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Has Arsenal borrowed too much?

Robert Peston | 00:00 UK time, Tuesday, 14 July 2009

I've obtained a copy of the financial analysis of Arsenal that was made by the investment bank Lazard Brothers in support of Alisher Usmanov's proposal that the club should raise up to £150m in a rights issue.

It's a chunky 35-page document. But its conclusion can be summed up very simply: Arsenal has too much debt to pose a serious challenge to Europe's biggest clubs; or to use the jargon, it is over-leveraged, too thinly capitalised.

This is a verdict that has been rejected by Arsenal's board, which has been advised by NM Rothschild.

The North London club's directors argue that paying down debt would have only a marginal impact on the availability of financial resources.

Emirates stadium

Of course, as an Arsenal-supporting BBC journalist, I couldn't possible take sides in this dispute between the Uzbekistani plutocrat and Arsenal's directors.

But some of you will be interested in Usmanov's point of view.

Here are a few bullet points from the Lazard document:

1) It believes that Arsenal's earnings before interest, tax, depreciation and amortisation (EBITDA) will fall from between £55m-60m in 2009 to £35-40m in 2010. The most striking contributor to this squeeze that it cites is a 12-14% increase in costs to £179m "as a result of players being compensated for tax changes and a number of step-ups in wages for individual players".

2) It predicts that cash flow will fall by more than that because of some pre-payments on assorted deals that were taken in 2007.

3) It says that Arsenal's fans are already paying 40% more than the average for the big four English clubs for match tickets and 24% more for season tickets - implying there's little scope to increase gate revenues, especially in a recession.

4) It calculates Arsenal's gross average annual spend on new players as £18m, compared with £37m for the big four; and the net annual spend, including sales, as precisely zero, compared with a £20.2m big four average

5) Perhaps most germanely of all, it fears that redevelopment of Arsenal's former Highbury stadium into luxury apartments may not turn out to be profitable - and that refinancing £140m of property-related debt over the next couple of years will be neither cheap or easy.

So Usmanov - the second-biggest shareholder in Arsenal with a 25 per cent stake - suggests that investors stump up a maximum of £150m via a rights issue of new shares.

This would provide additional funds for Arsene Wenger to augment the playing squad, and/or pay off some of the property debt, and/or pay down a substantial portion of the £242m of separate debt incurred to fund the development of the new Emirates stadium.

As I say, Arsenal's board has said no to all this, following detailed scrutiny by bankers from Rothschild - which included those bankers sounding out the most important individual at the club, Arsene Wenger.

The advice to the board from Rothschild was;

a) paying down the Emirates-related debt would save a maximum of £5m a year;

b) there are better ways to rehabilitate the Highbury redevelopment, including a putative cunning plan under negotiation right now - and even if the worst came to the worst, there should be no direct financial contagion to the club, since the providers of the property loans have no recourse to the footballing assets;

c) perhaps most controversially, the chaps from Rothschild don't believe Arsene Wenger is seriously constrained by lack of finance in his ability to develop the playing squad - and, more importantly, they don't believe that he feels fettered (if you see what I mean).

All of which would be described by some as a courageous blocking tackle: turning down equity finance during a sharp recession, and while the worst conditions in living memory for property developers prevail, well that's quite ballsy.

Comments

Page 1 of 2

  • Comment number 1.

    Sounds like the answer is YES Robert!

    Anyone think NO?

    Next football club please.....

  • Comment number 2.

    Football isn't about making money its entertainment, although the Bankers of the world have given us some of the best entertainment since the 1930's albeit very dark humour, their advice with regards to Wenger shows how much they actually know about reality. For my sins I support Newcastle United who were probably advised by Bankers - Look where we are now!
    Unbelievable

  • Comment number 3.

    Never mind the news on BA pilots taking a pay cut then... Just report the stories that matter eh?

  • Comment number 4.

    Aren't Tottenham fans lucky to be spared all of these dilemmas?

    http://www.knowingandmaking.com/2009/07/economics-of-arsenal.html

  • Comment number 5.

    "..Arsenal has too much debt to pose a serious challenge to Europe's biggest clubs.."

    Really? And since when have figures had anything to do with football? Try as you like, and yes of course it helps and has "worked" on a few occasions, you can't buy success, there's more to it than just that. I think Mark Hughes will show that next season.

    Arsenal have a huge following and will always sell seats. Yes, tickets are expensive but i'd rather pay that and be entertained than pay less and watch anti-football at places like the bridge.

    Usmanov wants the club and wants us to think there's a huge money crisis.

    We may have had a few lean years but getting to the semis of the FA Cup and CL surely means we do "pose a serious challenge to Europe's biggest clubs".

  • Comment number 6.

    all the top clubs are in humungous debt, look at Man U , look at Liverpool, Man City and Chelsea have rich sugar daddies, the rest cant compete and have gone bust trying (Newcastle, Leeds, Blackburn etc etc, it is not sustainable, but it has turned into a bankers plaything now , with whoever trying to syphon off or look good into the bargain.
    and the russian is looking to increase his power at Arsenal, funny how you spin it eh

  • Comment number 7.

    Robert:

    Yes, I think that Arsenal has borrowed to much money...

    ~Dennis Junior~

  • Comment number 8.

    Investing in football clubs is like the "Angels" who put money into new West End shows, but with even less chance of making a profit. It's a hobby for rich men and devoted fans.

  • Comment number 9.


    Interesting one, Robert, many thanks for this midnight posting ( and gl kingston, comment 2 should stop taking the world too seriously and recognise a 'hobby posting from our valued correspondent)
    Sounds like Usmanov is clearly engineering a position to increase his stake/persuade the current Board of his virtues. Presumably a Rights issue would dilute the holdings of the current Board (unless they took up the new shares themselves...my financial expertise ends somewhere north of ISA's)and thus play into his hands.
    No club can buy continual success, and Wenger's philosophy provides a more interesting ride. Ultimately the 'buy success' approach results in the gross spectacle of Ronaldo being unveiled at Real....not a pretty sight.
    Now let's have an insight into the finances of the other big clubs

  • Comment number 10.

    This is a good article Robert and calls for a closer look. My concern is that arsenal is still doing good financially and has a bright future. Reason-Usmanov is very much interested in this club, Kroenke on the other side is busy increasing his shares. I think there is a game of business somewhere but i guess you want to do it with a promising partner like Arsenal FC. I could be wrong....

  • Comment number 11.

    Apparently speak to any Arsenal fan and they are not in debt...........all good then at the new library!
    We may have a "sugar daddy" at the bridge but what Arsenal would not give to have one of these eh!
    Usmanov is not that man and will not fund you lot, so what happens now? Arsene has no money to improve an already weak squad and the best players are spilling out of the Emirates faster than your fans on a european cup night, they are not stupid, they can see nothing moving forward for many, many years and so want a bit of the top action elsewhere.
    Enjoy the Europa cup next season, 2010/11, cause Man City are taking your champions league place at the end of this season.
    Couldn't have happened to a nicer bunch of supporters.

  • Comment number 12.

    Robert

    A football club with debt!!! Now that real explosive reporting there!! I think you may be on to something with this. I have heard the banks may have a few issues also!! Could be a scoop for you there also.

  • Comment number 13.

    I am not an Arsenal fan, but watch them from preference when I watch English football. They play attractive football, but for me have posed no serious threat to win the EPL for the last two years.
    I love Wenger and think he has and hopefully will continue to provide this standard of football for years to come.
    However, if Edgware Road truly think we pose a major threat to top European clubs he is deluding himself.
    English clubs the top four in particular do have financial advantages over most clubs in Europe due to Sky and other sponsors.
    At the moment Arsenal have too many good, but not great youngsters in the team, you cant lose Henry, Flamini, Hleb, and replace with Theo, Denilson Eboue and improve your team.
    Investment in experienced players is essential to retain Arsenals presence as a top four club, this seasons spending add up to another year without a chance of the EPL.

