Arsenal losses double as pandemic-linked refinancing lifts borrowings from Kroenke

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By David Owen

March 2 – Arsenal, the North London club striving for a return to the Champions League next season, have posted a swingeing loss for the covid-impacted 2020-21 period.

Loss before taxation for the year to end-May 2021 soared to £127.2 million, well over double the prior year’s loss of £54 million. This was on turnover for the Arsenal Holdings Limited corporate entity that was down relatively slightly from £344.5 million to £328.2 million.

The fact of playing the vast majority of games in the period behind closed doors hit US-owned Arsenal comparatively hard since the club would normally expect to out-earn most Premier League rivals for matchday receipts. As it was, matchday revenue slumped from £75 million to just £3.8 million, although a £65.5 million hike in broadcasting revenues largely cancelled out this reverse.

With wage costs rising well under 5% to £244.4 million, a good part of the increased loss was explained by a cut from £60 million to just £11.8 million in profit on player disposals. A Note on gross cash flows revealed that the club spent just under £133 million on player purchases in the year, while receiving £31.9 million from player sales.

The club also suffered a near tripling of net finance charges from £13.6 million to £39.8 million. The bulk of this – £32.2 million – was blamed on the pandemic. The Gunners redeemed and refinanced their stadium finance bonds via a loan from owner Stan Kroenke’s KSE UK Inc. They said that “significant elements” of the bond arrangements were linked to gate revenues, which – as already discussed – all but disappeared over the lengthy period when clubs were obliged to play in front of few if any spectators.

The group’s net debt at the end of the year jumped from £108.2 million to £199.1 million. This was entirely due to a sharp reduction in year-end cash and cash equivalents from just under £110 million to £18.8 million.

The refinancing alluded to above has contributed to a massive year-on-year hike – from £15 million to £201.6 million in the balance due to the club’s parent undertaking. A separate Note indicates this is repayable on two years’ notice.

The club said it had a £70 million working capital facility with Barclays Bank. The new accounts indicated that undrawn committed borrowing facilities had increased to £70 million from £50 million a year earlier.

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