ITV hit by £30m soccer bill

ITV chief executive Charles Allen will be forced to pay £30m for a stake in Arsenal football club - almost three times the value of the shares on the open market.

He will have to hand over about a fifth of his company's expected profits for last year under a deal he negotiated as chairman of Granada, the company that merged with Carlton to form ITV a year ago.

The move is likely to anger shareholders, many of whom are deeply disenchanted with Allen's leadership of ITV.

Allen took a five per cent stake in Arsenal for £47m four years ago, when the value of football clubs was substantially higher than it is today.

Under the terms of that deal, ITV was obliged to take a further 5% for £30m once Arsenal had received the necessary funding and planning permission for its new stadium in north London. The Emirates stadium has been under construction for some months and ITV now has to pay the money within weeks.

Arsenal is quoted on Ofex, the junior share-trading exchange, and has a market capitalisation of £224m. The market value of a 5% stake is just over £11m. 'It is a nightmare for Allen,' said one leading City analyst. 'Strategically, it is not where he wants to be.'

Allen has made it clear that he is keen to dispose of the company's shares in the club, along with its 10% stake in Liverpool, to concentrate on the company's core broadcasting business. However, the City regards it as extremely unlikely that he will recoup anything like the sums he paid for them.

ITV also has a 33% stake, worth about £7m, in MUTV, Manchester United's subscription television channel.

Allen has been selling parts of the business that he regards as non-core since the company floated on the stock market a year ago this week.

However, ITV's share price remains under pressure - down nearly 25% since its stockmarket debut last February - amid fears for ITV's long-term future in the face of competition from multi-channel television providers such as BSkyB.

An ITV spokesman confirmed the deal would be triggered in March, a year after planning permission and funding had been secured for the stadium.