Football is not a matter of life or death, it is more important than that

Financial results

Arsenal Holdings plc Results for the year ended 31 May 2009



Group turnover increased to £313.3 million (2008 ‐ £223.0 million) reflecting income

generated from cup competitions and property sales.

Match day revenue was increased to £100.1 million (2008 ‐ £94.6 million), mainly as a

result of progress to the UEFA Champions League and FA Cup semi‐finals.

Operating profits (before depreciation and player trading) in the football business were

£62.7 million (2008 ‐ £59.6 million).

The completion of sale of 208 (2007 – Nil) private apartments at Highbury Square

contributed £88.0 million of revenue (2008 ‐ £15.2 million) and boosted the operating

profit from property activities to £7.8 million (2008 – Nil).

Profit after tax of £35.2 million (2008 ‐ £25.7 million) was a record for the Group.

Since the end of the financial year there have been a number of further positive

developments in relation to the Group’s Highbury Square project:

‐ Of the 655 private apartments in the development, sales have now completed on

445 units with a cumulative sales revenue value of £172.4 million.

‐ The balance on the bank loan used to fund the project has been substantially

reduced to £47 million and agreement has been reached to refinance the loan and

extend its term to December 2010.

Commenting on the results for the year, Peter Hill‐Wood, non‐executive Chairman, said:

“The Group’s profits have now risen in each of the three years in which Emirates Stadium

has been our home. 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.”

Ivan Gazidis, Chief Executive, said:

“Clearly, the Club already has a first class stadium, an excellent world‐wide reputation and

outstanding core support. Football is a hugely competitive and fast moving business and we

must ensure that Arsenal is not just keeping pace but setting the pace, both on and off the

field. The Club is superbly positioned for the future and I am tremendously excited about

the opportunities we have ahead of us.”

Arsenal Holdings plc

Chairman’s report

I am pleased to open my report by confirming another year of strong financial results. The

annual accounts show an after tax profit of £35.2 million (2008 – £25.7 million) and this

represents a record level of annual retained profit for the Group.

The Group’s profits have now risen in each of the three years in which Emirates Stadium has

been our home. 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.

The 2008/09 season was not without footballing success although the first team finished it

without a trophy. In the Premier League a strong unbeaten run of 21 games ultimately

carried us into a respectable fourth place finish. In addition, we reached the semi‐finals of

both the UEFA Champions League, for only the second time in the Club’s history, and the FA

Cup. Disappointingly, the team were unable to advance further in either of these


Whilst honours eluded the Club at first team level, there was considerable success

elsewhere with the Under 18s team notably winning a League and FA Cup double. Arsène

Wenger already has a wealth of young players developing in the first team squad and it is

exciting to see another group of hugely talented players coming through at the next level

down. There was more silverware for Arsenal Ladies too, as they completed a domestic

treble of League, League Cup and FA Cup.

Earlier this year we were pleased to announce that Highbury Square had won the

prestigious ‘Special Jury Award’ at MIPIM, which is the annual property world equivalent of

the Oscars. We have always been confident of the outstanding quality and unique character

of the Highbury Square project and, consequently, I am delighted to report that there have

been a number of significant and positive developments over the summer months. These

developments are covered in more detail in the Chief Executive’s Report and the Financial

Review, but the key message is that approaching 70 per cent of the 655 private apartments

at Highbury Square have now completed sale and the related bank loan has been reduced

from £137 million to £47 million. We believe that the development has outperformed the

market and is now on a secure footing which should allow us to maximise our final return.

Ivan Gazidis joined the Group as Chief Executive Officer on 1 January 2009 from Major

League Soccer in the USA, where he was deputy commissioner. Ivan came to the Club with

an excellent knowledge of the football industry and he has quickly transferred this to the

specifics of Arsenal, the Premier League and the European stage.

During the year there were a number of changes in the major shareholdings in the Group

with both Kroenke Sports Enterprises and Red and White Securities taking their stakes

beyond the 25 per cent level.

The Board continues to have a regular dialogue with each of the Group’s major shareholders

and, in recent months, this dialogue has prompted an analysis around the question of

whether there should be a fundraising for the Group through a rights issue. This is a

complex subject, reflecting the two aspects of the Group’s business and the related

financing arrangements. 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.

The new season started with a headline grabbing 6‐1 away win at Goodison Park and,

although our opening schedule had some difficult fixtures, the team has produced some

excellent performances. Following a reasonably comfortable 5‐1 aggregate victory against

Celtic in the play off round we have now reached the Group Stage of the UEFA Champions

League for a 12th consecutive year – this is an outstanding record and places the Club within

a small and elite group of top European clubs. We expect the level of competition both

domestically and in Europe to be very high. Despite two disappointing results in

Manchester, we remain optimistic and excited by the Club’s prospects for the 2009/10


We recognised the fact that many of our supporters have been affected by the difficult

economic climate and accordingly we took the decision to recognise their commitment by

once again freezing all admission prices for the 2009/10 season. Subsequently, the level of

season ticket renewals has been excellent for which I would like to thank our loyal fans and

congratulate the members of our box office team, who have worked so hard both in

planning for and carrying through the renewals process.

