Arsenal Posts First-Half Loss as Sales From Property, Player Trading Fall

Arsenal Holdings Plc said a decline in property income and player sales resulted in a loss for the first half of the fiscal year at the 13-time English soccer champion.

Arsenal, which failed to snap a six-year trophy drought when it was beaten in yesterday’s League Cup final, posted a loss of 2.5 million pounds ($4.1 million) for the six months to Nov. 30, the north London-based club said in a statement distributed by PRNewswire today. That compares with a profit of 29.2 million pounds for the year-earlier period.

Revenue fell to 120 million pounds, from 196.8 million pounds a year earlier, on the reduced sales of homes built on the site of its former stadium, the Premier League club said.

“Last year we had some tremendous numbers pushed by property sales, and also the sale of a couple of big players,” the Gunners’ Chief Executive Officer Ivan Gazidis said in a recorded interview on the team’s website. “This year we don’t have those one-offs. Rather than seeing players leave we’ve actually invested in the squad.”

Arsenal announced a record 61 million-pound full-year profit in September. That was after selling the majority of apartments at its former Highbury Stadium, which it occupied for 93 years before moving to the nearby Emirates Stadium in 2006. It also boosted revenue by offloading striker Emmanuel Adebayor and defender Kolo Toure to Manchester City for a combined 33.9 million pounds.

The half-year figures show property sales declined by 74.1 million pounds after the sale of 50 units, compared with 261 the year before. The club has 35 of 655 apartments left to sell.

The only major player sold was Eduardo, who joined Shakhtar Donetsk for 4 million pounds.

‘Disappointed’

Gazidis said the club was “desperately disappointed” by yesterday’s 2-1 defeat to Birmingham City, which means the Gunners haven’t won a major title since the 2005 F.A. Cup. He said the club’s focus wasn’t on profit but creating a winning team. He said profit from property had paid for a 4.5 million- pound increase in player salaries. The club has 110 million pounds in cash reserves, while net debt at Nov. 30 was 147.4 million pounds, mainly related to costs for the new stadium.

Arsenal is second in the Premier League behind Manchester United, holds a 2-1 lead in the Champions League round-of-16 matchup against Barcelona and plays Leyton Orient in an F.A. Cup fifth-round replay in two days.

“We’ve got a very young team, the average against Barcelona was just 23 years old, and what we’re focused on is making sure that we keep the key talents in that team together and signing them to long-term contracts,” Gazidis said.

Arsenal Chairman Peter Hill-Wood said the club’s financial basis was “robust” and meant it could carry on adopting its self-sustaining model at a time when rivals such as Manchester City and Chelsea are bankrolled by billionaire owners.

Commercial Income

While Arsenal’s matchday and broadcast income is similar to that of United -- which makes more money from soccer-related activity than any other team in the U.K. -- the club’s commercial income of 30 million pounds for the year is far lower. United last week announced it was close to breaking the 100 million-pound mark for the first time.

“Commercial is going to be a big focus for us, particularly globally,” Gazidis said. “We’ve made a significant investment in our commercial partnerships team and I think the fans will begin to see some of the result of that over the next year.”

To contact the reporter on this story: Tariq Panja in London at tpanja@bloomberg.net.

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net.

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