By Bill Wilson
Business reporter, BBC News
It is hoped the sale of apartments can boost team building
Arsenal goes into the new English Premier League season looking forward to a timely financial boost from the sale of apartments at its former stadium.
When the club - which describes its business as both "football and property" - moved from Highbury to its impressive new Emirates Stadium in 2006, it turned its old home over to housing development.
The Highbury Square development comprises 711 one, two, and three bedroom apartments priced between £250,000 and £1,500,000.
And at the end of the month those who have paid a deposit - of between 10% and 20% - on apartments in the South Stand of the scheme will have to pay the rest of what they owe.
'Far from rosy'
The £300m-plus development should be providing some funds for manager Arsene Wenger, who has had to operate frugally as the club also services the debt it took on board to build its modernistic new venue at Ashburton Grove.
But there are fears that the credit crunch and falling property prices could now hit Arsenal's financial plans, both on and off the playing field.
Football business guru Alex Fynn is the latest commentator who feels the club may be regretting the decision to rely strongly for future income streams through the property market.
"The fear a good number of the prospective purchasers who had put 10% down on Highbury Square apartments might cut and run in the light of plummeting property prices means Arsenal's garden is suddenly far from rosy," he says.
As it was... fans arriving for a game at Highbury in 1972
The point is made in a book Mr Fynn has co-written, Arsenal: The Making Of A Modern Superclub , which analyses the club's journey from financial underachievers to third richest club in the world.
Mr Fynn, who has written and spoken extensively on the business of sport, adds: "The board know they are treading financial water until the Highbury Square revenue starts coming in."
He also expresses concern in the book that "for the club to develop Highbury Square themselves might not have made sound economic sense in the light of the credit crunch that came along".
However it is believed the Arsenal board is sanguine about the current economic situation, and envisages no problems with the development, despite current housing market uncertainty.
It is also understood the club believes that even in a falling property market, the uniqueness of the Highbury Square development will help the flats hold their value.
It is known that three buyers so far have given up their deposits and walked away from completing their purchase at Highbury Square.
But the club, which had made the decision it would make more money by redeveloping the stadium itself rather than selling out to a developer, highlights the fact it has sold more than 93% of its apartments.
As it is... the former Highbury playing area is being transformed
As Mr Fynn points out: "The club has massive commercial developments, and in fact they now define the nature of their business as being 'football and property'.
"The only danger is they might have predicated a few decisions on the premise that Highbury Square was going to bring in more revenue than it might realise."
As well as Highbury Square, Arsenal has also recently submitted a planning application for the redevelopment and regeneration of Queensland Road as part of the Emirates Stadium regeneration programme.
There, it plans to sell affordable housing to a housing association and to market other accommodation to a residential property company.
The club had turnover of £23.7m on its property development in the six months to November 2006 and in November 2007 this was £7.6m.
And operating profit from property fell from £9.3m in 2006 to £2.5m in 2007.
However it is understood this is merely down to the fact that more payments-due dates fell in the earlier financial period.
As it will be... Highbury transformed into apartments
"I would say Arsenal's finances are very good," says Mr Fynn, "not withstanding the fact they have got a huge debt - which is manageable as long as they fulfil three criteria.
"These are that they play to sell-out grounds in the English Premier League, that they enjoy a successful run in the Champions League, and that they keep their wage to turnover ration at a healthy level under 60%.
"If they continue to do that, there is a very great difference in going in to debt and trying to buy success through the purchase of players, and going into debt to build a new stadium - as Arsenal has done - which triples your matchday income at one fell swoop."
However he also warns that there are a "few variables" that could influence their financial position.
These include the future shape of the property market and credit-crunch, ensuring that Arsene Wenger is retained as manager and the lack of commercial experience which the club has at the highest level.
In moving from Highbury to the Emirates Stadium Arsenal hugely increased their match-day revenues.
A total of 1,838,152 attended matches at Arsenal's new home during the 2006/07 season, a 76% increase on the total attendance during the final season at Highbury, when 1,044,266 took their seats.
'Protecting the brand'
The move also saw the groundbreaking naming rights sale at the new stadium. In a £90m, 15-year, deal Arsenal gave the airline Emirates exclusive naming rights to the stadium.
"All I would say is that maybe from a marketing point of view they could have made better use of the assets they have," says Mr Fynn, who has worked as a director at Saatchi & Saatchi advertising for nearly 20 years, handling a number of big-name clients including several football clubs.
Mr Fynn believes Arsenal could have handled its naming rights differently
"There is nobody on the board with a marketing or advertising background, nobody with experience of working at somewhere like Procter & Gamble for example.
"I have suggested in the book that there were different ways of handling the stadium naming rights. They could have been protected the brand, by calling the stadium something like the Highbury Emirates.
"But let us not forget it is the third richest football club in the world."
Meanwhile the club hopes the conversion of all four former stands into apartments will be completed by the end of summer 2009.
In the meantime Arsenal are betting that the lure of owning an apartment overlooking where greats such as Alex James, Charlie George, Ian Wright and Thierry Henry once played will overcome any housing market wobbles.