  • Comment number 14.

    yes, they have borrowed, but is it too much??? no way... the money they borrowed for stadium is paying off itself, and may be the highbury development might seem a bit cheeky at this time, but come around 2010/11 who knows how the market will respond???
    there are more than willing arsenal fans to live there...

  • Comment number 15.

    Excellent article.

  • Comment number 16.

    Just proves what a good manager Wenger. Not many managers could achieve what he has with such limited funds.

  • Comment number 17.

    Being a Birmingham fan, I thought Arsenal were one of the top four!!!

    Or do we not take football into consideration any more.

  • Comment number 18.

    Football has shot itself in the foot paying players rediculous money. It is unnecessary and socially unacceptable to pay players are in excess of 100,000 pounds a week. Why isn't 10,000 enough? Even that is 10x the amount most people earn.

    The problem has been magnified by the so called sugar daddies that are paying way over the top to get the players they want, money mostly that came to them by means lets say questionable at best.

  • Comment number 19.

    I'm sure Mr Usminov is not being as philanthropic as made out. His idea would result in dilution of those long term share holders that can't afford to take up their rights. At present there are two types of clubs - those run as rich mens play things - Chelsea, Man C, and Real and then there are the rest. The rest, which are run as businesses have to abide by the basic rules of business - Expenditure can not out strip Income year on year. Whilst frustrating for us fans, we have to accept that we will have to live within our means or for those fans for whom winning is everything, pray that a rich person buys the club and competes with the rich clubs.

  • Comment number 20.

    I like that Arsenal, like Villa run there club like a sensible everyday business would.. i.e take calculated risks with investments and invest in the future.. The team I support, Celtic, are run in a similar fashion and our Chief Exec (peter Lawell) is well respected for his approach to the game at this time.. so much so that Arsenal themselves courted him.

    Uefa shouldn't bother with salary caps or other gimmicks which things like signing on fees would find a way around anyway. They should fine clubs that have mis-managed debts. How can clubs be fined or deducted points for going into administration when others who have better financial back up are allowed to spend what they don't or will never have?

  • Comment number 21.

    Another London football club like Chelsea FC could buy up Arsenal and merge. That leaves them with two grounds and a wider range of players (some of which could be sold). While one ground isn't being used, it could act as a second Wembley/O2 arena and host huge concerts. They could make billions as well as save billions as well.

    They could call the new team "Chelsenal" or "Arsesea" (I think Chelsenal sounds better, but at least I hope Arsenal never merge with West Ham)

    Don't think it would happen in the real world though.

  • Comment number 22.

    Robert

    An interesting story though I don't agree with your assertion that Arsenal in relation to other top clubs are too much in debt (as others have noted on this blog). The Guardian ran an excellent story on this (3rd June 2009) so your 'story' is really old news.

    In relation to your assertion may I suggest reading the following link:

    http://www.guardian.co.uk/football/table/2009/jun/03/premier-league-turnover-wages-debt

    This provides an overview of all the Premier league clubs. There is no doubt that many clubs are leveraged (whether over or not is a different matter).

    Arsenal were (I believe) the only club rightly to borrow against long term investment, i.e. a new ground and also building development (which has subsequently stalled?). They also appear to be one of the most prudent.

    The issue of over-leverage is really determined by EBITDA (i.e. it's based on turnover - direct costs in layman's terms)in the private equity industry which a number of clubs' finances resemble. One should also bear in mind that much of Chelsea's debt is in the form of an interest free loan by their owner as opposed to the others paying interest on their debt - a considerable advantage.

    The real issue as you have pointed out is that EBITDA, which one presumes, will fall for most clubs over the next few years. That's where the squeeze comes in when you are highly leveraged.

    In light of that, one would surmise that Usmanov is proposing exactly the right thing...........

  • Comment number 23.

    Yes Arsenal have borrowed too much money. Yes they are going to struggle to re-finance their debt. Yes their assets require a write-down and yes, given the scale of those assets the write-down will be significant.

    Does this mean that Arsenal cannot be a successful business? Absolutely not.

    Football is a game of two halves- what goes on on the pitch, and what goes on in the boardroom.

    Unless and until the factors outlined in the first paragraph (boardroom) begin to encroach onto the outcome on the pitch I can't see that there is any need for a rights issue.

    The oddity about the football sector is that if Arsenal win the champions league next season then their debt burden will be significantly reduced in any event. They are in effect members of a small lottery. Similarly success on the pitch in other competitions may help to mitigate the off-pitch scenarios/problems.

    In light of this fact it would be interesting to note what assumptions Rothschild have made regarding Arsenal's performance on the pitch in the coming seasons...this would provide the best indication of actually, how required (or otherwise) a rights issue is. Of course we aren't privy to this information- we need an investigative reporter...any thoughts RP?

  • Comment number 24.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 25.

    Football is still a completely unsustainable business model. Said so two weeks ago, still say so this week.
    Only the presence of rich men with large egos keeps it afloat.

  • Comment number 26.

    Yes they probably have borrowed too much. However, let's not forget that Arsene Wenger has obtained most of his star players at a fraction of the the cost of the other big 4's stars and he usually sells them on for considerably more than he paid!!!!

  • Comment number 27.

    I just wonder, remarkable as it seems now, whether we will look back in 10 years time, and wonder why we all let our favourite football clubs continue to hurtle towards financial oblivion through fundamentally flawed and crass financial management. I can't help feeling that we will see Premier League clubs as mirroring Banks in their naivety, and with hindsight we will all wonder why fan intervention didn't stop it all? Liverpool followed their auditors' Emphasis of Matter statement in their accounts by the very next day spending £17million on a full back who was barely worth the £4million he was sold for a few years ago! Footballing Bonfire of the Vanities.
    Maybe Sir fred and Andy Hornby will be the new Arsenal mangement team at the helm?

  • Comment number 28.

    #12. windchrisleeds wrote:

    "Robert

    I have heard the banks may have a few issues also!! Could be a scoop for you there also."

    How ironic, considering that it was Mr Peston who first broke the Northern Rock story at the very start of the banking crisis.

  • Comment number 29.

    I want to concur with my fellow thta money dont buy success,arsenal has all it takes to compete with big 4 clubs

  • Comment number 30.

    28 Rbs-temp

    I think you may be a little mislead on the Northern Rock Story, it had been common knowledge in the North of the UK for weeks before the BBC picked it up.

  • Comment number 31.

    What happened to Italy's domination of Europe and their subsequent command of the worlds best players. Same went for Real Madrid et al...

    The same will happen to the epl, down the pan it will go - as surely as night follows day ;-)

  • Comment number 32.

    In the past 20 years sport has changed beyond recognition.
    It's now all about money.
    It's the American way.
    More about the skills of accountants than the skills of the players?
    Football and cricket are the most affected.
    But in October 2008 the world changed.
    We all now have to deal with a more austere future.
    Over-indebted football clubs may struggle to cope, and a billionaire "Father Christmas" saviour may not be so easy to find any more.

  • Comment number 33.

    Robert

    In the 1980s we had Martin Spencer FCA to a meeting of accountants in London. He was then Managing director of Chelsea. Almost thirty years ago he was predicting that excessive debt could bring down a significant number of our top football clubs. Few people wanted to listen to him then, but the catalyst was a transfer of one Steve Daley (?) for the staggering sum of around £2m. Spencer was also highlighting the way in which all the clubs were interlinked through transfer moneys owed from one to another, something that still goes on today but was not on the balance sheet.

