Has Arsenal borrowed too much?

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Has Arsenal borrowed too much?

I've obtained a copy of the financial analysis of Arsenal that was made by the investment bank Lazard Brothers in support of Alisher Usmanov's proposal that the club should raise up to £150m in a rights issue.

It's a chunky 35-page document. But its conclusion can be summed up very simply: Arsenal has too much debt to pose a serious challenge to Europe's biggest clubs; or to use the jargon, it is over-leveraged, too thinly capitalised.

This is a verdict that has been rejected by Arsenal's board, which has been advised by NM Rothschild.

The North London club's directors argue that paying down debt would have only a marginal impact on the availability of financial resources.

Of course, as an Arsenal-supporting BBC journalist, I couldn't possible take sides in this dispute between the Uzbekistani plutocrat and Arsenal's directors.

But some of you will be interested in Usmanov's point of view.

Here are a few bullet points from the Lazard document:

1) It believes that Arsenal's earnings before interest, tax, depreciation and amortisation (EBITDA) will fall from between £55m-60m in 2009 to £35-40m in 2010. The ...

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http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/07/ive_obtained_a_copy_of.html

http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/07/ive_obtained_a_copy_of.html