Arsenal hit by housing slump

The dire state of the property market is hitting football giant Arsenal.

The Gunners registered an increase of more than 20 percent in pre-tax profit for the second half of last year but warned today that the slump in London property values was likely to hit their finances this year.

Figures for the six months to November 30, 2008 showed the club made pre-tax profit of £24.5m, up from £20m for the corresponding period a year earlier.

The 2006 move to the 60,000-capacity Emirates Stadium continues to underpin the club's profitability with matchday turnover up £3.3m to £44.4m, while broadcasting revenues rose £4.5m to £28.9m.

But AFX reported that uncertainty over the redevelopment of Arsenal's old Highbury stadium as a residential complex is a cloud on the financial horizon.

The construction of 186 flats on the site of the stadium is close to completion at a cost of £76.7m.

Only £58.1m of that total had been covered by agreed sales as of November 30 and the club admitted that loans related to the project would have to be refinanced.

"There is a probable need to extend the term of the Highbury Square bank loan and discussions with the banking syndicate are at a preliminary stage," the club acknowledged.

Arsenal chairman Peter Hill-Wood said: "Clearly there are some significant challenges ahead of us, both on and off the pitch, over the closing months of this financial year and beyond.

"The UK property market has been particularly affected by the economic downturn and, inevitably, this has had an impact on the group's own property development activities in the period.

"The financial arrangements for the group's property activities are separate and largely operate independently from the financing of the football business.

"This has always been a key aspect of our financial structure for the group and is intended to provide us with the ability to develop the football team as with, for example, the signing of Andrei Arshavin, irrespective of the difficult conditions in which our property business is having to operate."