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…