Arsenal FC has announced that its profits for the year ending 31 May 2006 have fallen to £7.9m and that the club's overall net debt has increased to £262m, due to investment on the Emirates Stadium project.

In a statement released on 20 September, Arsenal said "significantly less sales activity in our property development business" had put a dent in profits, despite an improvement in the turnover from football activities.

The club enjoyed a lucrative run to the Champions League final, boosting the football business turnover to £132m, compared with £115m for the 2004/5 season.

However, the major outlay on the new Emirates Stadium and the redevelopment programme at Highbury has not produced the expected results – 70 of the exclusive apartments to be built at The Stadium - Highbury Square remain unsold. The club's net debt has subsequently increased by £110m.

The figures come after an announcement in July that the club was to refinance the debts accrued through the construction of the Emirates Stadium, using future ticket sales as security, against a longer, 25-year term.

Peter Hill-Wood, Arsenal's non-executive chair, said: "The refinancing is strongly beneficial as it secures the financing arrangement for the long term and, by extending the repayment term and reducing the annual debt service costs, frees up significantly more future cash-flow for investment in the development of the team."