

    When we moved into the new stadium, it was projected for 25 years, but now, I wonder how many more years we’ll have of debt!?!

  • Sam

    Like I’ve said before, I love Arsenal for its financial management. This is the way any business, including a football club, should be run.

    Some really stupid blogs are using this information to prove their point againt Gazidis, calling him “con artist”. According to them, they’re paying off the debts in order to sell the club! They couldn’t be any more financially iliterate & wrong.

    Let’s kick some Stock ass tomorrow!

  • vj

    yeah my team for tommorow
    SAGNA Gallas Vermalen Clichy

    Song Ramsay Fabregas

    Nasri Bentdner Walcott/eboue

    Subs Fabiaski silvestre denilson eboue/walcott rosicky eduardo traore

  • Nick

    Great news for every Arsenal fan. We will never suffer the fate of Pompy or Leeds thanks to the club being run the way every club should.

    Couple that with laughing at Adebayor getting a 4 game suspension for his sending off against Stoke.

    What a great day!