Stefan Borson: Arsenal could land '£5m' hit after Kroenke decision
Yesterday at 03:30 PM
Arsenal owner Stan Kroenke could have decided the club will pay £5million of interest on his shareholder loans rather than convert them into equity.
That is the view of finance expert Stefan Borson, who exclusively told Football Insider only top-flight sides with profit and sustainability (PSR) issues should be concerned about paying interest on their loans.
Nottingham Forest owner Evangelos Marinakis recently converted £72million worth of loans into 7.2 billion shares.
The Greek businessman made that move after it was confirmed any shareholder loans still in effect after 11 January must be submitted as an associated party transaction (APT) and undergo a fair market value assessment following the Premier League's recent legal battle with Manchester City.
Any money now loaned to a club by their owners will need to reflect fair market value and see interest rates charged in line with commercial loans.
There has so far been no update provided on the £259million worth of shareholder loans Arsenal owe Kroenke.
Arsenal have huge PSR capacity to pay shareholder loan interest
Borson revealed the American billionaire could have decided it doesn't matter if he reduces the club's profitability from a PSR perspective because of their huge capacity.
"Arsenal may have taken a slightly different approach to Nottingham Forest," Borson told Football Insider.
"Kroenke could have thought 'We have loads of PSR capacity anyway and, actually, as an owner I still want to get interest out of the club. I am not asking for dividends, but if I am going to loan it more than £250million, I do want my interest coupon. We have not got any PSR issues, so it doesn't really matter that I am reducing the profitability of the football club for PSR purposes because we have got huge capacity. I am not going to use that capacity anyway, so I am keeping the shareholder loan in place and I'm paying what it is now required under the APT rules'.
"That is possible and it wouldn't be crazy, either. People have to understand the only issue that people should have with the shareholder loan is if they are tight on PSR because it's basically cutting across their capacity.
"But if you don't have that issue like Arsenal, who have got over £100million of capacity on PSR, it's fine if they pay £5million of interest off to their principal shareholder.
"The fans won't want that payment to actually occur, but it may not actually be paid in cash.
"It may be rolled up, such that the debt increases by the amount of the interest rather than actually paying it off."
In other news, Arsenal accelerate January transfer plan after 'crisis' talks.
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The post Stefan Borson: Arsenal could land '£5m' hit after Kroenke decision appeared first on Football Insider.
