Arsenal not concerned about debt

English Arsenal may be wallowing in debt, but the club said it still was "cash-rich."

Arsenal had an increase in their overall debt to GBP 262.1 million. The cost of moving to the new Emirates Stadium impacted the figures, with overall net debt climbing from GBP 153.3 million in 2005, a jump of GBP 108.8 million.

With the repayments of debt now restructured over a longer term, and match-day revenues set to rise significantly over the coming seasons, managing director Keith Edelman said the club is strong financially.

He compared the new stadium to buying a new house, in that a mortgage does not financially strap a homebuyer, and that a buyer will pay a lot less per year over 25 years than, for example, 10 years.

"It is like an individual buying a new, bigger house into which you have put more equity: you will have a bigger mortgage, but overall be in a stronger financial position," Edelman said. "The two things are completely separate and you do not say, 'You have no money to spend because you have a mortgage.' A mortgage is something you pay off every month, 'X' amount over a number of years then you look how much cash you have in your pocket to spend.

"Well, we ended the year with GBP 36 million of cash in the bank, in our pocket to spend now, so we are very cash-rich, although we have got high debts, which relate effectively to the mortgage on our stadium.

"Previously we had a 14-year repayment schedule, on which the interest rate was quite high. Because we sold the stadium out and it was being delivered on time and on budget, we were able to go into the financial markets and get a deal which was very attractive for the club which moves the debt out to 25 years and reduces the interest rate by about 2 percent.

"So we have lowered our debt repayments substantially every year. It is a good deal for the club and it means we have more money to invest in players and team development."

Arsenal's operating profits before player trading and exceptional items was GBP 11.3 million, which was down from GBP 32.6 million the previous year. Their group retained profits were GBP 7.9 million, down GBP 400,000 from 2005, while the level of pre-tax profits from the sale of players was up to GBP 19.2 million.

Arsenal's run to the Champions League final meant their football business increased turnover to GBP 132.1 million.

Construction on the redevelopment of Highbury into 711 residential units, most of which have been pre-sold, has begun with a GBP 125 million bank facility in place to fund the works.

"The Highbury redevelopment is a three-year project and we have sold very well," Edelman said. "In 2009-10 when the development is finished, we will get more profit out of that development which pays back some of our debts."

Source: euFootball.BIZ © Copyright 2006 - All rights reserved.