    The new ingredients since those days are

    a) the obscene amount of money in transfer fees and wages the Chelsea and Manchester City owners can afford to pay - credit crunch what credit crunch?;

    b) the way in which the Glazers have picked up Manchester United for a song and got their money back through saddling it with debt - something that has only paid off because of the Man U continued success and incremental ground enhancement

    c) the clubs like Arsenal who have been sunk by their new stadium, and who would be champions if they could afford to buy the three or four world class players they lack.

    Spencer's idea has come true to some extent in clubs like Leeds, but teams going bust has generally been confined to teams in the lower divisions. The real testing ground is going to be Real Madrid, who have spent a huge amount of money on Ronaldo, Kaka et al, and who must win big if they are to justify their expenditure. That will still be difficult given that Barcelona are still there -however it will probably mean that the balance of power could shift away from England and back to Spain.

    The sad thing is that our greatest team in Europe, Liverpool, dont figure in any of this, and are even now talking about letting one of their best players, Alonso, go to Real Madrid. TV money, which is the critical element in all this, relies on a strong ManU, Liverpool, Chelsea and Arsenal, and they would be delighted by a resurgent Man C.

    Incidentally, when people are talking about bankers how odd that no-one talks about Tevez about to earn as much in ten days as the Prime Minister earns in a year. If it had anyone other than Gordon Brown I would have said what a scandalous state of affairs

  • Comment number 34.

    Surely shome mistake?

  • Comment number 35.

    Robert

    All football clubs are potentially in trouble. Key factors will be the season ticket sales, and ancillary advertising in club magazine etc. For the lower leagues the loss of the Setanta deal could well bring serious implications for its survival on a fully professional level.

    The Real Madrid factor is bizarre: spending millions of Euros like it grows on trees. Ominously they are intimating that the present football league set up is not to their liking and are looking to create a genuine European League, perhaps because their current financial model is not sustainable. The last time Real Madrid got into huge debt, the city of Madrid bought their training facility for a nine figure sum and then leased it back for peanuts.

    When more businesses are working short time and staff taking voluntary pay cuts, what will it take to remind some footballers that they actually live on the same planet as the rest of us? Something has got to give. As an Arsenal supporter I do not agree with NM Rothschild view about paying off the debt - their assessment of saving GBP 5 million per annum is based on low interest rates. The existing loans if not paid off as the advisers suggest, will have to be refinanced at which point charges WILL go up. So, who is acting in whose best interests and for whom?

  • Comment number 36.

    I pray for the day that "elite" football clubs are forced to survive on their own income and ran like proper businesses and not some rich man's toy.

    Oh, survive on their own income and ran like a proper business? That sounds like Arsenal.

    Did we really need another article allowing people the opportunity to come and knock Arsenal because they could only manage to qualify for the Champions League (again), reach semi-final of both FA cup and Champions League? This following on from a season in which they were so close to winning the league. Their are certain clubs out there who could only dream of such things before "dodgy" money was "invested" in their clubs, yet some "supporters" of these clubs feel they have the right to come spout utter rubbish here.

    I really want to see Arsenal continue along the path it's taking, but seeing constant babble from halfwits who support clubs funded by the money of unscrupulous businessmen, almost makes me want to see that kind of investment thrown Arsenal's way. Then watch the likes of C***sea drift back into mid-table obscurity.

  • Comment number 37.

    Wow so many sweeping statements and lack of examples its amazing that the BBC didnt stop this being released as libel. Considering you write as an Arsenal fan you have no real data to show us about the ticket costs, just unsubstantiated percentages. You have no quotes of note, comparisons or any real idea of the implications of Usmanov's share creation scheme. 10 years down the line Usmanov could buy up all these 'new' shares especially as fossil fuels hit stratospheric prices and be as damaging to the harmony of the club as this debt has been in the first place. You have also completely undermined Wengers buying and the squad youth yet again which have stepped up over tumultuous injury problems to reach the last 4 of every competition bar one. Now Leeds are a club who borrowed too much, wheres the comparison, oh right there isnt one! Of all the clubs to pick about debt you picked the one who has gone about erasing it with great efficiency, would you rather Ronaldo for 80mill or Arshavin for 15m. Transfer Figures arent the be all and end all and as a supposed Arsenal fan you could have shown that. This scare mongering tat is amateur and the only thing I agree with is the rising wage bill, which will be paid for by winning a couple of cups this year!

  • Comment number 38.

    sadly football is no longer the peoples sport where teams were obtaining locals to play matches, now its multi million pound contracts and hyper wages.
    what is a footballer today well basicly a cash cow for their team and army of hangers on.
    football is now in the same stupid league as baseball and american football each sport now costs more to watch than a poor persons weekly wage bill.
    no wonder teams are in hock above their means when they have to pay millions a month on overpriced players.

  • Comment number 39.

    Robert

    Quite a few regulars 6-7 yrs ago when the stadium project was first floated and displayed in all of its glory suggested that the project was seemingly too ambitious in its design, size and scope. Highbury was recognised as having reached its natural end and had to go, but we felt that a smaller stadium with capacity to increase its extent incrementally would have been more akin to the position the Club were in, the extent of the clubs then support but more importantly, might have been a project that would not have impacted onto the pitch to the same extent as has this one.

    The football club has become a slave to its own ambition, rather than the motor of its ambition. The Boards situation has left it impotent to a degree. The club is lucky to have a Manager will work within the shackles that perhaps he (Mr W) assisted to orchestrate. The trouble is that Mr W is at the far end of his career and self interest and self preservation may have (perhaps unwittingly)led him to feel comfortable as he approaches the final stages of his contract at a Club that now has its own inbuilt reasons and excuses not to be as ambitious on the pitch as it once was.

  • Comment number 40.

    And this is a bigger story than either?

    1) the US budget deficit has risen above USD 1 trillion or for those that like their numbers the old fashioned way USD 1,000,000,000,000.

    2) RPI still falling and is now at -1.6% from -1.1%. Showing that in the real world outside the bubbles of politics and the economic madness of the Premier Leagute deflation is a real fact. CPI is also down from 2.2% to 1.8%. Both are huge drops in a single month.


  • Comment number 41.

    Interesting article Robert, but as mentioned, possibly could have done with a comparative paragraph against the other members of the Top 4 at the end.

    To the Chelsea Fan...

    This may sound like a strange answer but I would prefer not to have a sugar daddy come in and spend £300m (cMan City's spending so far under the Sheikh) and essentially buy the Premiership through transfer fees, and more effectively, salaries. Football needs an overhaul, probably with the introduction of a salary cap. Otherwise it just becomes a race between who is richer and less and less competitive.

    Although it is far easier to implement in one country, the NFL has remained very competitive through the draft and salary cap system. The former is probably impossible to introduce for football but FIFA/UEFA sanctioning the latter may go some way to stopping football becoming a procession for who pays the most to acquire the best players.

  • Comment number 42.

    One of the most interesting aspects of AFC from the business side is how it has remained financially independent, whilst the Board control seldom dances with the media without reason, as Mr Pestons article inadvertently demonstrates.

    Usmanovs advisers are seemingly engaged in presumptive guesswork whilst I am inclined to believe that NM Rothschilds have made a response, briefed to deflect.

    How did Mr Peston get hold of these documents?

    It appears to me that Arsenal are quietly siding with the Kroenke stake-building whilst the Usmanov threat is being publicly derided in a long drawn out affair. The Arsenal Board are arguably more fluent and ruthless in their own order when business matters are at hand, as witnessed by the non-stop boardroom exodus in recent times.

