Thursday 12th December 2019

What can we learn from the publication of Arsenal Football Club plc Accounts?

Arsenal Football Club plc Accounts

On Saturday 6 December accounts for the 12 months to 31 May 2019 were filed with Companies House for Arsenal Football Club plc, a wholly owned subsidiary of Arsenal Holdings Limited (AHL).

AHL is the overall holding company of all the Arsenal-related companies, and it is the financials of AHL which give us the whole club financial picture. You can read the published accounts here.

With a financial year-end of 31 May, accounts do not need to be filed until the end of the following February. In 2019 they were released at the end of January for AHL, and the Football Club accounts were also released on the same day. It is not clear to us at this stage why the Football Club accounts have now been released earlier than the overall AHL accounts.

AHL is now of course wholly owned by KSE UK Inc, a company registered in the State of Delaware, USA, and wholly owned and controlled by Stan Kroenke.

There are some key items that will only be addressed in the AHL accounts, for example coverage of the long-term stadium financing undertaken in 2006. This process saw bonds issued by Arsenal Securities plc, which are supported by gate receipts and season ticket monies that first flow to Arsenal Stadium Management Company Ltd, before coming into the Football Club. Some of those transactions don’t happen before 31 May each year, but of course all the money is within the Arsenal Holdings group, so will show in the overall accounts once these are issued.

Due to the Europa League final being played on 29 May 2019, season ticket renewals for the current 2019-20 season were delayed beyond the normal 1 June deadline. This, together with the transactions between the various Arsenal companies, has resulted in Football Club “match day revenues” being recorded as having reduced by £30m to £69.3m (£99.8m in 2018).

Therefore the final AHL figures will be approximately £30m higher than shown by the football accounts alone and be similar to last year's 99m recorded figure. There may even be a slight increase as the average ticket sales over 30 home matches actually increased to 58,943 from 58,012.

The AST will provide detailed analysis of the AHL accounts when they are published in early 2020.

Some other points of interest from the Arsenal Football Club plc accounts are:

  • Broadcast income from UEFA relating to the Europa League in 2018-19 was £36.6m (£34.4m in 2018) which compares with the £56.3m received in 2016-17 from the last appearance in the Champions League. Together with gate receipts, participation in the 2018-19 Europa League (seven home matches) would have been worth about £40m to Arsenal.
  • There were further “redundancy costs” of £3.2m, demonstrating that further cost is being incurred as a result of the considerable upheaval in football management staff in the last two years. This is in addition to the £17.2m of redundancy costs paid out in the previous season.
  • The number of training staff employed at the financial year-end was down by 19 from 106 to 87, presumably another result of the post-Wenger clearout.
  • Wages during the year (once redundancy pay offs were removed) increased by £8.4m from £218.9m to £227.3m.
  • The year-end cash position was described as “robust” at £107m (£114m the year before) but note should be taken of the delay in receiving season ticket renewal monies. Over £100m of cash is held in other group companies related to stadium finance reserve accounts and the property companies.
  • Player costs (fees and agents) are listed as £99m. This is about £20m more than we would expect using publicly available sources for the cost of players bought and agents fees. The players signed in this period were Leno, Lichensteiner, Guenzdozi, Torreira and Sokratis. This expenditure is offset by the recording of £12m for players sold which is also higher than anticipated.
  • One of the Key Performance Indicators remains the target of qualification for the UEFA Champions League
  • We now anticipate that the final AHL figures will show a loss in this year for the club in the region of £30m. This is a little smaller than we anticipated due to the £12m in player sales registered and also higher than expected broadcast revenues

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