Arsenal reports pre-tax profits

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The OFEX, listed Premier League club announced its preliminary results to 31 May 2005. Pre-tax profit rose by 82.1% to £19.27m from last year’s £10.58m, despite a reduction in turnover by 11.8% from £156.89m to £138.40m. Operating costs, pre-player amortization fell by 12.0% to £105.76m and player amortization charges were reduced by 25.6% to nearly £15.0m. The club's football business maintained turnover at £115.1m despite a fall in broadcasting income.

The club saw football revenues unchanged at £115.1m on the previous year. A fall in broadcast income from £59.8m to £48.6m, representing 35% of the group’s turnover, was due to lower income from the domestic PL allocation agreed with Sky and a fall in UEFA money due to the club’s exit from the Champions League at the knock-out phase compared with reaching the quarter-finals the year before. The reduction in television money, however, was compensated for by a rise in gate receipts, retail sales and commercial revenues which rose from last year’s £14.1m to £20.7m mainly as a result of a new long-term deal with Nike.

Turnover from the club’s other business area, property development has been reported at £23.3m, down from £41.8m the year before. The decline was due to the sale of two development sites to Newton Housing Trust and the recognition of revenue from previous years.

After net interest charges of £1.47m and taxation of £10.97m the club reported earnings per share virtually unchanged at £138.91 compared to £138.29 the year before, however no dividend was recommended.

Although net debt increased from last year’s £141.3m to £153.3m the club is actively seeking opportunities to re-finance its project bank debt with a longer-term loan carrying a lower interest rate. The club generated £81.1m cash from its operations during the year and after capital expenditure on the stadium and players, the influx of money from a share issue and bank loans, the club’s cash reserves rose to £63.1m from £17.6m.

The club spent more than £94m on its new Emirates Stadium, due to be opened by the start of the 2006/7 season, in the 2004/5 financial year. The club’s move from their 38,000 capacity Highbury ground, the club's home since 1913, to the 60,000 capacity Emirates Stadium is expected to increase match-day income by about £20m a season. A more detailed analysis of the club’s results will appear in the next Soccer Investor Weekly.