Has Arsenal borrowed too much?

[The Angel]

Interesting read (http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/07/ive_obtained_a_copy_of.html) in today's BBC.

"1) It believes that Arsenal's earnings before interest, tax, depreciation and amortisation (EBITDA) will fall from between £55m-60m in 2009 to £35-40m in 2010. The most striking contributor to this squeeze that it cites is a 12-14% increase in costs to £179m "as a result of players being compensated for tax changes and a number of step-ups in wages for individual players".

2) It predicts that cash flow will fall by more than that because of some pre-payments on assorted deals that were taken in 2007.

3) It says that Arsenal's fans are already paying 40% more than the average for the big four English clubs for match tickets and 24% more for season tickets - implying there's little scope to increase gate revenues, especially in a recession.

4) It calculates Arsenal's gross average annual spend on new players as £18m, compared with £37m for the big four; and the net annual spend, including sales, as precisely zero, compared with a £20.2m big four average

5) Perhaps most germanely of all, it fears that redevelopment of Arsenal's former Highbury stadium into luxury apartments may not turn out to be profitable - and that refinancing £140m of property-related debt over the next couple of years will be neither cheap or easy."

Discuss.

[The Angel]

Most interestingly, it confirms that Arsene has limited cash to work with: "perhaps most controversially, the chaps from Rothschild don't believe Arsene Wenger is seriously constrained by lack of finance in his ability to develop the playing squad - and, more importantly, they don't believe that he feels fettered (if you see what I mean)."

[DaPrince84]

im probably reading it wrong, but it says we have a balanced budget... and dont spend over the amount...

[Rewinder]

Those are the conclusions reached by Lazard, who were hired by Usmanov to validate his point of view. None of that is necessarily true.

[DougG_ATL]

Those are the conclusions reached by Lazard, who were hired by Usmanov to validate his point of view. None of that is necessarily true.

Exactly. The accountants can manipulate numbers to illustrate whatever they want; in this case, Usmanov wants to cast doubt in the minds of shareholders from whom he might gain more control.

[The Jitty Slitter]

* Thread closed *