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. Our two key acquisitions this year, Andrey

Arshavin and Thomas Vermaelen, have proved very successful and 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.

The year saw the departure from the board of Arsenal Holdings plc of Lady Nina Bracewell‐

Smith and Richard Carr and once again I would like to record our thanks to them for their

contribution to the Group over many years. Richard remains a director of Arsenal Football

Club plc and he continues to be closely involved with our youth development programme.

In closing, I would like to thank my fellow directors, our management team and our entire

staff for all of their hard work and dedication over the last year. I would also like to thank all

of our professional advisers and, in particular, pay tribute to our Highbury Square project

team for the support they have provided.

Finally, thank you for the fantastic support given to the Club by all of our shareholders,

supporters, sponsors and commercial partners. I look forward to welcoming you all again to

Emirates Stadium over the course of the new season.

P D Hill‐Wood


25 September 2009

Arsenal Holdings plc

Chief Executive’s report

I am delighted and proud to be presenting my first report to shareholders as Chief


I have invested a fair proportion of my first nine months with the Group in conducting a

thorough and wide‐ranging assessment of the organisation and its position on both the

domestic and global football stages. I am very encouraged by much that I have found. We

have many excellent people and in a number of areas our operational standards and

practices already define best practice. We are in a strong position financially and our

business model is widely respected.

The economic background is clearly difficult but the impact of the recession on the results of

our core football business for 2008/09 was limited. Many of the key aspects of our income

were protected by virtue of the contractual arrangements in place before the start of the

season but I also believe that the outstanding loyalty of the Club’s supporters has played an

important role.

Operationally, we dealt seamlessly with additional home fixtures associated with last

season’s cup runs and additional events including the Brazil versus Italy international

friendly and the Capital Radio Summertime Ball. Over 50,000 music fans attended the

Capital event, which was the second ever concert at Emirates Stadium, and enjoyed sixteen

acts from the UK and the US including Lionel Ritchie, Leona Lewis, Dizzee Rascal and Blue.

Discussions are already well advanced for next year’s concert schedule.

The UK property market has been particularly affected by the economic downturn and our

major development project at Highbury Square has reached its final stages during a period

where the market conditions have been extremely challenging.

By the close of the 2008/09 financial year we had completed the sale of 208 of the 655

private apartments at Highbury Square. Completions were much slower than was predicted

in our original development plan as a consequence of the difficult conditions in the property

and mortgage finance markets. This has had a direct impact on the repayments made

against the £137 million bank facility used in part‐funding the construction works. The sales

completed contributed some £88 million of revenue and £10 million of operating profits

within the Group’s results for the year and, after funding the balance of the construction

costs, allowed the bank loan to be reduced to £124 million.

Since the end of the financial year, some of the hard work we have put in on Highbury

Square has begun to yield positive results.

First, the completion of all the remaining construction works and the central gardens has

meant that apartment owners can fully enjoy living in an award winning building complex

rather than a work in progress. The official opening ceremony for Highbury Square was held

on 24 September 2009 with Arsène Wenger and a number of the players in attendance.

Secondly, following lengthy negotiations, the position of a number of key bulk purchase

contracts for units at Highbury Square has been fully resolved and, in addition, the rate of

private sales completions has noticeably picked up. Finally, again after many months of

negotiation, we have reached agreement for an extension of the term of the Highbury

Square loan facility on terms which we consider to be reasonable and appropriate.

Following on from these developments, the number of private apartment sales completions

has now risen to 445 with a cumulative sales revenue value of £172 million and the bank

loan has been substantially reduced, to £47 million. Although we still have to obtain

completions or re‐sell some 210 flats, the in‐fill plots around the site and certain commercial

elements within the development, we are now confident that any remaining risk associated

with the project has been minimised. Clearly the ultimate amount of the Group’s profits

from Highbury Square will remain uncertain until the remaining sales are concluded but we

believe the development is now on a secure footing which should allow us to maximise our

final return.

Turning to the Group’s other long running property development project, at Queensland

Road, I am pleased to confirm that planning permission was finally granted on 30 July 2009.

The redevelopment permitted includes the realignment of the road and the construction of

one new building to the south of the road up to six storeys high, comprising 213 residential

units for use as affordable housing together with an area of commercial space. A

second building will be constructed to the north of the road, incorporating five towers

providing ten to fifteen floors of residential accommodation above a plinth of mainly

commercial space. This building will include 516 residential units, an indoor sports centre to

be operated by the Club, which will include local community use, and 179 car parking

spaces. The residential units in the two towers to the west of the site will be used as

affordable housing with the remainder for use as private market housing. We are already at

an advanced stage of negotiations with Newlon Housing Trust with regard to the sale of all

of the affordable housing and the site clearance works at Queensland Road.

On the Field

The team produced some exciting and stylish football during the course of the 2008/09

season, in particular over the second half of the season when the momentum of an

impressive 21 match unbeaten run in the Premier League helped to secure a fourth placed

Premier League finish which at one stage of the season looked in doubt.

That fourth position in the Premier League with 72 points, meant the Club achieved 2009/10

UEFA Champions League participation for a 12th consecutive season, a record which is

matched only by Real Madrid and Manchester United.

