Stan Kroenke seals $500 million loan for LA Rams & why Arsenal may become a selling club

Stan Kroenke seals $500 million loan for LA Rams

As confirmed by the Athletic’s Daniel Kaplan, Arsenal owner Stan Kroenke has secured a huge loan for his NFL franchise, the LA Rams.

Kaplan reported that “NFL owners today approved lending the LA Rams another $500 million for Sofi stadium development”.

NFL owners today approved lending the LA Rams another $500 million for Sofi stadium development

— Daniel Kaplan (@KaplanSportsBiz) May 20, 2020

Back in 2016, Kroenke moved the Rams from St Louis to Los Angeles.

At the time, NFL Commissioner Roger Goodell called relocation a “painful process”.

As part of the deal, the Rams agreed to pay the NFL a £311m ($550m) relocation fee.

When it comes to the Rams’ new home, the SoFi Stadium, the costs have ballooned.

As reported by NBC, this latest $500 million loan “is on top of the $400 million the Rams already borrowed from the league’s stadium lending program.”

 

So what does this mean for Arsenal fans?

A simple assumption to make is that if Kroenke is up to his eyeballs in debt with the LA Rams, that could impact the finances available at Arsenal.

Indeed, Football London have trumpeted this line, claiming that:

Arsenal’s transfer plans ahead of the next transfer window could be set to be dealt a major blow as Gunners owner Stan Kroenke is in need of $500million to help finance the Los Angeles Rams’ stadium.

But is that actually true? Will Kroenke have less money to spend on Arsenal because of the Rams’ stadium costs?

NBC note that Kroenke has agreed some positive terms in his new financing deal with the NFL.

Firstly, Kroenke has agreed to pay back the loan over 30-years.

Secondly, the LA Times report that “if the NFL further increases the debt limit, Kroenke can take advantage of lower interest rates.”

 

Saying that, Arsenal’s finances don’t look great

While Kroenke’s latest $500 million loan in America may not impact Arsenal’s finances, that’s not to say that the Gunners don’t have significant financial issues ahead.

Back in February, Arsenal’s latest accounts showed a £27.1 million loss, despite an increase in football revenue.

It was the first time Arsenal had announced an operating loss since 2002.

Arsenal Group have published their accounts for year ending May 31, 2019. They made a loss of £27.1 million.

In 2018 it was a profit of £56.5million.

— James Benge (@jamesbenge) February 28, 2020

Telegraph reporter Sam Dean has dug into the problem facing Arsenal’s current business model:

Arsenal’s business model, under the ownership of Stan Kroenke, is one of self-sustainability: they only invest what they generate.

Here is where the problems start, because three seasons outside of the Champions League have severely affected what Arsenal generate, and their bloated wage bill is a major drain on finances.

Arsenal have an annual wage bill of £230 million, while they’ve only been playing Europa League football in recent seasons.

Moreover, the Gunners are only 9th in the current Premier League campaign, so they’re not returning to the Champions League anytime soon.

Considering the current economic implications during the Covid-19 pandemic – reduced TV payouts, no gate receipts – Arsenal’s finances looking forward are bound to be restricted.

 

Arsenal could become a selling club

In his article for the Telegraph, Sam Dean concluded that Arsenal may have to become a selling club:

Given their financial situation before the crisis struck, an elongated suspension could essentially force Arsenal to attempt to cash-in on their key players as soon as possible.

Their best players leaving on the cheap is not part of the business strategy, but it may well become an unavoidable reality.

 

Also see: Best Netflix, Amazon & YouTube football documentaries & movies to watch during coronavirus isolation

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