Arsenal financial results: Coronavirus blamed for loss of £ 47.8million
What do the financial results show?
The remarkable figure is that after tax Arsenal lost £ 47.8million for the fiscal year ending May 31, 2020.
The club lost £ 14million in match day revenue, £ 6million in broadcast and other business losses and £ 34million due to a carryover of broadcast revenue to the following financial year .
The amount spent on player transfers – which included deals for Nicolas Pepe, Kieran Tierney, William Saliba, Gabriel Martinelli, Pablo Mari and David Luiz – stood at £ 182.2million.
The decision to sack Unai Emery in November 2019 cost the club £ 10.4million.
The club were able to make up for some losses, however, and the pay cut agreed to by Arsenal players and managers last season saved £ 19million.
What steps have Arsenal taken to mitigate the losses?
In April 2020, Arsenal’s first team players and the head coach agreed to a voluntary 12.5% pay cut to help mitigate the financial impact of the pandemic.
Later that year, Arsenal announced plans to lay off 55 employees as the pandemic continued to hit the club’s finances.
Arsenal also took out a short-term loan of £ 120million from the Bank of England, repayable in May 2021. Both measures took place in the current fiscal year.
What did Arsenal say?
In a statement announcing the results, Arsenal said: ‘Pre-tax losses of £ 35million were directly attributable to COVID-19. The impacts of the pandemic have extended into the 2020/21 season and are continuing. Matches continue to be played without the presence of the fans and as a result the club operates without one of its main sources of income.
“Since the end of the year, the Group has refinanced its stadium financing obligations and initiated a series of cost reduction measures. These measures will allow the club to be in a good position to react once the situation begins to improve.
“The club continues to enjoy the unwavering support and commitment of its parent company, Kroenke Sports & Entertainment, and its ultimate owner Stan Kroenke.”
How worrying are these results?
For obvious reasons, there hasn’t been much optimism about these financial results from Arsenal supporters.
Arsenal recorded an after-tax loss of £ 47.8million, an increase of over £ 20million from the previous year. Doing this in a year when they were supposed to take advantage of new trade deals with Emirates and Adidas shows the enormous impact of the pandemic.
What is most concerning is that these results only take us until June – there have been nine months of empty stadiums since then. Next year’s financial results are likely to be all the more disagreeable. In November 2020, the Arsenal Supporters Trust predicted that 2020-21 could see Arsenal declare further losses of £ 158million. It may get worse before it gets better.
Arsenal have, however, taken a number of steps since this performance period to adjust to the crisis. The owners have helped refinance the stadium’s bonds and taken a range of cost-cutting measures, including layoffs. Fortunately, there have been no further changes in leadership – replacing Emery with Mikel Arteta and his staff cost more than £ 10million.
Arsenal are better prepared to face their new reality, but the pandemic will still have taken a huge toll.