In the UEFA Champions League strong performances in the knock‐out rounds produced wins

over AS Roma and Villarreal as Arsenal progressed to the semi‐finals of the competition for

only the second time in the Club’s history. Reaching the same stage in the FA Cup meant

Arsenal’s first visit to the new Wembley Stadium. Unfortunately, the team was unable to

convert the opportunities provided by these semi‐final appearances and exited both

competitions at this stage. In the Carling Cup Arsène Wenger once again deployed many of

the Club’s younger players in progressing to the quarter‐finals.

Away from the first team, everyone associated with the Club was delighted by the success

achieved by the youth team and by Arsenal Ladies in the 2008/09 season.

The Under‐18s team completed a fantastic season by securing a league and cup double.

Steve Bould’s team won the FA Premier Academy League title and beat Liverpool over two

legs in the FA Youth Cup Final. The first leg of the final was played at Emirates Stadium in

front of a crowd of more than 33,000. This is a great achievement and congratulations go to

all the players, coaches and staff in the Youth Development department. It is truly exciting

to see such a talented group of young players coming through together.

Once again we must offer our congratulations to the Arsenal Ladies who were victorious in

the FA Women’s Premier League and both their League and FA Cups. The League win was

achieved in dramatic fashion, with a win over Everton in the very last game of the league

season. The continued success of Arsenal Ladies was a fitting tribute to Vic Akers, in his last

year as the Ladies' manager. Vic had been manager of our ladies team for more than 20

years, in which time the team has won over 30 major honours, a truly fantastic



During the close season, the Club welcomed another exciting new player to its first team


Belgian international defender Thomas Vermaelen joined Arsenal on a long‐term contract

from Dutch Eredivisie side Ajax, where he was club captain in the 2008/09 season. The 23

year‐old, who is predominantly a central defender, has experience in both the UEFA Cup

and UEFA Champions League including two appearances for Ajax against Arsenal in the

Group Stage of the 2005/06 Champions League. During his time with Ajax, the club won the

Dutch League Championship in 2003/04, the Dutch National Cup on two occasions (in 2006

and 2007) and the Dutch Super Cup twice (in 2006 and 2007). Thomas made his full

international debut for Belgium in March 2006 and he has gone on to establish himself as a

regular in his country’s set‐up.

The Club extends a warm welcome to Thomas, together with all the new ‘First Year Scholars’

joining our Youth Development programme this summer. We wish them all the best of luck

during their Arsenal careers.

Our main focus over the summer months has been the retention of key members of the

squad. We are delighted to have signed new long term contracts with Robin van Persie,

Theo Walcott, Kieran Gibbs, Jack Wilshere, Lukasz Fabianski, Aaron Ramsey, Denilson and

Nicklas Bendtner.

The summer saw the departure of three first team squad players.

Emmanuel Adebayor left the Club to join Manchester City. Adebayor joined Arsenal from AS

Monaco in January 2006 and made a total of 142 appearances for the Club scoring 62 times.

He was our leading goal‐scorer in the 2007/08 season, scoring 30 goals in all competitions

during the campaign, which earned him a place in the PFA Premier League Team of the Year.

During the 2008/09 season, Adebayor scored 16 goals from his 37 appearances, including six

from nine appearances in the UEFA Champions League.

Kolo Toure, who was in the final year of his contract with the Club, also departed for

Manchester City. Toure joined Arsenal in February 2002 and made a total of 326

appearances for the Club. He was a regular in the first team over the past seven seasons.

During his time with Arsenal, Kolo won the FA Cup twice, in 2003 and 2005, and he was an

important member of the ‘Invincibles’ squad which won the 2003/04 Premier League

without losing a single game.

The third first team squad player to leave the Club during the close season was Amaury

Bischoff who was released at the end of his contract with the Club.

We wish Kolo, Emmanuel and Amaury well for their future careers and thank them all for

the contribution they made to Arsenal Football Club.

Commercial Partners

The Club is fortunate to have the support of a number of blue chip companies and we

continued to develop our commercial partner programme during the 2008/09 season.

The Club is delighted to have recently renewed its long‐standing partnership with O2, the

UK’s leading mobile operator, for a further three seasons. This relationship extends back to

the 2002/03 season and during that time O2 has been a key partner of the Club. As part of

the new agreement, O2 will be providing specific offers for Arsenal supporters across its

portfolio of services.

The Club welcomed Citroen as its official car partner for the 2008/09 season. The

relationship incorporates a selection of rights including a link with Arsenal’s charity of the

season. Citroen developed a bespoke ‘Ultimate Fan’s Car’, which was raffled in aid of the

Teenage Cancer Trust, raising in excess of £12,000.

Despite the difficult economic climate, the Arsenal retail business proved to be robust,

whilst E‐commerce revenues showed growth in a static market. The Club has established an

objective to expand its shop base and there will be two new Arsenal retail outlets opening

inside the M25 in 2009/10.

