Arsenal Accounts: £17m to pay off King Wenger and his entourage

From Rhys Jaggar:

The Last Night of the Arsenal Financial Proms

So the very last set of financial accounts required to be published by law as a plc were released by the club yesterday.

The simple highlights are these:

1. The club made an operating P+L loss of £42m on turnover of £403m.

2. It covered that by recording a £122.3m P+L profit upon transfer of players.

3. Net Income was a very healthy £56.5m, balanced by an equally healthy net cash inflow of £51.3m.

4. Cash balances on 31/05/2018 was a near record £231m, including around £36m of debt service reserve.

5. Staff costs soared to £240m, including £17m to pay off Wenger and his acolytes.

6. Total debt of £197m (including debentures) is now comfortably covered by cash and cash equivalents i.e. in effect the stadium costs are fully covered, even if not yet fully paid for.

7. Commercial revenues actually dwindled, a fairly shocking performance given the increases achieved by competitor organisations.

8. 12 years after opening the stadium, the club is still dabbling in property, recording significant revenues and profits from the sale of sites near the stadium.

9. The club admitted that average gates were down to just over 58,000, with matchday revenues £1m down on 30 games vs 26 the previous season.

10. Kroenke family drew no dividends, consultancy fees etc.
So overall, Arsenal leaves the uk plc scene in a healthy enough position financially, even if on the pitch matters are still somewhat in the balance.

The accounts confirm that the football club is now a subsidiary of KSE Holdings Inc, registered in the state of Delaware.

One wonders whether the Deutsche Bank loan raised to buy out Usmanov is on the holding company balance sheet in Delaware and how interest and capital repayments will be funded.

Next year will be the interesting one to see how detailed the filings for Companies House will be. Many EPL sides in private ownership e.g. WHU and Everton, release fairly detailed financial reports, so it is quite conceivable that Arsenal will continue to do so.

The predictions are that staff costs will remain high (several high earners will disappear in summer 2019, so 2020 may be healthier), revenues will remain fairly stagnant and the question will be how P+L and net cash flow will end up.

Short of a few major sales before May 31st, it is hard not to conjecture that both numbers will be negative. The most sellable are Lacazette, Aubameyang, Iwobi, Xhaka and Torreira. Bellerin would be on that list if fit. Chambers may now be sellable after regular football at Fulham.

Best financial outcome would be Nketiah replacing Welbeck in squad, ESR replacing Ramsey, Saka replacing Iwobi if he were sold, Medley replacing Mustafi.

Such things might not be the best footballing outcome, but the quickest way to generate a two hundred million transfer fund is turning academy graduates into big money transfers. It is not necessarily the route to go…..and nor may another round of transfers out in the summer.

Shifting deadwood is still a major part of the agenda.

Myles says: 

Thanks, Rhys.

More interesting than last night’s 2-1 win over Cardiff.

Guendouzi was good. Classy penalty by Aubameyang, a very good goal by his mate Lacazette.

It was always gonna be Delaware, we knew that.

As we all know, Stan Kroenke is a billionaire who doesn’t put money in. He takes it out.

And Unai Emery inherited a deeply dodgy squad that’s still very unbalanced. It’s not his fault that AFC wasted so much money on players who do not produce.