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Arsenal has refinanced some of the costs of its new Emirates Stadium in the capital markets. The club is set to pull off a ground-breaking deal to borrow £260m from investors using ticket sales at the stadium as security, which will tie the performance of the bonds to the team's ability to attract fans to its home games. Securitisation is a device that allows companies to borrow funds against future cash flows and has been widely used by mortgage lenders, pub chains and the government in recent years. It has been used by clubs such as Manchester City in private deals, but the Arsenal deal is distinctive because it has been sold publicly. Leeds United and Leicester City ran into trouble with such deals when they borrowed heavily against future ticket sales and then struggled to meet their repayments when the form of the clubs plummeted and attendances fell. Manchester City's finances are relatively obscure compared to those of some clubs, but they have a good deal on the City of Manchester stadium and are able to ride out problems resulting from fluctuating attendances that arise from supporter frustration.
Arsenal insist that their deal is different, reflecting the special status of the North London club. Keith Edelman, Arsenal's managing director, stated, 'It's the first football club securitisation to be rated investment grade', adding that the bond would be 'credit-wrapped' or guaranteed. Arsenal, he said, was 'the first football club ever to get that.' Rating agency Standard and Poor's have issued a triple A rating for the deal, the highest quality level of bond investment. However, this does not mean that the financial community thinks that Arsenal is the investment equivalent of the marble halls at its old Highbury ground. This rating was only achieved with a financial guarantee from Ambec Assurance, a company that specialises in insuring securitisations. Without that Arsenal Football Club dealt itself was given a ratng of BBB-, one notch above 'junk' status.
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