Internationally, the Club continues to develop its merchandising business. BEC Tero, the

Club’s Thai partner, has continued to increase the number of outlets trading official Arsenal

merchandise in Bangkok. Additionally, Arsenal has partnered with BEC Tero to enter the

Chinese market. By the end of 2009, there will be two flagship stores and up to 50

concessions selling official Arsenal merchandise across 10 major cities in China. The Club has

also partnered with the International Business Group in Bahrain to open a store and set up

an Internet shopping service for customers in the Gulf States.

The 2008/09 season was the first in which the Club managed its licensing programme inhouse.

Licence revenue grew by over 30%, which fully justified the decision, and this area is

expected to continue to expand and increase its contribution.

The Club’s domestic and international soccer schools business has also moved forward.

There are now 19 Arsenal soccer schools operating across the world, with several more

planned. A notable achievement is the development of a new soccer school project in

Dubai, where Arsenal has partnered with Emirates to operate a soccer school at their venue

‐ The Sevens. This school will open in autumn 2009 and run a mix of courses for children, as

well as community programmes.

Football training activities have also developed in other areas. A pilot soccer camp will be

run in Denver USA, in conjunction with Kroenke Sports Enterprise, and the results will be

evaluated to determine next steps in this territory. Also, Arsenal partnered with Saudi‐based

mobile telephone operator Mobily to run a two week soccer camp in London in July 2009.

Twenty five boys were trained by Arsenal coaches in what could become a bigger

partnership and a commercial opportunity.

As a consequence of Setanta Sports going into administration, we had to withdraw Arsenal

TV from the Sky platform. Over the next few months we will need to re‐evaluate the most

appropriate distribution platform and business model for Arsenal TV going forward. Whilst

this evaluation takes place we have decided to continue to produce and develop a full

schedule of quality programming for Arsenal TV which will be available to Arsenal

supporters on‐line via

The international rights for Arsenal TV for the period 2010‐2013 have recently been

awarded to sports rights specialist MP & Silva. Despite the global economic situation, there

will be a significant increase in fees which demonstrates both the growing appeal of football

and Arsenal on the world stage.


We have commenced a programme of works to ‘Arsenalise’ Emirates Stadium. The objective

is to bring the Club’s rich heritage to life in and around the stadium and to make Emirates

Stadium feel more like home to all our supporters. The initial programme comprises four

key aspects, all of which have been developed in partnership with supporters’ groups:

The ‘Victory through Harmony’ team huddle features 32 of our greatest players

creating a dramatic and imposing ‘wrap’ around the eight cores of the stadium;

Branding throughout the lower concourse and featuring a timeline of the Club’s

greatest moments;

The Highbury Shrine featuring a team shot of every player who played at our old

home; and

Armoury Square which provides fans the opportunity to personalise their own part

of Emirates Stadium.

All these elements reinforce our commitment to provide our supporters with the very best

environment to watch the team play. The Club will continue to actively seek feedback from

its supporters and other visitors to Emirates Stadium and, in conjunction with our partners

Delaware North and Cleanevent UK, strive to ensure a continually improving overall

customer experience of the Club. There are a number of further “Arsenalisation” projects

which, due to the constraints of planning and delivery lead times, we will look to progress in


Charity of the Season

Teenage Cancer Trust became Arsenal’s nominated Charity of the Season for the 2008/09

campaign, taking over from TreeHouse. The partnership with Teenage Cancer Trust, a

charity devoted to improving the lives of teenagers and young adults with cancer, has been

another huge success. Led by our ‘Be a Gooner. Be a Giver’ campaign, a record‐breaking

fundraising total for the Club of more than £532,000 was collected for the charity.


From a financial perspective the 2009/10 year has already started strongly, boosted by the

sales completions at Highbury Square and the player sales which I have referred to above.

Property activities, at both Highbury Square and Queensland Road, will continue to be a

significant feature over the next twelve months.

On the field the new season has got off to a mixed start. The successful progress through to

the Group Stage of the UEFA Champions League is important from both a football and

monetary perspective. Promising performances in the Premier League have not always

translated into results but have given us cause for optimism. We now look forward to

supporting the team, as it challenges for silverware, throughout the course of the season.

Clearly, the Club already has a first class stadium, an excellent world‐wide reputation and

outstanding core support. Football is a hugely competitive and fast moving business and we

must ensure that Arsenal is not just keeping pace but setting the pace, both on and off the

field. With that in mind, over the next months we will be formulating, and then beginning

the process of implementing, a vision and comprehensive plan for the next phase of the

Club’s development as a world class sports organisation. The Club is superbly positioned for

the future and I am tremendously excited about the opportunities we have ahead of us.

I E Gazidis

Chief Executive Officer

Arsenal Holdings plc

Financial Review

The Group achieved an after tax profit for the year of £35.2 million (2008 ‐ £25.7 million).

This is the highest annual retained profit in the Group’s history and, against a difficult

economic background, it represents an excellent result.

Group turnover rose to £313.3 million (2008 ‐ £223.0 million) and operating profit before

player trading and depreciation, which is a key measure of our financial performance,

exceeded £70 million (2008 ‐ £59.6 million).





