Debt Doesn't Stun Gunners

Arsenal managing director Keith Edelman today insisted the club are very much "cash-rich" despite an increase in their overall debt to £262.1m.

The cost of the Gunners' move to their new Emirates Stadium impacted on the figures released today by the club's parent company, with overall net debt increased from £153.3m in 2005, a jump of £108.8m. However, with the repayments of the debt now restructured over a longer term and match-day revenues set to rise significantly over the coming seasons, Edelman insists Arsenal are in good financial health.

"It is like an individual buying a new bigger house into which you have put more equity - you will have a bigger mortgage, but overall be in a stronger financial position," said Edelman. "The two things are completely separate and you do not say 'you have no money to spend because you have a mortgage'. A mortgage is something you pay off every month, X amount over a number of years then you look how much cash you have in your pocket to spend. Well, we ended the year with £36m of cash in the bank, in our pocket to spend now, so we are very cash-rich, although we have got high debts, which relate effectively to the mortgage on our stadium."

Edelman revealed how the club have been able to restructure their long-term debt. "It is like a mortgage on your house - if you have got to pay it back over 10 years or 25 years, you pay a lot less over 25 years," he added. "Previously we had a 14-year repayment schedule, on which the interest rate was quite high. Because we sold the stadium out and it was being delivered on time and on budget, we were able to go into the financial markets and get a deal which was very attractive for the club which moves the debt out to 25 years and reduces the interest rate by about 2%.

"So we have lowered our debt repayments substantially every year. It is a good deal for the club and it means we have more money to invest in players and team development."

The figures also showed that Arsenal's operating profits before player trading and exceptional items was £11.3m, which was down from £32.6m the previous year. Their group retained profits were £7.9m, £400,000 down from 2005, while the level of pre-tax profits from the sale of players was up to £19.2m. Arsenal's run to the Champions League final meant their football business increased turnover to £132.1m.

Construction on the redevelopment of Highbury into 711 residential units - the majority of which have been pre-sold - is under way, with a £125m bank facility in place to fund the works. "The Highbury redevelopment is a three-year project and we have sold very well," said Edelman. "In 2009-10 when the development is finished, we will get more profit out of that development which pays back some of our debts."