Owners Kroenke Sports and Entertainment (KSE) have provided Arsenal with a loan that allows them to pay off the remaining sum before they were due in 2029.
football.london revealed in April that owner Stan Kroenke was prepared to offer financial guarantees to the club that would allow for greater stability and flexibility during the COVID-19 pandemic which has robbed Arsenal of significant revenue streams, not least matchday income from supporters.
In loaning Arsenal the money to buy their bonds early KSE have removed the financial covenants which required the club to set aside a significant sum in their accounts every year. They will still have to repay the loan from their parent company, the terms of which have not been revealed.
However if KSE were to be repaid under more generous terms than the financial institutions that held these bonds then Arsenal’s annual payments in interest and debt repayments, which totalled £20million in 2018 and 2019, will be reduced.
The Gunners have also held £36.8million in debt service reserve accounts under the terms of the bonds, that sum acting as security for future payments. They will no longer be required to retain this sum.
February saw Arsenal announce their first operating loss since 2002 with the 12 months through to May 31, 2019, seeing the club lose £27.1million. Since then the coronavirus has placed further pressure on club finances with the Arsenal Supporters Trust forecasting that losses could reach £144million if the 2020/21 season has to be played behind closed doors.
Whether that will happen is not yet clear and a key aspect of the loan from KSE was offering some degree of financial clarity in such uncertain circumstances.
Though the loan from KSE will offer Arsenal greater financial security the major investment from ownership is not intended to strengthen the club’s transfer budget but rather to offer it the stability to operate in financially strained circumstances.
Arsenal do hope to strengthen Mikel Arteta’s squad this summer and are targeting Atletico Madrid midfielder Thomas Partey as their top priority. For the time being however they must wait for further clarity over on field and off field matters, as varied as which European competition they will be in next season and when fans might return to stadia, before they are able to make firm commitments.