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Liverpool bust, Man U bust, Arsenal’s amazing profits. Compare, contrast, wonder and enjoy

By Tony Attwood

So having done my bit yesterday to put the boot in vis a vis Liverpool and Manchester IOU here’s what Arsenal FC have been up to

  • The completion of sale of 362 (2009 – 208) private apartments at Highbury Square and the social housing site at Queensland Road generated £156.9 million of revenue from property (2009 – £88.3 million) and allowed the Group to repay £129.6 million of bank loans.

Let’s note that – when all of Liverpool and Man U’s “profit” is eaten by the banks, we are paying off the loans taken out to develop the Ems

  • The Group’s property business is now debt free and generating surplus cash for the Group. The overall level of Group net debt had been reduced to £135.6 million (2009 – £297.7 million) at the balance sheet date.

I could run that again and again and again.  When Liverpool are paying £2.5m a week in debt fines in addition to interest (the fines are for being late paying off the debt) – and with the bank just wanting to sell the business without any regard to the future of the club, just read that previous statement again.

  • Group turnover increased to £379.9 million (2009 – £313.3 million) boosted by the income generated from property sales.

OK the property sales are one off, but still, it makes good reading, because it is that which has given us the best stadium in the UK.

  • Operating profit (before depreciation and player trading) in the football business was £56.8 million (2009 – £62.7 million) after increased wage costs.

£56.8m!!!!!  Now I can imagine someone picking up on this and running the headline “profits slide as Arsenal go five years without trophy”.   Ho ho.  Just read the first word in that little snippet.  We have profits that the rest of the league would die for.

  • Operating profit in the property business was £15.2 million (2009 – £7.8 million) reflecting the sales activity at Highbury Square.
  • Profit from player trading of £13.6 million (2009 – £2.9 million).

That’s a pretty nifty profit – especially when you look at the squad we now have.

  • Group profit before tax was £56.0 million (2009 – £45.5 million) and profit after tax was £61.0 million (2009 – £35.2 million).

Commenting on the results for the year, Peter Hill-Wood, non-executive Chairman, said:

“The most pleasing aspect of these results is that the returns generated in the property business during the year, particularly at Highbury Square, have allowed us to repay £130 million of bank loans and significantly reduce the Group’s overall net debt. We now have a debt free property business which is accumulating surplus cash as further unit sales are made at Highbury Square and which has three further property assets to realise over the next few years.”

Ivan Gazidis, Chief Executive, said:

“The competitive landscape makes it ever tougher to achieve success on the field and standing still is simply not, and never has been, an option for the Club. It is important that we continue to develop a vibrant and robust business with sufficient revenues to sustain success. The Group has made good progress over the last year and I am excited by the opportunities which we have in front of us.”

Compare and contrast with

Liverpool – teetering on the very edge

Man IOU – existing for the sole purpose of keeping the Glazers alive

Chelsea – desperately scaling back in order to try and meet the new financial regulations, and with nothing like the youth team promise that we have

Man City – spent billions, still not top of the league, and with no chance of qualifying for Europe financially even if they get there.

Tottenham – finances hidden in the murk of the Bahamas and Virgin Islands, not even got planning permission for a new stadium, and utterly dependent on the benefactor

The model which is made up of the youth policy which brought in the 11 year olds 7 and 8 years ago, the world wide scouting which is the envy of the rest of the world, and the financing of the new stadium in part by the sale of the old, plus the continuity of time in the Champs League, is unbeatable.

A word of thanks, perhaps, to Mr Wenger in all this, would not go amiss.

39 comments to Liverpool bust, Man U bust, Arsenal’s amazing profits. Compare, contrast, wonder and enjoy

  • munawwar

    our lord wenger… THANKYOU.. with such financial security you can focus on football for 10 years to come and knowing you are going to be competitive for all those years….

    which other club can say that? i wouldn’t want arsenal to go broke winning few trophies and then no future..

    this is what vision gets you..

  • dats

    Tony-doesn’t it feel great to be a gooner.
    Tell me, just what are the three further property assets mentioned? Are these separate from the Highbury Square development and any idea how much income will be realized upon their sale?

