The unnamed Singaporean property developer has committed to the purchase of more than 100 flats at the site of the club’s old stadium for a total of £50m or just under 40% of the total loan of £135M. The property developer has already put down a non-refundable deposit of 10%. Furthermore, he has made clear to Arsenal that he is willing to make a further large down payment on the balance of his investment. He is not however, prepared to pay the £45m up-front..
The consortium of banks involved in the Highbury Square loan is, RBS and the Bank of Ireland. The Irish bank objected to the proposed deal forcing the club to reject the proposals. It is understood that the “substantial” down payment and initial deposit would have been in the region of £30m.
It is absolutely crazy for the banks to object to this deal. This would have enabled the club to repay £30m of the £135m loan, instead we are left with 100 flats unsold and the banks have no money. Where is the logic in that?
When Arsenal released their financial results, we were just entering the first throws of a worldwide economic recession and the pound had not completely fallen through the floor. Arsenal’s balance sheet showed over £90 million in cash, before the summer transfer dealings, furthermore we were told in October 2008 that the club had sold over 90 of the 711 apartments generating £38 million in cash.
At the time and in fact in the annual report we were told that the loan on the Highbury Square development was ring-fenced from the club, assuming this was taken out by a subsidiary of the club
“The bank facilities which the Group has used to fund the Highbury Square development
are ring-fenced from the financing of the football segment of the business. The final profits and cash to be released to the Club on completion of these property developments has not been budgeted by the Club and will be treated as a “bonus” when received – accordingly, there is no commitment to use any such profits and cash at any specific time for any specific purpose.”
So looking at accounts subsequent statements, a fan would expect us to have in the region of £128 million in cash excluding anything generated since the start of the season. We were then led to believe by Danny Fizsmann that Wenger had whatever resources he needed to strengthen the squad. Arsene’s reluctance to use these “unlimited” resources led to people pointing the finger at Wenger and saying he is stubborn and will not spend any money.
Just before the transfer window opened, our beloved Chairman, Peter Hill-Wood said,
‘One has got to look ahead – in the future there is probably not going to be much more money coming in. We have got money, but I am not sure we are going to spend it. We’ve got to continue to run the business in a sensible way.”
At the end of November, the signals from Hill-Wood were slightly different, saying, “Absolutely. There have been suggestions that we keep stopping him from buying – that is not the case.”
He added, “He’s very sensible with the way he approaches the transfer market, he’s not going to buy anybody just because the press or fans say he should. He’s only going to buy somebody if he thinks they’re going to improve what is a young squad but a very talented one.
“He certainly has got money if he wants to spend it.”
So why the change in tone from Hill-Wood and why will the club not be honest and upfront with the fans?
Well the answer lies in the notes to the accounts. The club expected all the Highbury Square development flats to be completed and the aim was to sell the flats by summer 2009. This would have given rise to cash in the region of £200 million. This money would have been used to pay off the bank loan of £133.5 million that was used to build the flats. In the notes to the accounts, it states that this loan needs to be repaid in April 2010.
The club is clearly concerned that flats will not sell in sufficient number to generate the funds to repay the loan, and as such despite all the protestations of the board that the property enterprise will not affect the football club; clearly, this is not the case.
Once more Wenger has to cut his cloth short because we do not have the money, once more Wenger plays the dutiful employee and not say a word, whilst once more board hide behind Wenger and claim he has all the money needs.fans.