ITV faces substantial loss on forced purchase of Arsenal stake

Arsenal received a £30m bonus yesterday to invest in its playing squad after the broadcaster ITV was forced to double its stake in the north London football club under the terms of a media rights deal signed in 2000.

Arsenal received a £30m bonus yesterday to invest in its playing squad after the broadcaster ITV was forced to double its stake in the north London football club under the terms of a media rights deal signed in 2000.

ITV is now looking to sell its near-10 per cent stake, although the transaction will represent a substantial loss for the commercial broadcaster which was forced to pay £9,177.12 a share yesterday compared with the prevailing offer price for Arsenal shares of £3,950 a share.

The share purchase, which represents an injection of new equity into Arsenal in return for the issue of new shares to ITV, was triggered after the satisfaction of a clause in the agreement in 2000. This stipulated that Granada, now part of ITV plc, would purchase another tranche of shares 12 months from the securing of planning permission and funding for the club's new stadium.

Granada took a 4.9 per cent stake in Arsenal under the original deal at the height of the media and telecoms boom. Charles Allen was chairman of Granada at the time when media companies were desperate to own stakes in clubs to secure what appeared to be valuable media rights. Steve Morrison, Granada's former managing director, was the other management figure linked to the deal.

The Arsenal deal secured Granada broadband internet broadcast rights but these have failed to prove to have any commercial value. Keith Edelman, Arsenal's managing director, said: "The proceeds will assist Arsenal in the achievement of our corporate objectives, including investment in the development of our playing squad."

The £30m injection will come as a welcome boost to an injury and suspension-hit Arsenal team at a time when their progress in domestic competitions has faltered. They are third in the Premiership and struggled through to the quarter finals of the FA Cup after beating Sheffield United only on penalties.

Their progress in the Champions League is far from assured after losing 3-1 to Bayern Munich in the first leg of the first knockout round.