Arsenal offsets turnover decrease by netting profit from transfers

Arsenal Holdings PLC, the group which operates Arsenal Football Club, recorded a decrease in operating profits in their half year results on Wednesday as the club continues to struggle on the pitch.

The company reported a 62% decrease in operating profit to £20.7m and a fall in turnover of 5% to £182.2m compared to the same period in 2016 as sales from football slipped 12% to 167.7m, reflecting the club’s early exit from the FA Cup and absence from the lucrative Champions League competition.

However, a £15.5m profit from player trading, helped by the summer sale of players such as Alex Oxlade-Chamberlain, Kieran Gibbs, Gabriel and Wojciech Szczesny, drove a 99% jump in profits before tax to £25.1m.

That was in sharp contrast with the £27.6m of red ink incurred in 2016.

The club has managed to profit from player trading despite bringing in record signing Alexandre Lacazette for a then club record fee of £46.5m.

In the January transfer window, the club's sales of Alexis Sanchez, Theo Walcott, Olivier Giroud and Francis Coquelin helped to fund the recent record signing of Gabon striker Pierre-Emerick Aubameyang for a reported £56m, but this has not been taken into account in the financial results.

Chips Keswick, the club’s chairman, said: "Breaking our transfer record twice in one season and the player contracts we have signed shows our commitment to getting the club back competing for the Premier League."

The chairman further conceded that the club "must spend effectively" as the cost of transfer fees and player wages skyrockets at the top level of the sport.

Outside of football, the group’s property business completed the sale of two development sites on Holloway Road generating revenue of £14.5m.

The group has no short-term debt and holds cash reserves of £137.6m, excluding balances designed as debt service reserves, up 37% from 2016.

"Our strategy remains self-financing and we must accept all the challenges that brings at a time when the inflation of transfer fees, player wages and the fees demanded by agents has become super-heated," said Keswick

In a statement, the club said the season so far "has not been the easiest of campaigns" but it hoped for a strong finish and to reenter the Champions League through a top four finish in the Premier League or victory in the Europa League.