    Mr Usmanov's lack of Board representation should speak volumes therefore of how the Arsenal view his shareholding - his possibly objectionable background, motives and his links with David Dein do not echo the ethos of the current Board.

    In Mr Kroenke, they have another Board member whose credentials quietly declare his potential to take the helm from that powerhouse of the Arsenal Board, Sir Peter Hill-Wood. A man with little influence in terms of shareholding, Sir Peter bucks the trend in terms of power, seemingly reigning supreme in the boardroom through his unique persuasion and diplomacy carrying the Arsenal ethos.

    It is quite clear then, the Board are strong and resolute. They are as well, successful as witnessed by the on and off the field achievements over the last 20 years. No one should need reminding that Arsenal is the only top European side to remain entirely funded in-house - it is a unique achievement.

    Usmanov will unlikely find his way any further beyond the present, and with his asset base diminished, will likely refrain from further stake-building in the near future, hence the reason for the deflective proposition of the £150m rights issue and the apparent discredit to the Board as a result of not entertaining it.

    Arsenal have effectively announced they are a selling club at the moment Arsene actually stated so last summer in a moment of angst - that is how Arsenal will sail the current choppy waters - self financing and drawing on the players it has developed to fill the gaps that their lack of money cannot buy.

    Adebayour will go for £21m this year and Fabregas will surely be sold for 35m next year and so it goes on funding the shortfall. 11 years of Champions League is no a lack of success, trophy or no trophy.

  • Comment number 43.

    #32

    RP does well to raise the topic of football, which must be getting towards being a trillion dollar worldwide industry.

    As you say, more about money and accountants than anything else.

    However, rest assured that football will not be hit too badly by the depression. Governments throughout the world will ensure its ascendance to keep attention away from the important issues. Just imagine what would happen if football were suspended or even threatened on financial grounds?

  • Comment number 44.

    Does the report not include a guesstimate for spending on new players? Or does it assume that all transfers will be realised through selling first? If this is the case then Arsenal can look forward to 4th place again for the next 5 years or so depending on how quickly Man City gel into a team. The average figure of about £20 million for the other clubs in the top 4 is about right as we have bought Glen Johnson for £17million so that leaves us with £3millionish left.

    Tbh I thought that Usmanov would have taken over at the Emirates by now but with stories about renegotiating rents in the Royal Arsenal development down to about 10% in one of the free London papers last week I am sure they don't help the cause.

    Perhaps they should organise some extra revenue by organising say the American team to be based at the Emirates for the olympics as that would bring in a lot of extra funds.

  • Comment number 45.

    An excellent article.

    I believe Arsenal are one of the best run football clubs in the country (possibly "the" best). It used to be Liverpool but then they brought in Hicks and Gillett...short term capital but who knows how that will end up.

    The clubs with unsustainable wage bills are living on borrowed time - if you believe in your club thgen you want it to be around for the next 100 years, not like that Chelsea fan (#11 Nikkiluc) who was taunting "you'll be in a lower cup next year"...Chelsea could well be extinct in 5 - 10 years depending on certain factors.

    Byu the way I'm a Swindon fan, not Arsenal, but I sincerely believe that Arsene Wenger is the best manager in the country and whilst the likes of Man Utd and Chelsea continue to "buy" their trophies, I'd take much more pride watching a team be developed through the club, winning lots of games by playing attractive football, and actually they're not too far away from winning a trophy.

    Actually the league could help in this respect, by limiting the number of substitutes used in matches, which gives the richest clubs a distinct advantage due to the number of expensive players they have in reserve.

    How about making football a game of 11 vs 11 again?

  • Comment number 46.

    Well maybe mr Kroenke & Mr Usmanov should dip into their multi-billion pound fortunes and wipe the stadium debt - £242m - not a problem for them surely...then again like them all...they are in it to make money not because they "love" the club.

    Id love to watch the Arsenal, but Ive been priced out of that. I can't afford it...ticket, travel (Im in Cornwall) etc etc...ah well, gone forever are the good old days. Maybe I should work for the BBC, then I could afford it! lol. Sorry Rob ;o)

  • Comment number 47.

    You always know that an analysis is BS when it makes a comparison and doesnt back it up. If I said Mandanda is shorter than Andrey Arshavin, and I only tell you Andrey Arshavins height, then telling you Andreys height proves nothing.

    The article says Arsenal cant compete even with clubs who earn less than us (like Liverpool) and thats obvious BS.

    Usmanov and his media mouthpieces should show us how those other clubs are financing their player acquisitions. Those of us who care about fact and data, have actually seen PIK loans increase at Liverpool and Man United. Theyre borrowing to buy players.

    How Usmanov can claim we have too much debt, when clubs that take in slightly more revenue than us have 4 times our debt payments?!

    Do a comparison, Usmanov and media mouthpieces! Mr Peston of the BBC, can you compare Arsenals finances to those of our competitiors? Why is your piece missing the key piss of information that would establish its validity?

    Theres a big Usmanov shit-selling campaign going on.

  • Comment number 48.

    Usmanov is not advocating the Rights issue primarily to help Arsenal. He knows that the other shareholders either don't have liquid capital at the moment or don't wish to invest further monies in the Club. He can then buy the unwanted shares and have a stake greater than 30% and a seat on the board. Unlike the other shareholders his interest in Arsenal is not for the football but as a money making venture. Unfortunately a lot of supporters have been taken in by the amount supposedly left over for buying new players. Hopefully the sale of Adebayor will bring in funds which can be used to buy more than one replacement.

  • Comment number 49.

    Remember Bob, Stan Kroenke is waiting to takeover.

    As you maybe aware there are still plans to devalue the dollar. Although the Chinese are against it, most economists (or strategists - my profession) realise that its that or allowing the Yuan to float. The Americans will not agree to a second stimulus. The politics don't allow it.

    So Stan has to move sooner than later. At that point refinancing isn't an issue. The Kroenke's family fortunate has actually increased through the recession with the steady growth of Wal-Mart. Essentially your Blog indicates the exits Nina Bracewell-Smith, Carrs and Danny Fiszman.

    This was expected anyway. There are always stages in the growth phase of a business when the size of the business is too large for some of its shareholders. This would have been forced by a 'Rights Issue'. But will happen with the takeover anyway.

  • Comment number 50.

    It's also really depressing that the media are acting like Usmanov is offering Arsenal £150M cash in wheel barrows, no strings attached. Mr. Usmanov is not offering Arsenal money. He's asking Arsenal shareholders to cough up £150M for the club.

    Journalists should present the information in the right way.

  • Comment number 51.

    Mr Peston, a quick scan of Arsenals 2008 accounts reveals interest payments on their debt have dropped to 17m a year from 37m a year in 2007, no doubt due to refinancing during this time of low interest rates. The club made a 36m profit in 2008.

    Man Utd holding company's interest payments are constant however, at 45m a year, on the money borrowed for the take over. The club made a 20m loss.

    Now when it comes to paying down debt, those numbers would make any accountant in the world to recommend it to Man Utd, not Arsenal.

    Which might explain Sir Alexs statement that the Ronaldo cash ain't getting spent this summer!

  • Comment number 52.

    Poor quality report with very little discussion of any depth-yet another piece from you creating confusion and scaremongering!

  • Comment number 53.

    #40. Ian_the_chopper wrote:

    "RPI still falling and is now at -1.6% from -1.1%. Showing that in the real world outside the bubbles of politics and the economic madness of the Premier Leagute deflation is a real fact."