Group turnover 313.3 223.0

----- -----

Operating profit before depreciation and player


70.5 59.6

Player trading 2.9 5.2

Depreciation (11.7) (11.6)

Joint venture 0.4 0.5

Net finance charges (16.6) (17.0)

----- -----

Profit before tax 45.5 36.7

----- -----

The growth in turnover and profit in our football business was largely attributable to the

team’s performance in the Cup competitions which resulted in additional revenues from

broadcasting and an additional four home fixtures played. Sales of 208 apartments at

Highbury Square were completed in the year and contributed £88 million of revenue and a

little over £8 million of profit toward the pre‐tax results of the Group’s property segment.

The results of the football and property development segments are considered in more

detail later in this review.

In terms of the Group’s balance sheet I would like to draw attention to three particular

aspects. Firstly, the carrying value of intangible assets (player registrations) has increased to

£68.4 million (2008 ‐ £55.7 million) following expenditure in the year on new players and

contract extensions of £41.3 million. Secondly, the carrying value of property development

stocks has fallen to £167.0 million (2008 ‐ £188.0 million) as the costs relating to Highbury

Square apartments are transferred to the profit and loss account on completion of sale.

Finally, mainly as a result of loan repayments on our Highbury Square facility, the Group’s

overall net debt has decreased from £318.1 million to £297.7 million.

Segmental Operating Results

2009 2008

£m £m


Turnover 225.1 207.7

Operating profit* 62.7 59.6

Profit before tax 39.9 39.7

Property development

Turnover 88.3 15.3

Operating profit* 7.8 -

Profit / (loss) before tax 5.6 (3.0)


Turnover 313.3 223.0

Operating profit* 70.5 59.6

Profit before tax 45.5 36.7

*= operating profit before depreciation and player trading


Football Segment

The football business increased its turnover to £225.1 million (2008 ‐ £207.7 million).

The main contribution to this increase was the gate income from four additional home

fixtures – the UEFA Champions League semi‐final and three FA Cup ties – and UEFA

Champions League broadcasting revenue.

Gate income represented 44% of our total football revenues and was derived from 32 first

team home fixtures. The average attendance of 59,453 (2008 – 59,720) was impacted by the

fact that three of the home FA Cup ties featured Championship opponents. Notably, overall

gate and match day revenue exceeded £100 million for the first time; the total for the year

was £100.1 million (2008 ‐ £94.6 million).

In addition to competitive first team fixtures we staged a second successful Emirates Cup

weekend and one international friendly – Brazil versus Italy. However, there was no concert

income in the year; revenue from Capital Radio’s Summertime Ball in June will be included

in next year’s results.

Broadcasting revenues increased to £73.2 million (2008 ‐ £68.4 million). The Club received a

slightly lower level of Premier League live coverage this season but this was outweighed by

the additional Champions League distributions associated with progressing to the semi final,

one round further than the previous year. Champions League revenues are distributed by

UEFA in € and, accordingly, the weakness in sterling worked in our favour.

The retail and commercial revenue lines were perhaps the areas where the Club had its

greatest sensitivity to the recessionary climate. However, performance in both areas has

proved to be robust with revenues actually showing modest increases – retail turnover for

the year was £13.8 million (2008 ‐ £13.1 million) and commercial income amounted to £34.2

million (2008 ‐ £31.3 million).

Wage costs rose to £104.0 million (2008 ‐ £101.3 million) representing 46.2% of football

segment revenues (2008 – 48.8%) and this continues to fall within our target range. There

continues to be significant upward pressure on players’ wage expectations and the activities

of other clubs in the market and the introduction of the 50% income tax rate from April

2010 mean this looks set to continue. The Board remains firmly committed to backing

Arsène Wenger’s judgement in determining the composition of the playing squad and the

level of contract terms required to secure the long‐term commitment of both new and

existing players.

A proper assessment of the Club’s level of player investment needs to be based on overall

expenditure on players rather than on a separate consideration of the levels of wage and

transfer expenditure. We do not separately disclose the amount of the total wage bill which

is represented by players but the table below provides an indication of the levels of






Total wages 104.0 101.3

Additions to intangible assets (player registrations) 41.3 27.5

Profit on sale of player registrations (23.2) (26.5)

Net expenditure

122.1 102.3

Other operating costs rose to £55.4 million (2008 ‐ £46.6 million) and there are a number of

reasons for this, including:

Retail costs – reflecting tightening margins

Utility costs

Direct costs of event staging including fees paid to Emirates Cup participating clubs

and increased number of home fixtures

Exchange losses on € denominated transfer payable provisions

Taking into account all of these changes in revenue and operating costs the operating profit

(before player trading and depreciation) from football increased to £62.7 million (2008 –

£59.6 million).

Property Segment

The Chief Executive has already provided (see above) a detailed update on the contribution

made by Highbury Square to the results for the 2008/09 financial year and on the further

significant progress which has been made over the subsequent months.

In terms of the results for the year, revenue of £88 million from Highbury Square sales

completions provided a contribution to segmental operating profit of £10.2 million.

However, we set against this profit a further impairment write‐down against the carrying

value of the Queensland Road site such that the overall segmental operating profit was £7.8


Although we now have planning permission at Queensland Road it is appropriate to

continue to carry the site on the basis of the most recent professional valuation until such

time as the sale arrangements for the site become more certain. The additional expenses

incurred in the year, mainly in connection with the complex planning application process,

took our costs for the site above this £24 million valuation and therefore resulted in an

impairment charge.

