The Elephant In the Room - The Redevelopment of Highbury Pt2

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USMartin
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The Elephant In the Room - The Redevelopment of Highbury Pt2

Post by USMartin »

As to when the decision to re-develop Highbury ourselves was taken the history is not so clear-cut. Reports were still suggesting the club intended to sell the property to a developer as late as 2004, though the application to undertake the project goes back to 2002.

What is less unclear is no matter what version of facts you believe that Keith Edelman recommended the club actually keep the property to redevelop it rather than sell it, and that the reasoning was that the club could make moner money redveloping the property themselves than by selling it

But the major thing is that the decision represented a sea change in the financial profile for the club for the next several years, and not one for the better.

The situation is that had Arsenal sold Highbury for an immediate profit of 60-70 million pounds after the 2006 season that the club would have owed roughly 250 million pounds over the next 20 years, and 50 million of it by 2010 and had 65-70 million with which to pay that debt through then.

By contrast the redevelopment loan needed to pay for the costs the club would incur transforming Highbury Square would assure the club would owe roughly 370 million pounds over the next 20 years, and 160 million of it by 2010, and ZERO with which to pay that debt through then.

So again the Board had a choice between two scenarios

Minus 250 Million, Minus 50 Million, and Plus 65-70 Million
or
Minus 360 Million, Minus 160 Million, and ZERO

I think regardless of the potential pluses or minuses of EITHER option the reality is that clearly the second option would create a far greater strain on Arsenal's finances, at least in the short-term and until the profits from the redevelopment were actually in the club's accounts.

And when when you consider two ther points - first, that Arsenal had already invested over 100 million pounds into construction of the new stadium, and second, the club's policy of Board members not investing their personal wealth into club projects, one has to ask well, where was the money to pay the loan off going to come from?

Again More in a bit.

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