    No, deflation is not a fact. The negative value of the RPI is a statistical fluke, due to the sudden and unprecedented fall in mortgage rates. Systemic deflation does not exist in the UK economy, as will be seen when those rate decreases start to work their way out of the inflation index early next year. The CPI, which excludes housing costs, is still at 1.8%, which is within the government's inflation target.

    Inflation is still a greater medium-term risk than deflation, due to the huge amount of money that the BoE has pumped into the economy by means of quantitative easing. But the statistics seem to indicate that the Bank has successfully walked that tightrope and has, perhaps, done just enough to keep the economy on course.

  • Comment number 54.

    Financial advisers ... pah! Aren't they the same guys who got us into this recession mess?

    Arsenal is still the best run club in England. We may have missed a few trophies in recent years - as much due to a run of key injuries as anything (and dumb Lehmann getting himself sent of in the 2006 CL final)- but we will end up the most valuable club in the EPL when the stadium loans are worked through.

    In the meantime, win lose or draw, I'm looking forward to another season of Europe's most entertaining football.

  • Comment number 55.

    Re: comment 13: So the season before last, being top for most of the season, six points clear in February and still in with a chance in April doesn't constitute posing a serious threat to win the league? Our threat in 2007/08 was probably more than Liverpool's threat to win it in 2008/09.

    However, I don't think we'll pose a serious threat to win the league/CL this season unless we get a strong DM. At the moment, my prediction is 4th place and narrow cup failure. Again.

    Robert: as other people have mentioned, our debt is actually decreasing. There was a recent Guardian article about PL clubs' finances, and Arsenal's wages as % of turnover were the lowest in the division, and the figure you get when dividing debt by profit was a lot smaller for Arsenal than it was for Chelsea and Man United. Maybe you should be scare-mongering about their finances?

  • Comment number 56.

    At the risk of seeming to be someone who gives a s**t about football.....

    "the providers of the property loans have no recourse to the footballing assets"

    Erm, what exactly is the football stadium then?

  • Comment number 57.

    Sooner or later one of the big clubs will take a major crash.

    Could be Arsenal.

  • Comment number 58.

    Robert, your article does not appear to be an objective analysis of the situation at AFC. The article, although pretended to be sympathetic to AFC cause, actually concludes as Usmanov agenda. But let's not be deceived, Usmanov's model is solid. However it also gives him the opportunity to mop up excess/unclaimed/unallocated rights issue. The board's response is trictly personal, not business. And who says there is no personal interest in business?

    What's more, the article tends to give the impression that AFC has borrowed too much. This argument is fundamentally flawed giving all we know about football and the EPL. For example, and strictly business speaking, Adebayor and Fabregas are business assets bought for a combine total of around 7m. At today's prices, the two alone could fetch up to 55m pounds.

    lastly, if AFC were to close shop this very minute, will all its assets pay for the debt? The answer is emphatic YES!

  • Comment number 59.

    #56, the Highbury apartments project (converting the old stadium into flats) is a separate entity to the footballing side. If it goes down the pan, the footballing assets (such as the stadium) are protected.

  • Comment number 60.

    Nice to see the players are being compensated for the tax changes, poor things. Unlike us mere mortals who just have to pay up!!!
    I think I'll go and see my boss....

  • Comment number 61.

    This article is about Arsenal's business acumen. However, in football we cannot accurately assess the wisdom of a business decision without considering the footballing side.
    For Arsenal to maintain revenues they need to stay in the Champions League, should they fail that objective this season then it may make business sense to raise fresh capital. Should Arsenal maintain their status in the Champions League, then clearly the footballing model is working and so is the business model.

    Arsenal recognised that Highbury did not generate enough funds for significant long-term success. The Emirates does. However, to pay for the Emirates, Arsenal has sacrificed about 10-15 years of potentialy (and now apparant) reduced success - through reduced wages and transfer spending, compared to the three main rivals. Arsenal's gambit did not consider Manchester City.

    With Bendtner, Vela, Walcott, Van Persie, Rosicky, Arshavin, and Eduardo all offering an attacking threat, Arsenal can afford to cash-in on Adebayor. If Jack Wilshire and Aaron Ramsey progress as hope, then Fabregas may not only represent a good sale at £40m - but may be surplus to requirements anyway. The great thing about Wenger is he will tend to reap a financial profit from the buying and selling of some players.

    Arsenal should look to AC Milan for advice on maximising longevity of players. If they can keep their current crop of players going to that extent, they may not need to buy anyone for the next 15 years anyway! By which time the Emirates will be paid off, the debt negligable, and the ability to invest in the best players will be there.

    Arsenal have spent 80 years in England's top flight and will surely want to spend the next 80 in the top flight. Their ambition and determination to maintain profitability should be applauded. Looking for a short-term financial boost would be wrong, when they took a long-term decision which Usamov and Kroene have bought into. If Usamov wishes, he could privately fund an acquisition.

  • Comment number 62.

    lets face it just like some of the banks the football business model is bust... only kept alive by rich men or television companies paying over the odds for what is "only a game".... it will only take one of the props to fall and the whole thing comes tumbling down...they should learn the lesson, after a boom there is always a bust and right now with Clubs paying over the odds for players, and players demanding ever more excessive salaries we are in full boom...

  • Comment number 63.

    RP I hope you will look into the proper finances of AFC and the holding company when their end of year accounts are published instead of Mihir Bose and his biased Spurs view. The debts are coming down they have planning permission for the final stage of the development phase and all the development has been ring fenced so it does not have too much of an impact on the footballing side of the business.

    They are also creating jobs, houses or flats and regenerating a previous run down section of the Highbury area which was and is one of the biggest privately funded projects for decades in London.

    So with the debt coming down year on year now and the club running within itself which is sustainable I see know issues with the level of their debt.

    Yes Arsenal 1st team haven't won anything for 4 years but we only just missed out this year in both the CL and FA cups and last year when we almost won the PL but never got over the loss of Eduardo in the Birmingham game. With a defensive midfielder to come in I think we are close to challenging for the title again.

  • Comment number 64.

    Rothschild were never going to agree to this proposal as they were hired by the current board whose interests revolve around remaining as the current board for some time to come.

    The figures don't really add up, the 5m saving is dubious, the outstanding debt is 140m and if that produces interest of 5m a year then the implied rate is 3.5% which sounds rather low to me.

    Meanwhile the notion that the property financing is firewalled from the football side of the business would not stand up in court as Southampton discovered when their holding company went into administration and their football club got hit with the corresponding 10 point penalty. They argued that it was not the club but the holding company that was in administration, but the court held that the two were inextricably linked. The same would be true here when the property loan holder suggests they might like to sell some players to generate money to pay off the debt due.

    Arsenal are not in as bad a position as Man Utd or Liverpool but then again they have been fairly conservative with their spending and as a result haven't won a trophy since 2005.

    Man Utd have spent hardly any of the 80m generated by Ronaldo's sale (received in 4 installments of 20m over 4 summers) but seem to be able to hold off interest in players such as Vidic while Liverpool are already being hit on for their best players by other clubs who sense they could be vulnerable to large bids given their debts (Torres, Mascherano and Alonso are all either subject to interest or have been bidded for, they are 3 of their best players).

    Football finance has never been so interesting as it is right now, the global tussling for ownership of players and clubs is having direct effects on the fortunes of clubs on the field. Every fan should be aware of the situation around their club and sensitive to how this is affecting their prospects for the coming seasons.

  • Comment number 65.

  • Comment number 66.

