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Stan Kroenke offers loan to Arsenal, its meaning and Arteta’s transfer plans

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Stan Kroenke offers loan to Arsenal, its meaning and Arteta's transfer plans

Stan Kroenke offers loan to Arsenal, its meaning and Arteta’s transfer plans, After redeeming the fixed-rate bonds they issued when building the Emirates Stadium, Arsenal have taken a major step toward increasing their financial stability in the coming years.

Owners Kroenke Sports and Entertainment (KSE) issued a loan to Arsenal allowing them to pay off the remaining amount before they were due in 2029.

In April, Football Audit revealed that owner Stan Kroenke was prepared to give the club financial assurances that would allow greater stability and flexibility during the COVID-19 pandemic, which has robbed Arsenal from significant revenue sources, not least from supporters’ match-day profits.

In lending Arsenal the money to buy their bonds early on, KSE has eliminated the financial covenants that allowed the club to set aside a large sum in their accounts each year. They will still have to pay back the loan from their parent company, whose terms have not been revealed.

However, if KSE were to be repaid on more generous terms than the financial institutions that held these bonds, then Arsenal’s annual interest and debt repayment payments, which amounted to £ 20 million in 2018 and 2019, would be cut.

The Gunners have held, under the terms of the bonds, £36.8million in debt service reserve accounts, the amount serving as insurance for potential payments. They won’t be expected to keep the number any more.

Stan Kroenke offers loan to Arsenal, it's meaning  and Arteta's transfer plans

Stan Kroenke offers loan to Arsenal, it’s meaning and Arteta’s transfer plans

Arsenal announced its first financial loss since 2002 from 12 months to May 31, 2019, with the club losing £27.1million.

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Since then, the coronavirus has placed further pressure on club finances with the Arsenal Supporters Trust predicting losses could reach £144million if the season 2020/21 is to be played behind closed doors.

How this would happen is not yet clear and, in these unpredictable circumstances, a key feature of KSE ‘s loan provided some degree of financial clarity.

Although KSE ‘s loan will provide Arsenal with greater financial security, the major ownership investment is not intended to reinforce the transfer budget of the club, but rather to offer it the stability to operate under financially strained conditions.

Arsenal hopes to reinforce the squad of Mikel Arteta this summer, considering midfielder Thomas Partey from Atletico Madrid as their top priority.

Nonetheless, for the time being, they will wait for more clarification on field and off-field problems, as varied as they will be in next season’s European competition and when fans will return to the stadium before they can make firm commitments.

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