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Finance expert issues verdict on Arsenal building 100,000-seater stadium
Arsenal are considering expanding the Emirates Stadium, their home for coming up to two decades in a move which would shape the future of the club spiritually and financially.
The motivation for expanding the ground is clear. Across the Premier League, clubs are either increasing or are looking to increase capacity, with a renewed focus on matchday income as a key revenue stream.
Last season, no one earned more money than Arsenal in ticketing income. The North Londoners banked £132m through the turnstiles, which was bested only by Paris Saint-Germain and Real Madrid worldwide.
But Stan Kroenke and his enforcers in N5 believe they can satisfy more demand.
Last summer, Josh Kroenke revealed that Arsenal are exploring ways to expand the Emirates. Since then, there has been a drip-drip of new information but nothing concrete as yet.
The Emirates, whose current capacity is just shy of 61,000, is less than 20 years old but was built on blueprints from the 90s, since when stadium design has significantly evolved.
Football clubs have three primary revenue streams – matchday, commercial and media – and it was only a few years ago that the received wisdom was that matchday was no longer particularly important.
But UEFA and the Premier League’s Profit and Sustainability Rules (PSR) have forced clubs to behave more commercially, with owners no longer able to spend freely in the transfer market.
Currently, PSR is based on a club’s profit-and-loss account. Soon, the Premier League will move to a revenue-based system instead, which will make matchday income even more important.
There has also been something of a mission creep towards more US-style pricing and non-ticketing income, as well as an increasing awareness of just how lucrative hospitality can be.
The Kroenkes are keenly aware of the bounty on offer from VIPs. Their most expensive hospitality season ticket – in the JPMorgan-sponsored Diamond Club suite – comes in a £30,000.
So, how big can Arsenal go? And how much could they earn?
Arsenal should cap Emirates at 80,000, says Kieran Maguire
In the NFL, where Stan Kroenke is a shareholder, there is a curious trend in stadium design: some franchises are actually reducing capacity when they come to build new stadium.
The idea is for reduced capacity to fuel increased demand and justify steeper prices, while a less-is-more approach allows NFL teams to extract more cash from hospitality and premium seating.
Could Arsenal borrow from this playbook, like the Kroenkes did when they built the world-beating SoFi Stadium for the Los Angeles Rams in 2016?
“There is no simple solution here,” says Kieran Maguire, football finance lecturer at the University of Liverpool, speaking exclusively to TBR Football.
“The interesting thing here is the capacity of the SoFi Stadium is around 70,000 – that’s the sweet spot.
“People saying ‘let’s go to 100,000’ aren’t considering that fans will be too far away from the action. All of a sudden, you get pushback from fans who aren’t willing to pay high prices for that kind of view.
“Also, the costs of going from 80,000 to 100,000 are probably the equivalent of going from zero to 80,000 from an architectural point of view.
“Structurally, there are more and more issues the bigger the stadium gets. That’s why I have always been slightly sceptical about the plans at United.
“Because the existing structure at the Emirates isn’t geared towards and expansion, this is going to be very expensive.
“You also have the disruption caused by the expansion, though Liverpool and Manchester City are showing how this can be done at an existing stadium.
“The issue from Arsenal’s point of view is that they are now looking over their shoulders and they see Spurs are generating more money per fan by having a multi-function approach to the stadium.
“A revamp of the Emirates allows them to keep up. A switch to squad cost control rules means that every extra £1m in matchday revenue is £700,000 on player costs, so an expansion from 60,000 to 80,000 could certainly help Arsenal in that department.”
When could Emirates expansion be completed?
Arsenal are said to have been presented with some design options by architectural firms to expand the stadium.
However, they are yet to settle on a final approach and it could be some time before Kroenke Sports & Entertainment reach a decision.
With the highest matchday income in the league at present, they can probably afford to not rush the big call and make sure they make the right one.
Construction could be done in one fell swoop or in a phased approach, like Liverpool and Man City have taken in recent years.
The construction path they plot will have a major bearing on the timeline. If they choose the former, Arsenal may need to find a new home in the interim period.
Wembley Stadium has been suggested as a placeholder, like it was used by Spurs before they moved into their new stadium.
But with Chelsea also keen to either dramatically increase capacity at Stamford Bridge or move to a new stadium, Arsenal could have competition in this department.