    To my fellow brother& siters gunner fans as soon as arsenal built the emirates stadium; it was like noak ark, you know he would have to start again, and start by new players etc you see where i am going we must be patienal there is little money in the pot we can work it out for ourselfs rome was not built in a day we have to wait and be patient i time will come for arsenal and when it does what out we will be up there for years do not worrie up the gunners Let us turn the highbury&emirates stadium into a winning stadium they will fear arsenal when they come to us this seazson more noise we are arsenal and always will be up the gunners.

  • Comment number 67.

    Please can you focus on a club that matters. Like Real Madrid or Man City. I want a financial analysis of one of them.

  • Comment number 68.

    All very interesting but that fish eye picture really doesn't work with the text!

  • Comment number 69.

    Premiership football is, whether we fans like it or not, big business. Until present financial investors were queueing up for a stake in the big clubs, because they generate huge revenues from TV and merchandising. Also it is becoming more apparent that the reality is you can buy your way to success. We only have to compare the spending on players of Manchester United, Chelsea and Liverpool to Arsenal's as evidence. What is holding Arsenal from lifting silverware is the fiscal policy in which they are unwilling to make big money signings and their wage structure. In order to stay competitive they will need to follow in the footsteps of the other big clubs and make big money signings for experienced players in key positions that will strengthen the squad.

  • Comment number 70.

    why is it always doom and gloom with arsenal
    i never read anything but bad press they play
    brilliant entertaining football have the best
    stadium in england and great loyal fans come
    on give them some praise

  • Comment number 71.

    I always thought Usmanov was a better Poirot than Suchet. ;)

  • Comment number 72.

    This document seems to be heavily stacked and should be treated accordingly. It almost seems to have an agenda.

    It's interesting to look at the debts of all the EPL teams, including those with 'recent' new stadia.

    Where in this league of debt Arsenal would stand - certainly not a league they will not come top.

  • Comment number 73.

    It would have been more interesting for Robert Peston to find a football club that *isn't* in financial peril. Good luck with that.

  • Comment number 74.


    So this blog basically takes 2 reports, both bias towards their respective cause, and summarises the key points.

    Thats fantastic work Robert.

  • Comment number 75.

    For me Arsenal's only real financial problem is the number 5 you highlighted in the piece. The Highbury Square development was supposed to be contributing significantly to the group's cashflow over the next few years. Because of the property market this is not going to work as planned.

    In my view though, this is not the structural issue that Usmanov would like us to believe. The problem is one of cashflow: the builders need to be paid but buyers are pulling out of or gazundering on the agreements to purchase.

    Arsenal have a big number (£267m) in their Short Term Liabilities column of the balance sheet which is a lot of money to have to find if everyone calls their debts in at once. It is also worth noting the 6 month figure of £51m in operating cost associated with the property development business unit. In the quarter to Nov 30th this was covered by income of £58m from property sales.

    This income is where the problem is and if it is not coming in to cover the costs as the work is completed, then there is a cash drain on the rest of the group. Do note however the £76m cash at bank.

    It's a timing issue. At the market peak, the properties might have brought in £350m. Maybe it will only be £200m now, but much of those costs have been incurred and a lot of that income is yet to arrive. How long does the club need to hold the property for before starting to get the money back? In the mean time the club has to renew the loans at the best possible price. Usmanov casting doubts is hardly going to help the club achieve that...

    Even so, £17m a year in interest is hardly punitive when your annual turnover is over £200m and you are sitting on assets of £800m.

    From what I can see, there are resources there for the right player if Wenger wants someone but we know he is never going to a) pay more than £20m and b) pay more than £80k per week in wages because if you do, then everyone else will want to get closer to the new ceiling.

    I really don't get Usmanov's proposal. Bring in more cash to spend on new players and increase the costbase further by upping the wages of those that you have already.

    Pay off the loans? £150m saves you £7.5m a year, but that's it, £150m gone and what good footballers can you buy for £7.5m a year. £150m upfront to pay for 1 extra player's wages and you still have to find the transfer fee.

    Then what? Where the revenue upside to this investment?

    I have a better idea. If we need short term funding, how about we sell 1 player a year when their value peaks and use that to a) bring in more younger players and b) create a space in the team for those younger players to start increasing their own value. Sell Henry (+£17m), buy Adebayor (-£7m), sell Ade (+£25m) buy someone else (-£12m)... £23m up over a few years.

    Walcott, Gibbs, Vela, Ramsey, Wishire... A production line of good players - ready for Barcelona, Madrid and Manchester's millions. When the cashflow is better you might even want to hang on to some of them and play the big boys at their own game but don't overstretch too early and follow Leeds and Newcastle into oblivion.

    Arsenal are a very well run club. Look back 15 years... The Highbury Square venture has already given us the Emirates Stadium at no extra cost and the worst that can happen is that's all. As an upside it may provide a lump of cash when the properties are eventually sold. I would leave it to the people in charge today to keep going. From what I can see they know what they are doing.

  • Comment number 76.

    What happened to all the 'media' types that were devout Arsenal fans in the 90's when they were doing well and now in the last few years all seem to follow Chelsea?

    For the vast majority of us that would be pleased to see the arrogant Frenchman make excuses and still fail, I hope the whole thing comes tumbling down and there's one less bit of London bias in the sports reports.

    God help us if Chelsea had won the European cup, it would have been like the second coming on the TV.
    LFC 5 MUFC 3 London nil, that's how we like it up north!

  • Comment number 77.

    Post 52, if deflation doesn't exist why then are factory exit prices falling at their fastest level in 8 years? Why are car dealers falling over themselves to sell you cars offering huge discounts? Why does virtually every shop now have an almost continual sale? Why are travel agents offering huge discounts against brochure prices on holidays that aren't even last minute bookings?

    Re your comment re interest rates being the cause of this. They have been unaltered for a number of months now so their effectiveness will be working their way out of the figures rather than exaggerating things and yet inflation is falling by an increasing amount, It's not just RPI as CPI has fallen by 0.4% in a month as well.

    The abandonment of RPI in favour of CPI by Gordon Brown led to complacency that allowed the asset price boom to continue well beyond its natural point and has been a major contributor to the problems we are in.

    Ignoring mortgage interest payments which is the largest monthly expenditure of a considerable number of the population, myself included by the way, is no way to run an economy.

  • Comment number 78.

    "Premiership football is, whether we fans like it or not, big business."

    No it isn't. Not one Premiership club turns over £300m per annum. It's small-to-medium business. Arsenal charges more for season tickets than Man U or Liverpool because it can; the fans are richer. (And it's less likely to rain on them). The club has a waiting list of 40 000 for season tickets. Matchdays at the Emirates produce between 2 & 3 times the money they did at Highbury. There's a decent revenue stream from TV and matchdays that easily covers interest payments.
    It isn't Arsenal out of the "big" 4 that's in financial trouble, it's Liverpool. Though they played really well last season they've got nowhere with the new ground and their owners are skint. They're whistling in the dark, boasting about rejecting a £50m bid for Torres that existed only in their minds.

  • Comment number 79.

    The drift of players to Spain over the last 6 months has been fascinating. So many players came to the Premiership when the Euro was around 1.4 to the pound and the top rate of tax was 40%. With the Euro now only worth around 1.15 to the pound and the top rate of tax on their marginal earnings a whopping 50% these poor destitutes are looking at around 30% less in their Euro bank accounts than 3 years ago. Throw in the Spanish Revenue's latest stunt (Spanish practice?) of Foreign Executive status then they pay tax at 24%. None of these players are financial geniuses but they all have advisors hence Real and Barca are the latest El Dorado. Whilst these 2 fight it out next season to see who can shoot the most fish in the La Liga barrel, at least the Premiership will have 4, possibly 5 teams pushing hard for the title with a solid undercard of Villa and Everton keeping them on their toes.We complain about the same old teams at the top of the league, the Spanish league is worse than the old Scottish First Division before they changed that.

