I had to produce a rather detailed analysis of Arsenal’s financial report for the past year but to save you the boredom, the financial jargon and a plethora of figures i will just run through some of the important numbers and elucidate a little. Generally speaking things are looking very healthy, although there has been a noticeable increase in player wages, yet a method for long term growth isn’t immediately evident without a more appealing brand (Arsenal) which will only come about via greater on field success (Champions League) or tours (North America).
First things first. The property business connected with the club, that which has developed much of our old Highbury into high end flats, should be considered only a short term asset. We have realised only relatively small profits from the property development so far, £6 million in 2009 and £11 million in 2010, but now that all associated debts incurred by the property development are covered by an almost equivalent cash surplus (produced by property sales this year) we can expect a couple of years of ‘extra’ money coming into the club, until the rest of the development has been sold. This extra money will only appear for a couple of seasons so we might have inflated profits for a while. Not a bad thing at all. So, from the property development we realised an £11 million profit this year.
From transfer dealings we recorded a £38.1 million profit. Yes. That is incredible isn’t it?
From broadcasting we made £84.6 million. From match day revenue we made £93.9 million. This means broadcasting went up £11.3 million and match day revenue went down £6.2 million. Why? More television money and less home games. That’s all. We also made £44 million from our commercial operations (corporate sponsorship et al).
Squad costs, aka wages and associated, went up £6.7 million in a single season – and yet we sold some high earners. Total Expenses, including wages, was £202.5 million. Yes. That too is incredible isn’t it?
So, once we account for the property development, broadcasting, match day and commercial money, then include the player transfer profit and subtract the expenses Arsenal ended up with a profit of £61 million. £61 million profit!! After tax!! Some accounting meant we actually recouped £5 million from the taxman as our pre tax profits were £56 million.
Let me put it another way, however. Take away the £11.2 million from the property development (this won’t be around forever) and then also take away the £38.1 million on player sales it means the £61 million profit is actually closer to £11.7 million. You might wonder why do i say the profit is closer to £11.7 million instead of the £61 million announced, well, let me reiterate. Most of the profit arrived from profits on transfers and the property development. In the long term we shouldn’t ‘expect’ to make profit on these areas. For the next two years, perhaps three, we will make millions more on the property development but it is not a long term revenue source and no club can count profit on player transfers as a guaranteed income. Ok, maybe with Wenger it is different but still, accounting practise won’t have it. It’s not guaranteed.
All in all, as said, the figures are good and the club is in a healthy financial state. Makes it all the more disconcerting that we didn’t buy a £20 million goalkeeper (Buffon?) or even a £5 million alternative (Schwarzer?). We could most definitely afford it.