Arsenal announce another increase in profits
Gunners’ figures defy the crunch, but how much longer will their financial health last?
On the day that Mike Ashley has been forced to plough £10m of his own cash into Newcastle to cover operating costs, Arsenal have announced that their profits have risen £4.5m to £24.5m before tax for the six months ending 30 November 2008.
Matchday revenue and broadcasting revenue both increased (by £.3m and £4.5m respectively), and problems shifting the properties on the old Highbury are not as drastic as previously reported; the 186 apartments are valued at £76.7m, and they had already sold £58.1m by November 2008.
Chairman Peter Hill-Wood told the BBC:
“Clearly there are some significant challenges ahead of us, both on and off the pitch, over the closing months of this financial year and beyond.
“The UK property market has been particularly affected by the economic downturn and, inevitably, this has had an impact on the group’s own property development activities.”
While these figures represent a picture of fiscal health, the Arsenal board must be mighty concerned by their reliance on Champions League money. According to Simon Chadwick, a professor in sport business strategy and marketing, English clubs have made an average of £34.39m from reaching the knockout stages of this year’s competition, and the eventual winner will make up to £98.69m.
Arsenal recorded a net debt of £318.1 million for the year ending 30 May 2008, including £250.2 million borrowed for building the Emirates Stadium (part of a 23-year loan at a fixed interest rate).
If the club fail to clinch fourth spot in the Premier League, thier delicate financial model could start to crumble.