Bumper transfer profits can’t hide Gunners’ need for return to Champions League

By David Owen

January 27 – Arsenal, the North London team battling to secure the top-four Premier League finish that could see them return to the Champions League, have reported one of the biggest annual pre-tax profits ever recorded by a football club.

But, in keeping with an emerging pattern, the profit of £70.2 million was attributable almost entirely to player sales. Francis Coquelin, Olivier Giroud, Alex Oxlade-Chamberlain, Alexis Sánchez and Theo Walcott all departed during the year to 31 May 2018, mainly to Premier League rivals.

This contributed to a huge profit on the disposal of player registrations of just over £120 million.

This masked a severe deterioration at the operating level, with an operating loss of just over £42 million posted, compared with a profit of £52 million the previous year.

Sir Chips Keswick, chairman, said that while player trading had meant that “overall Arsenal has had another profitable year,…we are very aware of the financial pressure which Europa League football places on the club. A return to the Champions League is a clear priority which everyone at the club is committed to delivering.”

Arsenal currently lie fifth, three points behind Chelsea in fourth place and seven behind local rivals Tottenham in third. They were knocked out of the FA Cup by Manchester United on Friday, with Sánchez among the scorers.

After a long period of stability and success, the winds of change have been blowing through the club recently. Arsène Wenger has given way to Unai Emery and the Gunners are now owned lock, stock and barrel by US sports team entrepreneur Stan Kroenke. Chief executive Ivan Gazidis also departed in October 2018, after the latest year-end.

The change in first-team management left its mark on the results in the shape of a £17.2 million exceptional charge. Other noteworthy one-off items were the sale of a property development site next to Holloway Road station, which appears to have yielded about £5 million, and a beneficial movement in the market value of an interest rate swap.

Football revenue at Arsenal Holdings fell back below £400 million to £388.2 million, reflecting the lack of Champions League football. The decline affected all three main income streams, with broadcasting dipping from £198.6 million to £180.1 million, commercial from £117.2 million to £106.9 million and matchday revenue from £100 million to £98.9 million.

Staff costs climbed from £199.4 million to just over £240 million, £16.8 million of which were exceptional costs.

The year-end cash position increased more than £50 million to £231.3 million, leaving overall net cash at £14.8 million.

Notes to the accounts showed total debt dipping below £200 million to £197.2 million. Most of this is in the form of fixed and floating rate bonds. The fixed-rate instruments are said to bear interest at 5.1418% per annum; £50 million of floating-rate bonds bear interest at LIBOR for three month deposits plus a margin of 0.55%. Interest rate swaps have been used to fix the LIBOR element of this cost at 5.75%.

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