Arsenal’s wages have gone beyond an annual cost of £100 million for the first time, though the club have also announced a record turnover of £223 million.
The figures, which are for the year ending May 31 2008, underline Arsenal’s status among the five biggest revenue-generating clubs in the world, while they also recorded a pre-tax profit of £36.7 million.
However, the club’s net debt has grown significantly over the past 12 months from £268.2 million to £318.1 million, with the club acknowledging a “reduced level of property activity”.
As well as the £250.2 million of long-term fixed rate bonds for the Emirates Stadium, the debt includes £133.5 million of bank loans used to fund investment in the Highbury Square redevelopment works.
However, a significant level of property sales activity is anticipated for 2008-09, with a large number of apartments scheduled to be completed and released for sale. Legal completions from the first phase of 65 apartments released at the end of July have so far generated sales proceeds of £18.7 million.
Improved performances on the pitch helped the club raise their broadcasting income to £68.4 million from £44.3 million, while match-day income continues to challenge Old Trafford as the most profitable in world football with a rise of £4 million to £94.6 million.
These increases have helped fund an increase in the cost of wages from £89.7 million last year to £101.3 million. Overall, it means that wages account for around 45 per cent of the club’s turnover – a figure that is considered relatively sound by industry experts.
“We are committed to operating the club as a business which is financially self-sustaining,” said chairman Peter Hill-Wood. “Over the last two seasons Emirates Stadium has taken our football revenues to a new level, but we cannot be complacent.”
Hill-Wood also stressed that money was available to Arsene Wenger in the forthcoming January transfer window. “Funds will always be made available to Arsene to improve the quality of the squad and we have consistently stated that adequate funds are available to him if needed,” he said.
“We maintain a constant dialogue with Arsene and whilst there is not a set figure in place we are always able to buy additional players should he choose to buy. We have every confidence in Arsene and trust in his judgment, so he decides whether he needs to strengthen his squad.
“It is not about spending a specific amount of money, it is about investing in the right people. It’s about having the right players with the right quality and the right spirit. People easily forget that we were not too far off winning some silverware last season. The margins are so small.
“We may have a young squad but they are talented and have one more year’s experience. They are managed exceptionally well by Arsene and we have every confidence that they will have a successful season.”
Hill-Wood said that the level of the club’s debt was “not a matter for concern”, arguing that the sale of apartments would reduce the Highbury Square bank loan, which stands at £133.5 million, over the next year.
The long-term debt of £250.2 million for the Emirates is payable over 23 years at a fixed rate interest of 5.3 per cent.
“The repayments on the bonds together with the interest costs amount to £20 million per annum and this figure needs to be considered in the context of the significantly increased levels of income and profits that we are able to generate operating from Emirates Stadium as compared to Highbury,” said Hill-Wood.
“The football club generated an operating profit figure of approximately £60 million for the 2007-08 financial year, so you can see that the £20 million annual debt service costs are very comfortably covered.”