  • Comment number 80.

    " we felt that a smaller stadium with capacity to increase its extent incrementally would have been more akin to the position the Club were in, the extent of the clubs then support but more importantly, might have been a project that would not have impacted onto the pitch to the same extent as has this one."

    The empty seats every week at the Emirates sure proved you right, didn't they?

  • Comment number 81.

    "It says that Arsenal's fans are already paying 40% more than the average for the big four English clubs" - Pardon? Arsenal ARE one of the big 4. If you're referring to Manchester City, just because they have huge amounts of funding and are buying big players left, right and centre, that means nothing. They have to prove themselves on the pitch.

    As a Brentford supporter and a non-financial mind, very much standing on the outside looking in, it appears to me that Arsenal has been run responsibly as a club, as the anti-thesis to the heavily indebted sugar daddy approach of Chelsea. Football has never been a world that was full of patience among supporters or these big money men who come in and expect to win the title every season as long as they pump cash in, which makes it particularly sweet when Chelsea don't come away with the treble every season.

    So what is wrong with Arsenal rejecting the potentially highly destructive sugar daddy route and running the club fairly successfully for a few more years, developing their youth and nurturing a manageable debt? Absolutely nothing.

    Manageable debt is not bad debt. Arsenal only has too much debt if you're skewing the figures in order to get your way and take the club over.

  • Comment number 82.

    What changes would the equity boys demend should that route be the one selected to sort it out? The mind merely boggles at the thought of a cost-cutting manager out on the training sessions!

  • Comment number 83.

    i was watching "trisha" earlier, and one of the adverts suggested that if your debts seem to be out of hand, "0cean f1nance" could put them all into one easy payment...they even have their own TV channel!

    could it be worth arsenal giving them a call? :)

  • Comment number 84.

    #76 Breakfast maker...yes it's a well-known fact that people "oop North" celebrate their collective achievements of all the Northern football clubs.

    In fact there was tremendous excitement in Liverpool when Man Utd beat Chelsea a couple of years ago: "yes, that's 8-0 to us Northerners" they shouted. There was dancing in the streets of Newcastle and an many a glass was raised in Leeds city centre.

    Not quite sure how the Scottish fans felt about it (are they Northern too?) nor the millions of Man Utd fans in Oxford, Surrey, Cornwall, Bangkok, Nairobi, Beijing...

    Not quite sure what "vast majority" you think ur a part of, possibly ur a member of the human race but a football fan you surely ain't.

  • Comment number 85.

    Brandyrecovbery

    I agree with you that Wenger is an excellent manager. However, he does score heavily when people are talking about "intelligent" managers, whereas Fergie is seen much more as a man who is driven by winning and smeone who has bought success. I think this is totally unfair - Ferguson with his 11 Premierships, two European Cups, umpteen FA cups etc etc is by far the most successsful manager in the history of English football. As a Brighton supporter I welcome the fact that Fergie has always put great store by home players - something you cant say about Wenger or his two fellow managers at Chelsea or Liverpool. Try naming a UK/Ireland team from any of the other three which would match

    Foster,

    Brown, Ferdinand, Evans, O'Shea

    Hargreaves, Carrick, Gibson, Fletcher

    Rooney, Owen

  • Comment number 86.

    ZEUSFC

    One of those companies used to have an advert on TV (I dont think it was Ocean) with a line of people looking glum. "Step forward if you have been refused credit everywhere else. Step forward if you have CCJs". I think it went on to say step forward if you dont have a job or have some other similar disaster afflicting you like perhaps being an Arsenal supporter? They all stepped forward and the credit company came to their rescue by giving them loans of up to 25k. The ad closed with a line of smiling faces. It could equally easily have closed with a picture of Gordon Brown smiling (ugh).

  • Comment number 87.

    JUST WHAT IS THE POINT OF HAVING WONDERFUL STADIUM WHEN YOU HAVN'T WON FOR 4 YEARS.
    IT WOULD HAVE BEEN WISER TO STAY WHERE WE WERE RATHER THAN HAVING A FANCY FOOTBALL STADIUM AND SKINT.

  • Comment number 88.

    What ambition can do. Why will the Usmanov camp leak the report they compiled to the press? Why do they want to destabilize the team at this moment? Why is he buying shares of a club that he says is in so much debt? He has shown his hand and his hands to me are not adequate for a football club like Arsenal. He wants to create panic so as to buy enough shares to take over the club. That's simple business tactics but it will not work. He is should sell his shares to others since its all glum for Arsenal.

  • Comment number 89.

    majorroadaheadagain
    I think of the 11 you have listed - just 2 or three are really home grown - the rest were purchased quite expensively (other than Owen).
    Let us not forget other, non English big name signings like Berby, Tevez, Hargreaves etc

    So yes, Ferguson has bought his way into success.

  • Comment number 90.

    Interesting. You start of by saying you favour Arsenal's board over Jabba's and then dedicate the rest of the article to being a cut and paste job from jabba's PR machine.

    The question you should be asking are the following:


    Does Arsenal have high level of debts - Yes

    Is it against an identifiable asset rather than in securing players at inflated prices (aka Liverpool)or as a result of a leveraged buyout (aka ManU) - Yes
    Does Arsenal operating income adequately cover ongoing interest payments - Yes.
    Are a significant portion of the debt secured long term, and at low interest rates - Yes.

    Am I the only one seeing the hand of Usmanov's PR machines in this and similar articles that are coincidentally popping up in other newspapers just before and after the rights issue idea. The subtle theme in all these slanted articles is that Usmanov is offering to fund, for free, an orgy of high profile spending if only the big bad Board will listen to his reasonable ideas.


    As an arsenal supporter, I would support the decision of the board over Usmanov's waffle and subtle threats any day.

  • Comment number 91.

    Daokta

    Two or three?

    O'Shea joined at 17
    Evans Youth system
    Fletcher Youth system
    Brown Youth system
    Gibson peanuts
    Foster £1m

    Add Michael Owen as a free and you have seven out of eleven who cost not much more than £1m.

    I admit that Man U have always had to spend money to win their 11 Premierships - it would be stupid to think you could win without foreign players or the best of Briish like Ferdinand and Rooney. I was just asking if Arsenal, Liverpool or Chelsea could match the team I listed earlier. I think Fergie has a preference for UK/Ireland players whereas Rafa favours Spanish and Wenger favours French. There have been so many Chelsea managers it would be difficult to say who they favour.

    As i said before I am not a Man U supporter, just someone who thinks the record has not been fairly stated as between Fergie and Wenger.

  • Comment number 92.

    The main problem for Arsenal is not the huge debt, the massive ticket prices (way way higher than any other PL team) the intermittent blindness of their manager his complete lack of tactical nous, shown up most blatantly by that REAL master tactician Mourinho

    No its the fact that they have lost their soul

    At one time everyone respected them, they may not have liked them but certainly the respect was there, however Arsenal have gone from being an almost exclusively English squad pre Wenger, to a virtual Harlem globe trotters outfit, lacking that pre-requisite The English Spine, any sort of spine in fact, what point is there in an England manager in visiting The Emirates these days? unless the Gooners are playing someone like Chelsea or Villa of course

    PS, you may have guessed I dont support Arsenal, good article Robert

  • Comment number 93.

    Well, if Arsenal are too much in debt, what about MUFC, LFC and CFC?

