Arsenal reports loss

Arsenal Holdings plc, the company that owns Premier League English Arsenal, reported a group turnover increase of 76 percent in its results for the six month period ending 30 November 2006.

The group turnover was GBP 100.8 million compared to 57 million during the same period the year before. At the pre-tax level the group suffered a loss of GBP 8.54 million compared to a profit of GBP 14.66 million in the same period the previous year.

There are three reasons for the increase in the turnover. First of all, the gate revenue is much higher because of home matches at Emirates Stadium, which has a capacity of 60,400, compared to the 38,500 at Highbury.

Attendance at Emirates Stadium was at or near capacity for each of the eleven home matches compared to Highbury's nine home matches. Each match resulted in ticket revenue of approximately GBP 2.8 million.

The second reason is the club also had an increase in revenue from secondary transactions, such as programme sales, with about 37,000 programmes being sold at each match.

The third reason is the group's property business increased turnover with the sale last summer of a large development site at Drayton Park for approximately GBP 23.5 million.

The property income will continue to accrue in the future because of the redevelopment of Highbury, where the demolition is finished and work has begun on building over 700 residential units.

Approximately 90 percent of the units that were released for sale at Highbury Square have been pre-sold.

Arsenal's pre-player amortisation operating costs increased by 69 percent from GBP 50.1 million to GBP 84.6 million for that same period in 2005. This was due to a considerable increase in player wages, which rose by GBP 12.3 million.

Property development costs, in preparing Drayton Park for sale, were GBP 14.4 million, up from GBP 1.7 million in the comparative period.

Depreciation was reflected in the now operational Emirates Stadium and increased by GBP 2.9 million.

The remainder of the change in costs reflects the increased scale of operations at the new Emirates Stadium.

Profits before net finance charges and taxation, and after player trading, increased by 37 percent to GBP 19.6 million, up from GBP 14.3 million, but finance charges and interest have had a significant impact on the financial results for the period.

After the opening of the new stadium, the group's accounting for the interest charges on the stadium funding debt balances changed so that interest and other finance charges are now shown as expenses to the profit and loss account.

Previously, in the construction phase, these costs were capitalized or charged to the balance sheet. Because of these changes, net ordinary finance costs for the period increased to GBP 6.8 million compared to net finance income of GBP 300,000 in the same period in 2005.

Due to the refinancing of the stadium funding debt, there were finance costs of GBP 21.4 million which had to be charged immediately to the profit and loss account.

After a taxation credit of GBP 2.35 million, compared to a tax charge of GBP 5.06 million in 2005, Arsenal Holdings had a loss per share of GBP 99.35 compared with positive earnings per share of GBP 154.15.

Net debt increased from GBP 209.6 million to GBP 270.3 million.

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