  • Rhys Jaggar

    There are a few notes of caution in the accounts, Tony:

    1. Players contracts include guaranteed rises in wages.
    2. Commercial and retail conditions were hard, so the profits really needed the sales of Adebayor and Toure.
    3. You lose quite a bit of money if you get knocked out of cups early.
    4. If the Euro weakens against the pound, ECL income will be less rosy.

    But you’re right, it’s a stupendously solid set of accounts…..

  • DFG

    Hi Tony,
    This really is a great site/blog compared to the others out there and I really enjoy reading it daily and sometimes also leaving comments. I find your articles to be well written, well researched and always informative. However, if there is a negative downside it has to be the reference “lord Wenger” I think that statement is the only thing wrong with this site/blog because he is not a Lord. Without doubt he is the greatest manager of all time and you could easily say he works “miracles” at the club. However, the reference to “lord Wenger” leaves this site/blog open to “bashing” from other sites/blogs. This is just my opinion. Apart from that, please keep up the great work that you are doing. THANKS:

  • walter

    Needless to say I like the financial results?

    I saw on the link someone gave under the last article where the financial results had been mentioned. And fans from teams like Leeds, Liverpool, crystal palace and even a Tottenham supporter came to tell us how they admired the way we did things.
    The Liverpool fan would trade the CL cup any moment to be in our position.

  • A Casual Observer

    LOL – We have won already, nothing can stop us! This is the start of a true golden era for our club – prepare for domination and happy, happy times ahead!

    By god, Wenger has more than earned his bronze bust – I feel honoured to be living through this phase of our club’s history and pass my support on to my children.

    This is going to be VERY worrying reading for the other big clubs who must now know that while they were busy spunking their future away on the next big thing, they missed the boat entirely.

    Enjoy your past glories chaps – the future is all Arsenal we are now THE power club in English football.

  • Richard B

    @ dats – The other sites (I think) are the old second hand car sales site opposite the Armoury Store, the railway arches futher round to the north and the block next to Holloway Rd tube station which was to be part of the redevelopment of the station before TfL reneged on the deal.
    What they are worth will depend on how they are used but I have a feeling that the Club will want them to be used for the benefit of supporters not just as cash cows. Although they could, of course, be both!

  • Mick

    Hey mate great article as always but i have noticed that u have your figures WRONG! (sorry bout the capitals i just thought ud notice it that way lol) Profit before tax has to be greater than profit after tax therefore maybe u have just got the figures in the wrong order?

  • Aaron

    I have epifanes about the club now and then, and this week has been a total “I LOVE ARSENAL” week. I’m totally infactuated by the club. I love everything about it. Our business, our youth projects, our ladies and partners. But most of all I’ve just realised how Lord Wenger could easily be the best Manager of all time. This isn’t about trophies but for single handedly changing the face of football. Literally re-writing the modern game. How much of this reflects on other leagues i do not know. But being the biggest league in the world, the premiership is forever changing under Lord Wenger. People might want to fight it, Judge and even take the mick. But you know what they will all be doing what we are doing. I love it, i ABSOLUTELY LOVE IT. And all this does is just make me want to buy more Arsenal Crap, buy more subscriptions. lol.

  • walter

    Mick, I think it has something to do with the tax office having to repay money that Arsenal had payed in the past and was too much? We got some kind of refund one could say.

    Well that is what I made of it.

  • t00farg0ne

    With the property business now debt-free that pretty much means that most of the income from that from now on is pure profit. Does anyone know the financial value of the properties are left to sell?

    Assuming that is a resonable sum, the operating profit continues and player trading turns in a profit or breaks even (which, considering sell-on clauses, an abundance of great youth players and a possible sale of one great player who will be replaced by an emerging youth-team talent, looks quite likely) Arsenal could be debt-free before the end of Wenger’s contract.

    One other question, £297.7m – £135.6m means debt reduction of £162.1m yet only £129.6 was stated. What was the difference?

  • Rhys Jaggar

    The debt figure quoted is NET DEBT, which is an amalgamation of debt and cash in bank/cash-like instruments.

    The actual debt is in the order of £260m, which is about £230m debt on stadium (comes down around £6m a year, accelerating slowly) and £26m odd on the old debentures.