    1. MUFC: it seems to me that the Glazers might be thinking precisely that and banking £60m to reduce debt this summer. Their hedge-fund debt is exorbitant - they might like to start paying it off?
    2. LFC - their debt is nearly as big as Arsenal's and they can't say they own a new stadium........so they are far weaker than Arsenal too.
    3. CFC - the Russky has pumped in upwards of £500m so far, which is nominally debt. No doubt he will set interest rates appropriately?

    The only near-term difficulty is the Highbury Square debt. If you subtracted that from the equation you'd find Arsenal's net debt under £200m.

    I suspect that you'll find the Board growing commercial income, perhaps realising a couple of assets in 2010.

    The key risk is not qualifying for ECL. If that happens, it all depends what players' contracts look like. If their salaries are not linked to income, there's a problem, although how big is probably hard to say from the outside......

    There are many ifs and buts here, many of which will doubtless be clarified in the audited accounts in September, but I suspect the worst case scenario is more sanguine than you might be worrying right now.....

  • Comment number 94.

    ''''''3. CFC - the Russky has pumped in upwards of 500m so far, which is nominally debt. No doubt he will set interest rates appropriately?''''''


    Roman has done a debt for equity swap of half the amount invested
    so the actually debt is now way way lower

    Chelsea pay no interest at all on the outstanding amount

    There is no time limit for repayment on the remaining interest free loan

    Plus if he leaves he owes the money to himself ie no bailiffs knocking on his own door chasing his own debt :-)

    A totally different situation

  • Comment number 95.

    I'm an arsenal fan and I love my club but we have to be honest, our young lads still need a lot of experience. I don't see anything wrong in raising money through issue of rights. Arsene has been tremendous with the young lads but as long as he can't buy a crop of good players to strength the team and he keeps selling his best players, we'll be stuck with another season devoid of silverware. The position of the board has not moved the club forward, its time for a change of heart.

  • Comment number 96.

    I think we all need to be reminded that the primary motive of football/soccer is to win trophies, with or without entertainment and finess now varies from club to club. Whether a footbal club is in debt or not is also another matter entirely.

    If football is about debt and how much you owe, how come then that Real madrid FC is still regarded as arguable the best club in the world with almost a dozen European titles and several domestic trophies?

    I think Arsenal has a peculiar problem steming from their inability to spend money in buying quality players. Your fans come to the pitch to see you win and not to lose - true, you win some and lose some but having your fans dissapointed year in year out for 4/5 consecutive years in the name of saving money is unacceptable

    I think Arsenal needs to brace up if they are to win trophies. After all Manchester United, Chelsea and Liverpool are all in debt but are still winning trophies.Arsenal are not winning trophies and are not out of debt either - so what is the point?

  • Comment number 97.

    The times they are a changing.
    Once upon a time there were 3 bears their names were, 'English Bear, American Bear and Russian Bear.

    The English Bear was not as rich as the other two bears and he belonged to a group of other bears who were not as rich as himself. This little group had control of a football club which at one time in its history was said to be the richest club in the world and its players were on low wages.

    However the times they changed. Now the players are some of the highest paid players in the world and there are a number clubs that are richer. Help was needed to get back to being the world's richest club.

    Along came Mr American Bear and said 'I will help you'.

    One of the bears in the group said in as much. 'Over my dead body. Yank go home.'

    However months later he coughed up a lot of money to Mr English Bear (not you note to the football club) and became a member of the group.

    The Russian Bear (Actually he's from Uzbekistan. But 'Uzbekistan Bear' doesn't quite roll of the tongue or sound so threatening in our English culture.) heard about this and thought 'interesting very, wery interesting'. And paid out a lot of money to bears who are not as rich as he. But he was not allowed to become a member of the group of bears who control the club.

    As a step to becoming the number one rich club the group converted the stadium into flats for rich people and borrowed money and built a big stadium to make a lot of profit and with profit from the flat sales pay off the debet.

    However times changed. The property market collapsed the money from the flats slowed to a trickle. Ouch!

    Other clubs became richer and paid players yet more money and cost a lot more then before in transfers. Ouch!

    The team stopped winning titles. Ouch!

    Mr Russain Bear said 'No problem sell £150 million shares on the market that will put money into the club and ease the loans and pay big money in transfers'. What he didn't say was:

    'I will buy the most shares and gain control of the club.'Ouch!

    So the group of bears said: 'Over our dead bodies!'

    The rest we dont know. But:-
    The times they are a changing.

    Mean time a certain froggy would a 'wooing go' but lets hope he stays!


  • Comment number 98.

    Finance is a totally different ball game, where things happen behind the scene and not in front of the spectators. The fans are the primary customers and the ultimate paymasters, but they would not be expected to know what is really good for the club.
    The questions are:
    1. Could the fans keep filling up the Emirates, year after year, even if Arsenal do not win anything?
    The answer must be in the negative. If some lose their patience and desert Emirates, they may not be back, leaving the Club on a downward slope.
    2. The team-building is Mr Wenger's responsibility. Should he be subjected to the treatment Chelsea managers have received from Abrahamovich?
    The fact that Mr Wenger has stayed in charge as the manager shows the difference between Arsenal and other Clubs like Chelsea.
    I believe that Usmanov should be kept at bay and we should trust Mr Wenger for making a move, supported by the present management at the top. The likes of Usmanov are not munificent! We are better off persevering with our present top men to make the right financial decisions.

  • Comment number 99.

    I'll hand it to Usmanov, he's working hard to get control of Arsenal. Probably because he sees a great foundation and a great opportunity. All of this acts as a reverse barometer for the Arsenal Board....whatever Usmanov thinks, do the opposite.

    Arsenal could field the same team as last season and compete with Man U, Chelsea and L'Pool, as well as make a run in the CL. I'd prefer that we sign a few key, experienced, talented players this Summer, but times are tough. Things'll get better, the economy will improve and Arsenal will continue to be in position to make a run for some trophies.

    No worries....

  • Comment number 100.

    Some questions and comments:

    On point 1) of this blog:

    1) ...(EBITDA) will fall from between £55m-60m in 2009 to £35-40m in 2010...[due to]...12-14% increase in costs ..."as a result of players being compensated for tax changes and a number of step-ups in wages for individual players".

    Surely, this is a problem for most clubs in the Premiership; definitely for the big 4 or 5. Chelsea and Man City (luv those sugar daddies) might not be affected by this but Man Utd and Liverpool most definitely will.

    Point 3):
    ...Arsenal's fans are already paying 40% more than the average for the big four English clubs for match tickets and 24% more for season tickets - implying there's little scope to increase gate revenues, especially in a recession.

    Yes, but there is still a years' plus long waiting list to get season tickets and try to get individual tickets for any of the games - near on impossible. They might not be able to increase prices in the short term, but they certainly won't be losing paying customers, recession or no recession. On the other hand, the other clubs cannot afford a huge jump in prices, this would be seen as an unfeeling, heartless move by an out-of-touch 'rich' club in a time of recession.

    And 5) ...it fears that redevelopment of Arsenal's former Highbury stadium into luxury apartments may not turn out to be profitable...

    This is an interesting point. Interesting as to why it would be included here. The redevolpment of Highbury into apartments was always a financial risk - such is the nature of speculative development. Anyone who can predict what the housing market will be doing this time next year should package up that knowledge and sell it to the highest bidder. Arsenal might do even better than planned with this development, who knows. What is certain is that, even with a sustained downturn in the market, they will still do okay. This is a bricks and mortar issue. This isn't an investment in something that turns out to be a Ponzi scheme.

    This 'Rights Share' business was all about a takeover of the club by Usmanov. What he would make of it after that would be anyone's guess. The board have, over the years, especially the Wenger years, done very well for the club. I know where I would put my trust.


 

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