Arsenal's Europa League Exploits Impacts Profitability
Player trading and lack of Champions League football results in Arsenal posting a financial loss for the financial year ended May 31, 2019.
The Arsenal Group’s loss for the 2018/19 year after taxation was £27.1m (2018 – profit of £56.5m).
Football revenue increased to £394.7m (2018 – £388.2m) mainly due to the North London club reaching the final of the UEFA Europa League against Chelesa last summer and the increased commercial revenues which included the Visit Rwanda sleeve partnership as a new category.
Overall operating profits were impacted by continued investment in player wages which meant that total staff costs, excluding exceptional costs, grew by £8.4m to £231.7m (2018 – £223.3m).
The exceptional costs incurred of £3.9m (2018 – £17.2m) were attributable to a number of changes in the first-team coaching and support personnel and transaction advisory costs incurred by the Company in relation to KSE UK Inc becoming the Group’s sole shareholder.
Player trading activity for 2019/20 was limited with the total profit on the sale of player registrations totaling £12.2m compared to the £120.0m achieved in 2018. Player loans amounted to £4.6m (2018 – £2.3m).
In the statement of accounts it was noted that player trading profits have a significant impact on overall profitability particularly where other operating profits are adversely impacted by participation in the UEFA Europa League as opposed to the more lucrative UEFA Champions League.
Average annual profits on sale of player registrations over the last five years, including 2019/20, have been £34.0m.
The year-end cash position, despite the delay of season ticket renewals into June as a result of the UEFA Europa League final, was robust with balances of £167.0m (2018 – £231.3m).
Commenting on the accounts the club’s chairman, Sir Chips Keswick, said: “Our player trading profit for this financial year was limited and this combined with a second consecutive season of Europa League football has meant the club recorded its first overall loss since 2002.
“For 2019/20 we will see increased commercial revenues from Adidas and our renewed deal with Emirates but another season outside the Champions League will continue to apply pressure to our financial results.”
Image: Lucas Torreira (Arsenal) stands during the 2019/20 UEFA Europa League 1/32 playoff finale game between Arsenal FC and Olympiakos FC at Emirates Stadium, in London, United Kingdom, on February 27, 2020. (Photo by Federico Guerra Moran/NurPhoto) PA Images