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Finance didn't stop us signing players

While revealing record post tax profits of £35m Peter Hill-Wood has claimed that the decision to bring in only Vermaelen in the summer was the result of Wenger`s assessment of the quality of the existing squad and the quality available to him in the transfer market.

"Although transfer activity in the summer window was limited I can assure supporters that this followed lengthy discussions with Arsène Wenger and reflected Arsène`s assessment of the player resources, both within the existing squad and available on the transfer market, rather than any necessity or financial constraint" said the Arsenal Chairman. Adding "Arsène has the resources to bring more players in, if he believes doing so will add to the quality which we already have in the squad."

Rumours that the property developments were inhibiting the club were dispelled as it was revealed that the property related debt has been reduced by £90m to stand at £47m. This debt reduction was a reported as a 'significant development` over the summer months and not included in the year end to May 31st accounts. The significant developments may well include the income from player trading following the sale of Adebayor and Toure to cash rich Manchester City though the clubs financial report states that the debt reduction is as a consequence of completed property sales. Some 30% of the Highbury Square apartments are still to be sold which, when sold, should eliminate the rest of the debt and probably provide a net profit on the activity. The clubs cash position increased to a touch under £100m.

This, Hill-Wood claims, eliminates the need for a rights issue, proposed by Usmanov to reduce debt. "Now that we have resolved any issues linked to the financing of Highbury Square, in the final analysis I believe it distils down to a decision about whether it is appropriate to raise money from shareholders to purchase the registrations and pay the wages of footballers. This is not something that Arsenal has ever done previously in its history and it would be at odds with our ethos of running the Club as a business which is self‐sustaining and pays its own way in the world."

Successful clubs have to firstly be successful businesses but mindful of the impression that simply making money can have on support CEO, Ivan Gazidis was quick to clarify the real point behind positive financial results: "This is excellent news although I should perhaps stress that making and reporting profits is not in itself the primary objective for the directors. First and foremost we are supporters of this great football club and, as such, our main goal will always be the achievement of success for Arsenal on the field. The Group`s profitability is important because it is a by-product of running the Club as a solvent and successful business, which in turn allows us to maximise the level of investment in the playing staff and in the future development of the Club."

To underline the investment the club has made the report includes an assessment of total spending on wages, transfer fees and extensions to existing contracts which shows that net spending on player investment increased by £20m to £122m for the year.

The substantial reduction in the debt burden and improvements in the property market allied to the significant gain on player trading this summer should put the club in a strong position to bring in players to strengthen the squad wherever Wenger believes it needs strengthening. But experience seems to tell us that that might not necessarily be in concert with the opinions of all supporters.