The original repayment date for the £137 million Highbury Square bank loan was the end of

April 2010. Over the last ten months we have been in negotiation with our syndicate banks

for an appropriate extension to the term of the loan to reflect the delays occurring in sales

completions and probable requirements for rescission of a number of the original sales

contracts. We have worked closely with the banks during this period and I would like to

thank them for the constructive and supportive approach that they have taken throughout.

There were a number of moving parts to our negotiations – in particular, the status of

certain bulk purchases, the completion of construction works and the East Stand (which had

originally been marketed and largely pre‐sold to the Club’s own contact list) – and it served

the interests of both lenders and borrower to allow as many as possible of these aspects to

be resolved before agreeing the terms of the loan amendment.

I am pleased to confirm that we have now agreed terms to refinance the loan with Barclays

Bank plc. The term of the new loan is December 2010 and the margin will be 2.5%,

previously the margin was on two loan tranches with one at 1.3% and one at 1.7%. The

balance on the Highbury Square loan was £123.6 million as at 31 May 2009 and it has

subsequently been reduced to £47.1 million – all repayments have been made from the

sales proceeds at Highbury Square.

Player Trading

The sale of player registrations generated a profit of £23.2 million (2008 ‐ £26.5 million)

which, together with fees of £3.6 million from the loan of players, meant that overall result

from player trading was a surplus of £2.9 million (2008 ‐ £5.2 million).

The main contributions to the disposal profit came from the sales of Alexander Hleb and

Justin Hoyte and the sell‐on shares receivable in connection with moves by former players

David Bentley and Lassana Diarra.

The Board’s policy continues to be that all proceeds from player sale transactions are made

available to Arsène Wenger for re‐investment back into the development of the team.

Finance Charges

The net interest charge for the year was £16.6 million (2008 ‐ £17.0 million). Some £14.8

million of this charge relates to the long‐term stadium financing bonds and this interest,

which is at a fixed rate, together with the annual capital repayment of £5.3 million gives a

total debt service cost for the bonds of £20.1 million. This is effectively the annual

“mortgage” payment required on the stadium financing and it was covered at a very

comfortable margin of more than three times by the operating profits before depreciation

and player trading in the football business segment.

Interest costs of £5.5 million which were directly attributable to the Group’s property

development projects at Highbury Square and Queensland Road have been capitalised into

property stocks.

Interest receivable on the Group’s cash reserves amounted to £2.7 million (2008 ‐ £4.0

million) and this was adversely affected by the reduction in base rates during the year.

Cash Flow and Treasury

There is a strong element of seasonality to the Club’s cash flows with the renewal of season

tickets in May reflected in the year‐end cash and bank balance. Debt service reserve

deposits of £32.3 million are also included in the total cash position although, being part of

the security for the Group’s listed bonds, the use of these deposits is restricted. That said,

the cash and bank balances in hand of £99.6 million (2008 ‐ £93.3 million) clearly represents

a very satisfactory position.

The Group’s activities were strongly cash positive for the year and the cash generated from

operations was used as follows:


Cash from operations 62.3


Net expenditure on player transfers (12.3)

Payment of taxation (7.6)

Investment in fixed assets (3.0)


Net interest payments (17.7)

Debt repayment – property (10.0)

Debt repayment – football (5.3)




Increase in year-end cash 6.4


The level of the Group’s net debt at the 2007/08 year end was always expected to represent

a peak and over the course of the year this net debt has been reduced from £318.1 million,

to £297.7 million. The main change in net debt was a pay down of the Highbury Square loan

balance from £134.2 million to £123.6 million. Net debt will further reduce over the course

of 2009/10 as payments are made against the Group’s property loans ‐ as referred to above

the Highbury Square loan has, subsequent to the year end, been substantially further

reduced to £47 million.

The main components of net debt are shown in the table below (the details for term and

margin on the property loans reflect the revised terms of the Highbury Square loan agreed

since the financial year end).











£m £m £m £m

Start of year (250.2) (139.3) (26.1) 93.3

Movement in year 5.3 9.7 (0.3) 6.3

---------- ---------- ---------- ----------

End of year (244.9) (129.6) (26.4) 99.6

---------- ---------- ---------- ----------

Term 20-22 yrs 1-2 years 19-133 yrs N/A

Fixed rate 5.3% N/A 0 - 2.75% N/A

Variable rate N/A Libor + margin - N/A

Margin - 2 - 2.5% - -

Guarantee fee 0.5% - 0.65% - - N/A

The largest part of the Group’s debt is £244.9 million of long‐term bonds with fixed rates of

interest which have been in place since the refinancing exercise completed in the summer

of 2006. A repayment of £5.3 million was made during the year in accordance with the

terms of the bonds.

The Group’s property development financing consists of the Highbury Square loan facility

which has been referred to above, and a small loan being used for the Queensland Road

development of which £6.0 million had been drawn by the end of the year (2008 ‐ £5.2

million). The interest swaps which were in place to fix the rate of the Highbury Square loan

expired during the year and subsequently interest charges are being paid at a variable rate,

so benefitting from the current low level of base rate.