    The cash has gone up this year as season tickets were renewed quicker than before.

    The thing you should know is this: the only debt left is the mortgage and the debenture and the cash holding is strong.

  • A Casual Observer

    What are our cash assets now i.e. what have we got in the bank to offset against the current debt?

    Anyone know?

  • Gf60

    I’m no accountant but having gone through the accounts in detail, we have so much of which to be proud. Especially getting the vultures at HMRC to give back 5 mill!
    How much of the profit can be put down to AW’s vision is debatable, I suspect more than a bit, and it will be interesting to see how the doom and gloom brigade react to these numbers. Doubtless they will still continue to call for AW’s head.

  • In terms of Wenger spending money on players, do remember this. On 1 September next year we will have to register our 25 again. If we kept the same squad we would have (I think) 26, because a number of our 20/21 year olds will now be over 21, and so in the squad.

    So we would have to spend and sell, and in selling we’d get some money back.

    I suspect even more money will go into youth development and world-wide scouting. Not sexy, but just look at Wilshere and the way we discovered the unknown Song, and Cesc, and the half known Theo and Carlos Vela. That’s where the money will go. More youth, more scouting, and for me, that’s absolutely fine.

    (Oh and that’s the first time ever I have not been wrong on a tax calculation)

  • gooner

    Have all the apartments at Highbury Square been sold? If not, how much more profit can we expect?

  • Richard B

    @gooner – there are 85 flats left out of the latest figures but some of them have gone since this set of books were closed. What the sale price of these is we will only find out in six months or a years time. But you can assume that we’re talking several tens of millions.
    The comment about being ‘debt free by the end of Wengers contract’ is an interesting one. The club can only be debt free by then if it chooses (probably at some penalty) to use all of its retained cash to pay off the mortgage in one fell swoop. It may well have enough money to do that in three/four years time but it might not make financial sense depending on interest rates and those penalty payments for early payment. But to be in a position to even think about doing it would be truly astonishing.

  • Another take on the figures. Anders Red, the highly recognised Man U blogger has done a very decent piece on our finances. Little dig at us at the end, but it is a very fair piece indeed. (Sometimes I wish I could be that balanced)

    http://andersred.blogspot.com/2010/09/arsenals-200910-results-overall.html

  • Terence McGovern

    Net Assets at £255 million.
    80 or so units left to sell at average price of around £400k(quick calc done on last years sales divided by units open to correction) so should be £30 mil or so to come.

    Some key issues to take note over.

    We have cash reserves of over £125,000,000!!
    Ok over £40,000,000 of that is held as guarantees for the Stadium financing and allocated towards the future development of other the property projects but wow!

    We are getting a shitty return of interest on our cash becaus eof the low base rate. In a sense we are being punished here so that the stupidly run clubs get better interest rates(Unless of course you are Liver-circling the drain-pool.

    We seem to have alot of money coming to us over the next year from debtors over £60 mil in fact which wasn’t elaborated on. I would imagine that they are glossing over this so as to pull it out of the hat next year when it will replace the astronomical property revenues so to speak.

    Turnover of £379 million! Well it is a record high and will certainly be significantly lower next year but until then it look great.

    A note should be taken that although we have a better deal now with NIKE it was part of the original deal agreement and thus still not great compared to our peers. From 2014 on we will be able to gain parity on this so more income there to be had.

    there is no doubt that our commercial revenue overall is poor but mainly due to long term front-loaded deals with Emirates and Nike that were born out of necessity. The Emirates deal is lesseneing each year until 2017 but once it reaches the end we can dictate terms there I am thinking. These guys are VERY cash rich and will not want their sign being taken down.

    I highly reccommend that everybody downloads the full pdf file from the club website. If you do not have adobe acrobat reader it can be downloaded in seconds free from:

    http://www.adobe.com/products/acrobat/

    Just click on downloads top right and follow your nose.

  • Terence McGovern

    As I think of it Tony.

    It is worth noting that despite the viscious, pathetic, masochistic, ill-informed, prejudiced, misbegotten, misleading, snide, glib, sad, spiteful, nasty, mean-spirited claims from a certain blog of average and ill-repute, The detailed report issued by the club quite clearly states that the uptake for season and club level tickets was markedly higher than the previous year by financial years end.

