Arsenal planning to build 'new stadium in the sky' as Josh Kroenke's Emirates masterplan evolves

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Ahead of tonight’s North London derby, Mikel Arteta has urged fans to create the “best atmosphere” Arsenal have played in at the Emirates Stadium. Would an extra 20,000 seats do the trick, Mikel?

Supporters typically don’t need geeing up for a match against Tottenham, but some have complained that the Emirates has felt flat in recent weeks.

That is probably both a cause and symptom of Arsenal’s insipid form. Arteta’s side have won just once at home in the Premier League since 4th December.

Two cup defeats in less than a week, against Newcastle United and Manchester United respectively, have only added to the malaise.

At the end of 2023-24, Arsenal were hurting after narrowly missing out on the Premier League title for the second time in a row. However, the broader mood was still more positive than it had been for years.

Co-chair Josh Kroenke even mooted expanding the Emirates Stadium in order to capitalise on – and, although he didn’t explicitly say it, monetise – the optimism on the terraces.

Those were just “internal discussions” at that stage, but it has since emerged that Arsenal want to take capacity at the Emirates to 80,000 or potentially beyond.

Redeveloping the Emirates would cost the Gunners £500m-plus but, with the stadium arms race taking place in the Premier League at present, the question is whether they can afford not to look at upgrades.

Football clubs have three primary income streams: commercial, media and matchday.

The commercial market – which encompasses sponsorship, merchandise and events – is hugely competitive, particularly in the Big Six.

Media income meanwhile is centralised at Premier League and UEFA level and largely outside the control of Arsenal’s executive team.

There are only so many clubs with the resources and demand to accommodate over 60,000 fans, so it’s no surprise to see the likes of Arsenal zeroing in on this area to steal a march on their rivals.

But bricks-and-mortar infrastructure projects are wildly expensive, especially Arsenals corner of North London, one of the costliest real estate cities in the world.

So how will the finances work? Speaking exclusively to TBR Football, Liverpool University football finance lecturer and Price of Football podcast host Kieran Maguire explained how the expansion might unfold.

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Expanding the Emirates: Long-term financial implications loom

In stadium design, the further away you get from the ground, the more expensive the project.

It is why so many clubs look to increase capacity by building downwards if possible, but the Emirates Stadium site makes this impossible.

Stan Kroenke is worth around £15bn, so a £500m build with a defined return on investment is ostensibly not a problem.

Liquidity, however, AKA how readily assets can be converted into cash, is a separate issue.

And unlike with the world-class SoFi Stadium, which Kroenke built for his Los Angeles Rams NFL franchise, Arsenal won’t be able to rely on local government grants or a centralised league-wide infrastructure pot.

Josh Kroenke, son and right-hand-man of ‘Silent Stan’, has not elaborated on how Kroenke Sports & Entertainment would fund the redevelopment, nor has he discussed what it might look like at this stage.

Architecturally, Arsenal would effectively be building a new stadium on top of the existing one, so any loans that they take to cover the costs would likely be huge and impact the club for years to come.

“An 80-85,000 expansion is fraught with difficulty,” said Maguire, who is well connected in football.

“One positive is that 80 per cent of the country’s cranes are in London, so getting access to them shouldn’t be a problem.

“But the size and style of the stadium at present means it would be a very challenging and expensive proposition to effectively build it in the sky.

“They have to go up rather than down because of the Underground system and so on.

“All of the new seats will be geared towards the hospitality or tourist seats, as opposed to increasing opportunities for local fans to attend on a week-by-week basis

“You can only really recover the costs and service the debt through much higher revenue streams and much higher prices.

“There will be an increased interest burden and increased maintenance costs too, so that’s what the clubs feel they have to do.”

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Debt, the Wembley Stadium factor, and Arsenal’s transfer budget

Unless Arsenal opt for a piecemeal, phased redevelopment like Liverpool have with Anfield in recent years, they will likely have to vacate the Emirates before they can undertake such a huge project.

That would mean finding an interim home ground. Wembley Stadium, temporary home to Tottenham while they built their new stadium, is the likeliest destination.

However, Chelsea are also in the preliminary stages of planning a stadium rebuild, so there could be competition to secure the 90,000-seater arena.

What’s more, macroeconomic conditions such as stubbornly high interest rates means the investment environment isn’t favourable for Arsenal.

When Spurs built their stadium, they took out loans at fixed interest rates of 2-3 per cent. That wouldn’t be possible today.

But with Stan Kroenke’s self-sufficient approach, increased matchday income, as well as the commercial boom that would follow, would likely lead to more investment in the playing budget.

PSR is a non-issue for the Gunners, but Kroenke wants every penny that Arteta spends to be fully accounted for elsewhere in the business.

The owner wants to demonstrate long-term profitability and the sustainability of his business model, and that necessitates that some of the stadium revenue will be skimmed off the top.

But nonetheless, it is impossible to imagine a scenario where a significant chunk of the extra revenues would not also be redirected to Arsenal’s recruitment and retention budget.