2017 Arsenal Accounts – a 5-Minute Summary

This is a simple layman’s terms view of the Arsenal accounts for the period 1 June 2016 to 31 May 2017. It’s nearly all distilled from the longer and more detailed report written by Simon Hill for the Arsenal Supporters’ Trust.
All figures are rounded to the nearest million pounds.

Revenues
Matchday – tickets sold
£100m – no change from 2016
This varies only slightly year by year, as long as the stadium stays full – or at least tickets are paid for.
Variation is caused by the number of home games in the cups and the presence or absence of the Emirates Cup.
In 2016-17 Arsenal played 26 home games; the previous season Arsenal played 27 home games and hosted an Emirates Cup.

Broadcast
£199m – up £59m.
Increase due to the new Premier League TV deal (an extra £39m) and the second-place finish in 2016 leading to a bigger share of the Champions League pot converted at favourable exchange rates (an extra £21m, making £58m total from this source).

Commercial
£91m – up £9m.
Mainly made up of the Puma and Emirates sponsorship deals. The increase is due to a 35 per cent growth in secondary sponsorships (up £6m to £23m pa) but it also includes FA Cup prize money of £3m.

Retail
£26m – up £1m
This is sales of shirts, merchandise, etc.

Player Loans
£7m – up £4m
Wilshere and Chambers were the prominent deals. Arsenal’s accounts confirm that loan deals cover all the loaned player’s wages, with fees being earned on top.

Property
£1m – down £2m
There is very little property activity anymore, so the sums are small.

Total Revenue: £424m – up £71m

Costs:
Wages
£200m – up £5m
The underlying increase was around £15m, but there was no Champions League qualification bonus, which saved around £10m.

Other football costs
£79m – up £9m
These costs cover running the team (travel, hotels, medical costs, etc), stadium running costs, insurances and retail costs of sale (stock and running costs of the Armoury, etc).
These have risen from a fairly steady figure close to £60m prior to 2014 to around £70m between 2014 and 2016, and have jumped to £79m in 2017.
In 2014 and 2015 they included £3m ‘fees’ taken by Stan Kroenke, but the reasons for the size of the rise this year are unclear.

Amortisation
£77m – up £18m
Amortisation is the accounting cost of buying the team spread over the length of the relevant players’ contracts and includes items such as agents’ fees, Premier League levies and contract extension fees as well as the actual transfer fee paid for a player.
This ensures that the accounts do not take a major hit when an expensive player leaves for no fee at the end of his contract, but does not affect the cash position.

Depreciation
£15m – no change
This is the charge to the book value of the club’s non-playing assets – buildings, vehicles, various facilities in and around ((c) Andy Townsend) different properties, etc.

Property and Loans
£1m – no change
Costs associated with selling property.

Total costs: £372m – up £32m

Operating profit (revenues minus costs): £52m – up £39m
Coincidentally this increase is exactly accounted for by the larger Premier League TV deal.

Other costs and income:
Profit or loss on player sales: in the year to May 2017 a profit of £7m.
Interest: £13m – this is mainly the gradually reducing figure for the stadium repayment.
Debt repayment: £8m – this is the capital repayment element of the stadium debt.

 

Cash position:
The headline cash figure of £180m as at 31 May 2017 is down from £226m in 2016.

The amount that can be spent ‘risk free’ on new players is reduced by:

  • Debt reserve of £36m, held under the terms of the stadium loans
  • Working capital for bills to be paid through the season – around £20m needed
  • Reserve for other known future payments, including players previously bought – estimate of around £20m needed in the current year
  • Sums held to pay corporation tax and other debt repayment – about £21m
  • Payments for players acquired in summer 2017 – an estimate of £23m for this year, as large transfer deals tend to be spread over at least 2-3 years.

So a total reduction of £120m, bringing the figure down to £60m.

But add back in:

  • Receipts for players sold in summer 2017 – the total was about £70m, but some will be deferred so an estimate of £35m received in the current year.

£60m plus £35m = £95m of ‘available cash’.

 

Likely changes in the current season:
Matchday revenue
The figure for 2017-18 will drop by around £9m due to lower season ticket prices as a result of no Champions League.
No Champions League
This will reduce income by anything from £20m upwards, depending on how far Arsenal can get in the Europa League. Unless Arsenal win the Europa it’s likely to be a lot closer to £35m, given that Arsenal’s CL pot was boosted in 2016-17 by the fact of finishing second in the Premier League in 2016.
Property
Two sites at Holloway Road and Hornsey Road are held in the balance sheet at £12m and are still to be sold. Holloway Road is due to be sold this season (estimate of £6m).
A minimum of £75m has been generated from the property assets, including Highbury, since the stadium move commenced.
Effect of the Premier League wage cap
The Premier League wage cap allows a maximum of £7m extra in wages per annum plus any increases in commercial income plus average transfer profits referenced back to season 2012-13.
This is not simple to determine, but an estimate is that Arsenal wages would be allowed to go to around £220m in 2017-18, so there is some slack there.

Twitter: @AngryOfN5

 

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