    Somebody’s nose is growing loooooooooooooooooonger!
    muppets.

  • PK

    Two red letter days for me. The day I chose to be an Arsenal fan (I forgot when) and the day Wenger became manager (28 September 1996). I am just hoping for one more day to complete the holy trinity of red letter days. The day the Arsenal Supporter Trust/equivalent hold 25% of the club shares, keeping it out of the hands of oligarchs and billionaires forever.

  • Paul C.

    It is interesting to take out the property development numbers and look solely at the football turnover, which has gine down sligghtly in the past year. This was due to fewer home matches in domestic Cup competitions and, crucially, the absence of a Champions League Semi-Final match compared to the previous season (season ticket prices were frozen as well obviously).

    It will be interesting to see how Chelsea’s numbers compare later in the year since they will have goen from a CL Semi-Final appearance to getting knocked out in the round of 16, denying them an even larger payday. Liverpool will have gone from a Quarter-Final appearance to getting knocked out in the group stages. And Utd will have gone from an appearance in the Final to a Quarter Final appearance.

    How our competitors fare will be very, very interesting.

  • Paul C, you don’t need to wait on the CL TV money, it’s published:

    http://bit.ly/aQJOPp

    Looking at the CL matchday impacts:
    United will have lost c. £3.8m vs. previous season for one missed game (no ticket income from the final goes to clubs)
    Chelsea c. £5.5m for the two missing games (small ground)
    Liverpool c. £3m for the two missing games (small ground, cheap tickets)

    anders

  • Shit. Can’t even spell my own username….

  • Terence McGovern

    PK:
    Hate to burst your bubble but unless the AST come up with £250-£300 million they wont be buying 25% of anything.
    Once one of those guys decides to make a move, there will be little the AST can do about it. I am not sure what the % is but once held a compulsory purchase order can be attained on all remaining shares at a premium price and then it is game over.

    That being said Stan has stated many times that he believes in the financial sustainability model and the plural ownership at Arsenal. he has just bought the St. louis rams and whilst he is wealthy and he wife even wealthier still, it is unlikely that he will make a move soon.
    Alisher Usmanov is a different kettle of fish. Vastly wealthier than Stan at about £8 billion net, he would not need to borrow to purchase the club outright although he may not make that distnction.
    Both parties have courted the fans approval so they know that a leveraged buy out will be like signing an “I am satan incarnate” declaration.

    Where I believe that we will be protected from a leveraged buy out is from the inevitable fallout from the Liverpool situation.

    When liverpool crash and burn(Oh happy day)as they surely will, the amount of public outcry both from within the game and from political circles will most likely give rise to new rules and regulations prohibiting the use of leveraged buy-outs of football clubs. I cannot see anybody within the game or within the body politic opposing this change.

    I should point out as I have many times that I am philosophically opposed to the workings of the AST. They have a paltry few shares but for PR reasons get preferential treatment from the hierarchy at Arsenal.
    Also on philosophical grounds I am opposed to the fanshare programme because as the ‘brainchild’ of the AST it seeks to purchase them increased voting power whilst being paid for by ordinary fans.
    To put it better, like any other political entity as the AST will increasingly come with each added share, they will be less concerned with those who paid for their power and more concerned with maintaining their position. Whilst you might say that the two are not mutually exclusive, when it comes to political bodies it rarely works out that way.

    think Gordon Taylor of the EPL players union or worse think Barcelona election promises and the deceit that comes with them.
    It is my firm belief tha tthe only reason that arsenal gave the go-ahead for the fanshare project is because they believe that the uptake will be negligeable.
    Beads for the natives in point of fact.

  • Caribkid

    While it’s a very rosy financial picture, the Net Debt figure is somewhat clouded as they have subtracted reserves to arrive at that figure. In fact, our debt is still somewhere around £250M, which consists of the amortized loan on the stadium and the Debentures which supported construction.

    However, it would make no sense to pay down these loans which still have 21 years to run at a fixed rate of 5.57 because of prepayment penalties, the low cost of the loan and the fact our match day revenues alone are triple the repayment requirements.

