Monday, August 13th, 2012 « Untold Arsenal: Arsenal News. 800,000 visits last month
Which club has the most debt?
Editorial prelude [well we’ve never had one before, so why not?
On the History of Arsenal site, linked at the end of this article, you’ll find a page from the programme for the first ever league match at Highbury in 1913, reprinted. It is part of our build up to 100 years at Highbury.
Anyway, on that page there is an acknowledgement of the fact that Arsenal were indeed in debt as a result of building the Highbury stadium. To help overcome the debt they were selling shares in the club (£1 each), and season tickets (£1.05). There were discounts for being both a season ticket AND a shareholder.
So there was Arsenal (or more particularly, Messrs Hall and Norris who paid for the stadium) full of debt. 99 years on, its no longer our club that is searching for funds.
Which club has the most debt? and where are we in the debtor’s league?
By Cameron Wolfe
Shortly after becoming Chelsea’s Owner Mr Abramovich and the club released a statement saying that within five years Chelsea would be self sufficient.
That they (and others) have fallen well short of that statement, to say the least, is shown in the latest figures for various premier league clubs are below.
Here are two classic quotes from Chelsea.
Chief executive Ron Gourlay said: ‘Achieving a record level of turnover is satisfying given the economic background against which we are operating.’
Chairman Bruce Buck added: ‘The club is focused on complying with the requirements of Uefa’s financial fair play regulations while maintaining its ability to challenge for major trophies. We would expect this to be reflected in our results for the current financial year.”
Current results show a £63m loss and they just spent that again on new players this summer. And all this from a club that supports FFP.
So returning closer to home, where are Arsenal and Chelsea in the Debtors League?
No surprise, Chelsea are top which is to be expected considering just how much money Abramovich has pumped in to the club. Some people are of the belief that this money has been written off. But that’s not true. It’s on Chelsea’s parent company’s books and in theory could be asked to be repaid at just eighteen months notice. Some believe that in reality he’ll never see his money again. Others suspect he might one day ask for it back – and demand it. Forbes values the club at £402m so a buyer would have to pay @ 1.2billion
Sitting in an unhealthy second place is Man.U. No doubt once the Glazers convince which ever stock market they’re trying to create more shares on that their club is worth $3 billion everything will once again be rosy up at OT.
Clearly the Glaziers are in to make money – following the liquidity problems they had with their shopping malls and other ventures. The best solution for Man. U would be for the Glaziers to sell up and move on but currently the are looking for anywhere upwards of $2 billion for the club. (Depending on which figures are too be believed.)
Meanwhile, looking around elsewhere…
Stoke. Never been a fan. Mainly down to the fact I can’t stand Pulis and their style of play but Kudos to their powers that be. No debt. See you can be a premier league team and have no debt. Maybe other clubs should follow their financial plan. Maybe they are just keeping it simple. No outrageous signings/wages and a decent cup run or two. If they can sustain there EPL status indefinitely then they’ll be able to start sign better players.
A surprise was that Man. City carries a debt. Not a huge one but you would think that a club run by a family rumoured to be worth $55 billion would make sure that they weren’t needlessly paying interest charges no matter how small.
Biggest surprise was Fulham. Their owner isn’t as generous as some would think and fully intends to keep track of how much he is owed by the club. A good business man should always know how much he’s owed especially if it’s £190m.
So, Arsenal. How do we compare?
Nothing like Chelsea or Man. U when it comes to the amount of debt we have. Most importantly for the club the debt is coming down nicely on a yearly basis and the amount we pay in interest charges is more than manageable. In the next few years depending on how well we do in the CL, cups and in the league in general will help any along with extra income from TV, Naming rights or a new shirt sponsorship deal could easily go towards paying down the debt.
Stadium building costs don’t count when calculating FFP – and nor do academy costs, so all things considered we are doing ok on all front. The debt is just the normal mortgage debt and it goes down year by year.
Our income isn’t too far behind Man.U and if we keep on expanding in Asia, Africa and the Middle East then our income will keep on growing. As will our profit. And given that we are now coming to the end of the original sponsorship deals which were front loaded to pay for the Emirates in part, we can expect a huge uplift in sponsorship income within the next couple of years.
In the long run it makes sense to have been prudent when other clubs just kept on borrowing against their income. Or re-financing their debt every other year. In the very near future we will be able to compete on an even playing field. And we’ll be doing it just at a time when the finances of clubs like Tottenham, Liverpool, and possibly even Chelsea will be restricted somewhat by the desire to build a new stadium.
| Turnover £m | Wage bill £m | Debt £m | Interest £m | |
| Arsenal | 256 | 124 | 98 | 15 |
| Chelsea | 222 | 190 | 110* | 0.8 |
| Fulham | 77 | 58 | 190 | 0.6 |
| Liverpool | 184 | 135 | 65 | 3 |
| Man City | 153 | 174 | 43 | 5 |
| Man U | 331 | 153 | 487 | 50 |
| Newcastle | 89 | 54 | 130 | 0.2 |
| Stoke | 67 | 47 | 0 | 0 |
| Sunderland | 79 | 61 | 77 | 2 |
| Tottenham | 163 | 91 | 57 | 6 |
* Doesn’t include the 760m owed to Abramovich.
So summarising the future:
- Arsenal – turnover to rise with income from new sponsorship deals.
- Chelsea – were trying to get towards FFP but then panicked over poor league form and started spending again.
- Fulham – now spending money on extending one of the stands – so debt will increase.
- Liverpool – still pondering what to do about a stadium and how to afford it
- Man City – not looking remotely as if they can qualify under FFP rules.
- Newcastle – now trying a new link up with Rangers – which is interesting to say the least.
- Stoke – nice club, shame about the football (and the fans)
- Sunderland – interesting how slow the manager has been in the transfer market this summer
- Tottenham – still got to find the cash to build the new ground. If they borrow, it will be hard to borrow money for players. Will the owner in the Virgin Islands cough up more cash?