£616m reveal shows exactly how Arsenal are preparing for Emirates Stadium expansion
11/21/2024 09:00 AM
The Premier League is in an era of stadium rebuilds and, nearly two decades on from trading Highbury for the Emirates Stadium, Arsenal might be next in line for a major redevelopment.
When the Emirates opened its doors in 2006, it was the apex in stadium design, with its sleek, bowl-shaped design, ensuring excellent sightlines from every seat and glass façade creating a space-age feel.
But while venue in N5 is still among the biggest and best in Europe, Arsenal’s Premier League rivals are gaining ground and, in North London rivals Tottenham’s case, have overtaken the Gunners.
Man United remain the league’s matchday income kings, with Spurs closing in fast. But the new Sir Jim Ratcliffe-led regime has huge plans for a new, 100,000-seater stadium on the Old Trafford site.
In Liverpool, FSG have opted for a staggered redevelopment process that has gradually brought capacity to 61,276, a few hundred more than Arsenal.
Man City’s Abu Dhabi owners have opted for a similar approach and by the their project is finished, the Etihad Stadium will have surpassed the Emirates’ capacity too.
West Ham can also accommodate more at the London Stadium, while Newcastle United and Chelsea both have plans in place for space-age new home grounds that will place them on a similar footing.
It isn’t all about how many fans you can seat either. Everton’s new stadium at Bramley Moore Dock is a more modest capacity but will have outsized earning potential thanks to its commercial facilities.
Aston Villa and Leeds United, two clubs with among the richest owners in English football who see their clubs as European regulars in the long term, will also soon redeveloping Villa Park and Elland Road.
So, when the club’s co-chair Josh Kroenke revealed Arsenal are exploring expanding the Emirates, it was big news but perhaps not the most surprising.
Any upgrades would need to be comprehensive – and expensive.
While it opened 18 years ago, TBR Football has been told that the blueprints for the Emirates are now almost 30 years old, and the stadium was not designed with expansion in mind.
Speaking to TBR earlier this year, Liverpool University football finance lecturer and industry insider Kieran Maguire forecasted that Arsenal could spend £500m to raise capacity to 80,000.
Reports this week suggest that the Gunners are indeed aiming for that capacity, although they only at the exploratory stage at present.
Owner Stan Kroenke favours a self-funding approach in North London, so increasing revenue is central to fortifying the budget available to Mikel Arteta.
And developments direct from Arsenal this week appear to signal that the KSE regime are now getting their ducks in a row before they break ground on increasing the stadium.
Arsenal showcase Emirates Stadium’s value
Before any capital expenditure project can get underway, Arsenal must clear a number of hurdles.
One of those is acquiring approval from the council. After all, the reason Arsenal moved from Highbury in the first place was because Islington Council would not give them permission to expand the ground.
Local residents would need to be consulted and convinced of the stadium’s value as a community asset as well as a cash cow for Arsenal. Then, there are infrastructure costs and the possibility of public funding.
That may be one of the reasons that Arsenal released an official Economic and Social Impact report in collaboration with EY this week.
In the 56-page document, the club claimed to have delivered £616m in economic value to the UK, with £425m that figure zeroed in on Islington itself.
With the fate of the Emirates Stadium in Islington Council’s hands, it looks like the PR campaign has begun.
The finances of expanding the Emirates – £150m windfall in sight
Football clubs have three primary income streams: commercial, media and matchday.
There are signs that after a decade of huge growth, TV money is starting to plateau. Commercial income has less of a defined ceiling but is an immensely competitive marketplace.
Capital expenditure projects like expanding the Emirates are expensive but are also free from Profit and Sustainability Rules and are typically externally financed – and the returns are more or less guaranteed.
At the last count, Arsenal’s annual matchday income stood at £103m, behind Man United and Spurs in the context of the Premier League.
That was a bigger proportion of their total revenue than any of the so-called Big Six.
A crude pro-rata calculation based on that £103m figure extrapolated for an 80,000-seater stadium would give Arsenal annual matchday income of £139m post-redevelopment.
However, the true final figure would be higher – perhaps by an order of magnitude.
For one, that £103m figure was taken from the last recorded financial year, 2022-23, when Arsenal were not in the Champions League, where they have at least four premium priced matchdays.
Any Emirates rebuild would also include a major hospitality focus, which some clubs find generates revenue comparable to general ticket sales despite catering to a fraction of the stadium’s capacity.
There would be commercial opportunities too, such as the scope the renegotiate the naming rights deal with Emirates and court new sponsors for suites in the stadium.
In total, expansion would likely see annual matchday income hit at least the £150m mark.
The Wembley Stadium issue, Chelsea clash, and debt: Problems Arsenal must resolve before Emirates rebuild
In terms of the design itself, Arsenal have two choices.
They could opt for a staggered approach like Liverpool and Man City whereby construction takes place over several years but has minimal impact on the matchday experience.
Or, they could temporarily vacate the Emirates and get the work done quicker.
If the latter, they would need to find an interim home. And the consensus is that Wembley Stadium is the most likely option.
However with Chelsea also planning their own stadium project, there is the risk of a clash with Arsenal.
What’s more, with any redevelopment likely to cost £500m or more, Stan Kroenke would also need to consider whether he is willing to bankroll the project or load the club with debt.
Kroenke privately financed the £4bn SoFi Stadium in Inglewood, Los Angeles, widely considered one of the best in the world.
Time will tell whether he takes the same approach at the Emirates.