The Group has recently agreed to an extension of the term of its Highbury Square

development loan. The Group's other bank facilities are not currently due for renewal,

however, the Group has held a discussion with its bankers about these other facilities and

no matters have been drawn to its attention to suggest that renewal may not be

forthcoming on acceptable terms. The Group's forecasts and projections, taking account of

reasonably possible changes in trading performance, show that the Group should be able to

operate within the level of its current financial resources and bank facilities. The directors

have a reasonable expectation that the Group has adequate resources to continue in

operational existence for the foreseeable future and the financial statements continue to be

prepared on the going concern basis.

The bank facilities which the Group has used to fund the Highbury Square development are

ring‐fenced from and non‐recourse to the financing of the football segment of the business.

The use of property profits which may be transferred to the football segment is not

determined until such time as those profits are realised and transferred in cash to the Club –

accordingly, there is no current commitment to use any such profits and cash anywhere

within the Group at any specific time for any specific purpose.

Profit after tax

The tax charge for the period was £10.3 million (2008 ‐ £10.9 million). The effective rate of

tax at 22.3 % includes the benefit of adjustments required to the calculation of taxable

profits on the Highbury Square project. These adjustments reflect the transfer of the

stadium from fixed assets to trading stock in 2006 at its then market value and the roll‐over

of the capital gain which arose on that transaction.

The retained profit for the year was £35.2 million (2008 – £25.7 million).


The renewals of general admission and Club Tier season tickets have once again been at the

maximum level. The Emirates Cup has again proved to be a great commercial success and

although attendances, at this third staging of the tournament, were a little lower than

previous years this was balanced by lower fees payable to the participating clubs.

The sales of Emmanuel Adebayor and Kolo Toure to Manchester City will make a significant

contribution to the profits to be reported on the sale of player registrations.

Legal completions of 237 apartments at Highbury Square with a sales value of some £84

million have already been booked for 2009/10. With construction work complete and fully

paid for, the proceeds of further sales completions will directly reduce the remaining

outstanding balance on the Highbury Square loan.

Clearly, given the above, the Group has made a strong start to the new financial year.

However, conditions remain very tough and uncertain for our property business and this will

likely continue to impact both of our main property development projects over the next

year. Whilst the impact of the recession on our football business has so far been limited the

full commercial and financial impact may be still ahead of us. There are undoubtedly

challenges ahead but the Group starts the 2009/10 year very well placed to deal with them,

in a very robust financial position with a high level of cash reserves and comfortable levels

of debt.

S W Wisely

Group Chief Accountant

Arsenal Holdings plc

Consolidated profit and loss account

For the year ended 31 May 2009

2009 2008






















Turnover of the group including its

share of joint ventures 312,305 3,589 315,894 224,541 472 225,013

Share of turnover of joint venture (2,555) - (2,555) (2,043) - (2,043)

---------- ---------- ---------- ---------- ---------- ----------

G roup turnover 3 309,750 3,589 313,339 222,498 472 222,970

Operating expenses (250,950) (23,876) (274,826) (174,480) (21,757) (196,237)

---------- ---------- ---------- ---------- ---------- ----------

Operating profit/(loss) 58,800 (20,287) 38,513 48,018 (21,285) 26,733

Share of joint venture operating result 455 - 455 469 - 469

Profit on disposal of player

registrations - 23,177 23,177 - 26,458 26,458

---------- ---------- ---------- ---------- ---------- ----------

Profit on ordinary activities before

finance charges 59,255 2,890 62,145 48,487 5,173 53,660

---------- ---------- ---------- ---------- ---------- ----------

Net finance charges (16,633) (16,992)

---------- ----------

Profit on ordinary activities before

taxation 45,512 36,668

Taxation (10,282) (10,942)

---------- ----------

Profit after taxation retained for the

financial year 35,230 25,726

---------- ----------

Earnings per share

Basic and diluted 4 £566.24 £413.49

---------- ----------

Player trading consists primarily of the amortisation of the costs of acquiring player registrations, any

impairment charges and profit on disposal of player registrations.

All trading resulted from continuing operations.

There are no recognised gains or losses in the current or previous year other than those recorded in the

consolidated profit and loss account and, accordingly, no statement of total recognised gains and losses is


Arsenal Holdings plc

Consolidated balance sheet

At 31 May 2009





Fixed assets

Tangible fixed assets 440,369 449,517

Intangible fixed assets 68,446 55,665

Investments 730 406 ---------- ----------

509,545 505,588

Current assets

Stock - development properties 167,007 187,964

Stock - retail merchandise 1,751 1,218

Debtors - due within one year 45,981 32,340

- due after one year 9,508 13,939

Cash at bank and in hand 99,617 93,264

---------- ----------

323,864 328,725

Creditors: amounts falling due within one year (314,096) (334,252)

---------- ----------

Net current (liabilities)/assets 9,768 (5,527)

---------- ----------

Total assets less current liabilities 519,313 500,061

Creditors: amounts falling due after more than one year (292,748) (310,203)

Provisions for liabilities and charges (32,235) (30,758)