    Very healthy figures in the final analysis although a small worrying feature is the increase in % of salaries to income ratio. We should bear in mind however, that many of those salaries are been consumed not only by players but by the addition of executives which AFC have brought in to further establish themselves as a global marketing enterprise and which should result in additional revenue streams.

  • I wouldn’t worry about spelling, Andersred, I have been known to mistype Arsenal. Nice to have you along.

    Tony

  • Paul C.

    Andersred – thanks for that. There is also the matter of merchandising for those games as well.

    Looking at the TV and matchday numbers it would appear that Chelsea will have the biggest shortfall to make up, almost 13million (versus 11m for Utd and 9m for Liverpool), and that doesnt take into account smaller merchandising opportunities (especially for Chelsea, who have based so much of their marketing strategy on European success).

    What do people think of the over/under on Chelsea’s accounts this year? I would set the bar at a loss of 40million. Who thinks they lose even more than that (and that loss does not include the 18m spent on Ramires, which will go into next years accounts).

  • Terence McGovern

    Cheers for that link Andersred.

    well it has already started across the blogosphere.

    “how come we made so much money and didn’t buy a keeper innit”

    “all we are doing is making profit for whoever takes over the club”

    “All that money just goes into shareholders greedy pokets I tell ya!”

    In a tide of such monumental stupidity the only recourse is humour.

  • Terence McGovern

    Paul put me down for £44 million in the red for Chelski.

  • Paul C.

    Terence – that is their loss for last year as well – 44m.

    I am plumping for a slightly higher figure, around 50m loss. I just dont think the League and FA Cup double makes up for losses of Euro income.

  • Chelsea earned £4.4m more in PL TV money in 2009/10 vs. 2008/09. Add in €1.3m more in CL money and the positive exchange rate move and that’s another c. £1.9m. So media income will be £6-6.5m better. Offsets the lower matchday income.

    With United, remember “retail” is fixed through the Nike contract so the number of home games doesn’t impact that….

  • ugandan goon

    has any body, perhaps our own intrepid william the canine mcgraw, sought a quote from mourinho or sir alex on the latest figures, perhaps on just how important it is to win a trophy every year at all costs?

  • RedGooner

    Those numbers are simply sexy,
    Imagine in another year two the position this club will be in we can tell barcelona to shove their offers where the sun don’t shine for a long time to come.

    Feels good to be a gooner !!!!

  • Richard B

    Shares owned by Fanshare are not owned by the AST – they are owned by Fanshare subscribers and Fanshare will vote according to what Fanshare subscibers democratically wish for. There is an overlap between the two Boards (Fanshare and AST) but they are legally required to be separate.
    That’s not to say that fan ‘ownership’ is the be all and end all. Look at Barcelona – in some respects at least they appear now to be (off the pitch) a financial and PR disaster.
    Be careful what you wish for in terms of ownership.

  • Common Sensei

    @Terrence McG:

    I don’t know if you have realised but the links you are posting to the SkyTV streams are virus-loaded!

    Maybe it would be a good idea to check these things out before advising everybody to go watch the games there, as once you are infected with these things they are bloody hard to get rid of, and obviously any data stolen from your PC will never be recovered;

    Credit card details, address details, person details, passwords, photo’s and anything else on there are targeted.

    Please if you persist with giving out these dodgey links, also include some details on the risks of using them and some suggestions of virus protection options and after-infection advice.

    Thanks, I am sure you did not realise but still there is a massive risk here to other fans

  • nug

    Tony,how are arsenal doing financially compared to the likes of the other european giants (inter, milan, barca, real)?

  • Nug – I am not by any means an expert on European finances – the person to ask is Swiss Ramble http://swissramble.blogspot.com/ but from my more limited knowledge and very briefly

    Inter have said that the spending has to stop and that they are in a period of cut backs
    Barca failed to pay their players last June and are in a deep, deep crisis, with no way out
    Real are on another planet in that they seem to have a deep-rooted relationship with their bankers who will fund them no matter what
    Milan are known also for dodgy financial dealing, and like Chelsea will have a huge problem with the new financial rules