I have just been reading something interesting by Robert Peston from the BBC.

In the report he says he has a copy of a financial analysis of Arsenal that was made by the investment bank Lazard Brothers for Alisher Usmanov’ while he was trying to push through his idea to raise funds for the club.

Robert Peston says he is an Arsenal supporter himself and goes on to say it’s a 35 page document and list the key points from the document which I will list for you below.

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.

The advice to the board from Rothschild was

a) paying down the Emirates-related debt would save a maximum of £5m a year;

b) there are better ways to rehabilitate the Highbury redevelopment, including a putative cunning plan under negotiation right now – and even if the worst came to the worst, there should be no direct financial contagion to the club, since the providers of the property loans have no recourse to the footballing assets;

c) 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).

We seem to hear a new story about the state of our fiances every day now and each side seem to have totally different view points, But I’m getting worried now that we may be in big trouble if the worst happened and we failed to qualify for the Champions league.

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