---------- ----------

Net assets 194,330 159,100

---------- ----------

Capital and reserves

Called up share capital 62 62

Share premium 29,997 29,997

Merger reserve 26,699 26,699

Profit and loss account 137,572 102,342 ---------- ----------

Shareholders’ funds 194,330 159,100 ---------- ----------

Arsenal Holdings plc

Consolidated cash flow statement

For the year ended 31 May 2009





Net cash inflow/(outflow) from operating activities 62,305 (21,013)

Player registrations (12,335) 4,010

Returns on investment and servicing of finance (17,689) (19,655)

Taxation (7,622) (4,177)

Capital expenditure (2,950) (6,944)

---------- ----------

Net cash inflow/(outflow) before financing 21,709 (47,779)

Financing (15,356) 67,186 ---------- ----------

Increase in cash in the year 6,353 19,407 ---------- ----------

Reconciliation of operating profit to net cash inflow/(outflow) from

operating activities





O perating profit 38,513 26,733

Amortisation of player registrations 23,876 21,757

Profit on disposal of tangible fixed assets (42) (19)

Depreciation 11,682 11,555

Decrease/(increase) in stock 25,940 (82,958)

Increase in debtors (4,680) (1,172)

Increase in creditors (32,984) 3,091

---------- ----------

N et cash inflow/(outflow) from operating activities 62,305 (21,013)

---------- ----------

Analysis of changes in net debt At 1 June



Non cash






At 31 May



Cash at bank and in hand 31,601 - 22,498 54,099

Short-term deposits 61,663 - (16,145) 45,518

---------- ---------- ---------- ----------

93,264 - 6,353 99,617

Debt due within one year (bank and other loans/bonds) (142,835) - 8,733 (134,102)

Debt due after more than one year (bank loans/bonds) (242,726) (996) 6,621 (237,101)

Debt due after more than one year (debentures) (25,776) (320) 2 (26,094)

---------- ---------- ---------- ----------

Net debt (318,073) (1,316) 21,709 (297,680)

---------- ---------- ---------- ----------

Non cash changes represent £1,276,000 in respect of the amortisation of costs of raising finance, £320,000

in respect of rolled up, unpaid debenture interest and £280,000 in respect of amortisation of the premium

on certain of the Group’s interest rate swaps.

Arsenal Holdings plc

Notes to preliminary results

For the year ended 31 May 2009

1. The financial information set out above does not constitute the company's statutory accounts for the

years ended 31 May 2008 or 2009, but is derived from those accounts. Statutory accounts for 2008 have

been delivered to the Registrar of Companies and those for 2009 will be delivered following the company's

annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did

not draw attention to any matters by way of emphasis without qualifying their report and did not contain

statements under s498(2) or (3) Companies Act 2006 or equivalent preceding legislation.

2. Segmental analysis

Class of business:- Football





Turnover 225,052 207,723

---------- ----------

Segment operating profit 30,751 26,719

Share of operating profit of joint venture 455 469

Profit on disposal of player registrations 23,177 26,458

Net finance charges (14,449) (13,947)

---------- ----------

Profit/(loss) on ordinary activities before taxation 39,934 39,699

---------- ----------

Segment net assets/ (liabilities) 188,101 162,138

---------- ----------

Class of business:- Property development





Turnover 88,287 15,247

---------- ----------

Segment operating profit 7,762 14

Net finance charges (2,184) (3,045)

---------- ----------

Profit/(loss) on ordinary activities before taxation 5,578 (3,031)

---------- ----------

Segment net assets/ (liabilities) 6,229 (3,038)

---------- ----------

Class of business:- Group





Turnover 313,339 222,970

---------- ----------

Segment operating profit 38,513 26,733

Share of operating profit of joint venture 455 469

Profit on disposal of player registrations 23,177 26,458

Net finance charges (16,633) (16,992)

---------- ----------

Profit/(loss) on ordinary activities before taxation 45,512 36,668

---------- ----------

Segment net assets/ (liabilities) 194,330 159,100

---------- ----------

3. Turnover

Turnover, all of which originates in the UK, comprises the following:





Gate and other match day revenues 100,086 94,580

Broadcasting 73,239 68,360

Retail 13,858 13,052

Commercial 34,280 31,259

Property development 88,287 15,247

Player trading 3,589 472

---------- ----------

313,339 222,970

---------- ----------

4. Earnings per share

Earnings per share (basic and diluted) are based on the weighted average number of ordinary shares of

the Company in issue - 62,217 shares (2008 - 62,217 shares).

5. Reconciliation of movement in shareholders' funds





Profit for the year 35,230 25,726

Opening shareholders’ funds 159,100 133,374

---------- ----------

Closing shareholders' funds 194,330 159,100

---------- ----------

6. Annual General Meeting

The annual general meeting will be held at Emirates Stadium, London, N7, on Thursday 22 October 2009

at 11.30 am. The full statement of accounts and annual report will be posted to shareholders on 29

September 2009.

The directors are responsible for the maintenance and integrity of the corporate and financial

information included on the company's website. Legislation in the United Kingdom governing the

preparation and dissemination of financial information differs from legislation in other jurisdictions.



© 2008 Paul Kavanagh. All rights reserved.