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The Journalist

Writer: Amos Mail feedback, articles or suggestions

Date:Monday September 28 2009

Time: 10:01PM

Your Comments

I never really thought it was a lack of money that prevented AW bringing players in, or else I don't think he would have spent all of his budget on one player. A glance over to United, Chelsea and Liverpool shows you how difficult the transfer market has been with new tax legislation and the weakness of the pound. Even with their billions, City couldn't attract players from abroad- they largely spent on Premiership players. The Queensland Road project is the interesting one to watch now. Having gained planning permission, do Arsenal try their hand at property development again or do they outsource? I think that decision will show you how comfortable/uncomfortable the Highbury Square project has been.
Little Dutch
Some new additions to the preliminary report indicate that they are proceeding with the development of the Queensland Road project. It seems they are in the process of concluding a deal to sell all the affordable housing element of the development (about a third of the residential properties) to a housing association.
Amos.
It's very encouraging to have a sound financial grounding. As far as signing players is concerned...... that's Wenger's choice and he will be responsible for the pitch performances good or bad. What irritates me though is the price we're paying on our season tickets. I know we still have a waiting list, and I undersatnd Supply and demand, as have an economics A level. But do they realise how hard it is for the loyal, true fans to afford to go week in week out. It is my fear that a lot of our true fans are being/and will continue to be replaced by corporate season ticket holders. I know I'm surrounded by them!
navydave
The football side of the business has shown only a little improvement in numbers, which, given the tough circumstances, is good financials. The progress in the property side is also good news, and will be less of a distraction as we go along. Whether a football club should be involved at all directly in property development is a question that the Board will have to answer for the Queensland Road Project. Outsourcing it will be the easier way out.
prits
Good point navydave about the Corporate STH's, I too have a few of them near me, and they are very irritating with their mindless comments. Still, a pound coin is still a pound coin no matter who it comes from, and like it or not, the Corporate element will be with us for a VERY long time. The Queensland Road Project can be a HUGE success if handled by the right people. Not sure anyone on the board, or any of the ' new faces ' have the expertise in this field. Let's outsource it, and get on with running the Club soundly. I am expecting even better financials next year, with the inclusion of the transfer fees for Ade and Kolo giving us a head start.
CockneyRich1
We've got about 45,000 people on the waiting list - I reckon about 15-25,000 would actually take up an ST if offered to them. That's still reason enough for them to charge us the price they do for the STs we have.
shewore
Kroenke has a great deal of expertise in combining property development with his sporting enterprises. Everything in the report indicates that they will handle the Queensland Road development themselves though it is all still at an early stage. The footballing side has done pretty well with Matchday revenues, broadcasting and commercial/retail generating an extra £14m last season. Almost half of that came from matchday revenues!
Amos.
CR1, I don't think the corporates will be with us if we start dropping down the league. With respect to Queensland Road, it won't be as easy to get a contractor to take it on (on good terms for us anyway) in the current environment. Maybe our experiences with Highbury Square will set us in a position to handle it ourselves again.
navydave
Dropping down the league navydave is a frightening thought, and one which I don't wish to dwell upon ! I am in the VERY fortunate position to have my own company, and in february I purchased an apartment in Highbury Square. At the early stage of negotiations I explained that I was adding to my companys property portfolio. A day later, I received a call from the Agent offering me a 4 for 3 deal. I could buy 4 apartments and pay for 3 !! I am not sure how giving away property is such a good idea ! This is my only concern about the Queensland Road Project.
CockneyRich1
Bloody hell CR1 that's interesting...buy 3 get 1 free i've hrard of, but on apartments in N5...?!
shewore
The first 208 apartments seemed to have sold at an average price of around £425k. The report advises that a further 237 apartments were sold since the end of May raising another £84m which gives an average price of £354k. They may not all be the same size apartments of course but I can imagine that back in February, at the bottom of the market, they were pretty keen to do some deals. Apparently some concerns about bulk purchases (to overseas property companies I believe) they had at the time have been resolved (presumably with discounting). Still there are 200+ properties as yet unsold.
Amos.
sorry to go off topic, but just to let you know Paul i have dropped you an email, so hopefully you will pick up on it and get back to me?
pompeyrug
When I received the phone call shewore, I was taken aback. I asked the Agent to e-mail his offer, so that I could fully take it on board. I have kept the e-mails for posterity, and as a reminder on how NOT to run a business !!!
CockneyRich1
Good old estate agents, god love em...
shewore
Depending on whether they were still working off asking prices set at the top of the market I wouldn't have thought that a discount of 25% for buying 4 units back in February in a market that, from its peak, had dropped 30%+ at the time was that remarkable. Average prices seem to have dropped 17% by the summer anyway.
Amos.
CR1 - did you pay at the top of the market? If so, Amos makes a good point.
shewore
No, shewore, I paid a ' competitive ' price I would say. It was a few miles short of the asking price, but at the same time, not ridiculously low. Amos makes a good point anyway, regardless of my outlay. They maybe offered me the deal with my ability to exchange in 6 weeks and it being a cash purchase, I don't know. Despite the economics of it all, I am amazed that they actually offered me a ' free ' apartment, although it was one of the smaller, cheaper ones.
CockneyRich1
CR1, can you pay for my season ticket? ;-)
navydave
CR1, perhaps you can buy us a new CB!
Sir Henry
News of these new Highbury purchases were not included in the latest report--this press release only came out yesterday: http://www.londonandstamford.com/media_centre/rns/?id=6237 . It amounts to a £41.4m purchase of several Highbury apartments and parking spaces.
jaelle
It seems that the deal was the 'significant summer development' recorded in the report. There are still 200+ properties for sale. http://www.investorschronicle.co.uk/Companies/ByEvent/TradingTechniques/Inbrief/article/20090930/d319c876-adc3-11de-9695-00144f2af8e8/London--Stamford-scores-Arsenal-deal.jsp
Amos.
 

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