Emirates Stadium expansion: Official announcement today key as Arsenal plan £500m project

Arsenal’s plans to expand the Emirates Stadium are a tacit admission from Stan Kroenke of the threat he faces from upstart Premier League clubs.

The Gunners have been presented with design concepts for the Emirates Stadium 2.0, which they want to accommodate 80,000 fans. It will be an extraordinarily complex build, as Josh Kroenke has freely admitted.

The stadium’s facticity means Arsenal will likely have to build vertically upwards. And given that the seats furthest from the ground are the most expensive to install, early estimates suggest the revamp of the Emirates could cost £500m or more. What’s more, as the higher the seats the lower the ticket price, Stan Kroenke risks diminishing returns on his investment.

It’s a measure therefore of how competitive the Premier League now is that the club feels it has no choice but to push the envelope with their home ground.

The likes of Bournemouth, Brentford and Brighton are uber-smart operators and have proven that success on the pitch is not as indexed to wealth as it once might have been. The

However, establishment clubs have something those upstarts don’t: an enormous global fanbase and tourists willing to pay through the nose to watch Mikel Arteta’s side play.

It’s the same at Manchester United, who are also planning a new stadium build. Tottenham have already built their new stadium, while Liverpool have massively expanded theirs. Manchester City are in the process of taking capacity above 60,000, while Chelsea have grand ambitions for either a new stadium or a massive makeover of Stamford Bridge.

The other clubs who have either built or are planning to build new stadiums – West Ham, Aston Villa, Newcastle, Leeds, Everton, Nottingham Forest – all have huge fanbases too.

We have finally left the era wherein matchday income was seen as secondary to Premier League TV money. Suddenly, bricks and mortar are cool again.

For Arsenal, your fanbase (read: customer base) gives you the kind of financial advantage that your rivals simply can’t match without decades of success and brand-building.

Kroenke Sports & Entertainment understand the value of real estate better than almost anyone in football finance.

Arsenal’s owners have overseen the build of the phenomenally successful SoFi Stadium in Los Angeles. Ball Arena in Denver, home to several Kroenke-owned sports franchises, was constructed on their watch too. Both stadiums are currently at the centre of massive planned commercial development projects.

In N5, space is at a premium. Arsenal won’t be able to build a sprawling mixed-use complex like the Kroenkes have at their outposts in the US. They will need to be more creative.

More creativity will likely require more investment – on that front, however, there is some good news.

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Arsenal’s stadium debt costs may fall with interest rate cuts

While Kroenke is phenomenally rich, he is unlikely to front much of the capital for the Emirates Stadium expansion. Instead, these projects typically rely on debt.

When Tottenham built their stadium, they secured most of the finance through bank loans at very favourable fixed rates of between 2.5 and 3.5 per cent. Since they struck those agreements, however, interest rates have soared.

Bank of England interest rates – the rates on which commercial banks base their own rates – rose from practically zero in 2020 to around 5.25 per cent in 2023, which was the highest since before the 2008 financial crisis. If Spurs had borrowed at 5.25 per cent, their current annual interest payments of around £25m per year would instead have been closer to £45m.

For Arsenal therefore, borrowing money is going to be more expensive.

However, the Bank of England today announced that they have slashed interest rates from 4.5 per cent to 4.25 percent. It is the fourth rate cut in a row.

If Arsenal borrow, say, £500m, even the difference between 4.5 and 4.25 per cent would likely save them a seven-figure sum annually, depending on the length of the lending agreement.

It will be some time until Arsenal are in a position to begin seeking finance for the Emirates expansion, but the trend is encouraging.

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Arsenal’s matchday income at expanded Emirates Stadium

Last season, only Man United earned more through the turnstiles than Arsenal.

On a per-seat basis, the Gunners were top of the pile. At an 80,000-seater stadium, a pro-rata calculation suggests that their matchday income would rise to a stupefying £175m.

However, that fails to take into account the inevitable increased focus on hospitality, which would be proportionately more lucrative. Other enhancements to the general admission matchday experience would also see the club rake it in on matchdays On top of that, there would be dizzying commercial benefits.

Arsenal’s stadium naming rights and front-of-shirt sponsorship deal with Emirates is set to expire in 2028. At present, the naming rights element of the partnership is said to be worth around £5m annually.

At a revamped stadium, they could likely command quadruple that figure, either from Emirates themselves or a new partner.

On a net basis, Arsenal would have to subtract interest costs and new operational expenses, but a net income of £200m is probably realistic at an 80,000-seater stadium.

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