Kevin Whitcher
So the day many feared has come. News of Alisher Usmanov’s acceptance of Stan Kroenke’s bid for his 30% shareholding came yesterday. In fact it may well have been Usmanov who offered to sell in the first instance, having had his own reputed bid to buy out Kroenke knocked back last year. What it all means though is that Arsenal will be owned lock, stock and barrel by one man, as opposed to a plethora of shareholders, regardless that Kroenke could outvote them all.
There will be no more annual general meeting in October, the one chance for supporters (who owned shares) to hold the board accountable and express their opinion about how they were performing. It was fitting then, that the last one in 2017 ended in farce, as an unhappy audience let the board know of their feelings in no uncertain terms, with a show of hands rejecting the re-election of Josh Kroenke and Chairman Sir Chips Keswick to the board. This necessitated the formality of a card vote, in which Kroenke’s vote led to the re-election of both anyway. I was interested to see what would have happened this year. There would have been no Arsene Wenger speech (I doubt Unai Emery would have taken on that particular task – although Wenger was a de facto board member whose address to the shareholders was used to diffuse the tension in certain years as the shareholders could not bring themselves to be disrespectful to him). However I think, with the changes that had been made on the football side of the club, there would have been a better mood in the room.
Anyway, that won’t happen now. Shareholders will receive a windfall of close to £30,000 per share, but won’t own a small part of the club any more. They will become ordinary fans like the rest of us. It also means that, now in total control, Kroenke can do pretty much anything he likes.
He is reportedly funding the buyout with a £557m loan from Deutsche Bank. Kroenke is very rich in terms of assets, but cash rich he isn’t. Usmanov could have bought Kroenke out with his own cash. Kroenke needs to borrow. How do you think this is going to be repaid? The fear is from any profits the club make. Instead of 100% of profit being re-invested into the club in the form of transfer fees, player wages and upgrade on training facilities, we have no idea how much will now be siphoned off by the owner.
The Glazers did it at Manchester United to fund their own purchase of the club, but United could remain competitive in spite of this for the simple reason they were a moneymaking machine by that time, a process that really got underway in the early 1990s when their boardroom was stuffed with commercial acumen and Alex Ferguson began winning trophies on a regular basis.
Arsenal are not in such rude health. Kroenke has already extracted money from the club on the sly in the form of a couple of £3 million payments for some kind of consultancy that no-one actually can pinpoint. These were stopped in the face of protests at AGMs. Until we get to the summer 2019 transfer window, we won’t be certain how much Kroenke has taken out of the club, because that information does not have to be reported any more. Some figures do have to be divulged because of the (albeit generally toothless) Financial Fair Play rules, and we can then estimate how much the club are being financially hampered by the owner.
As it is, Arsenal are at a disadvantage, and will never become a spending club in the way that Manchester City, Chelsea and Paris St Germain have, due to the desire of their owners to fund their improvement. Were Kroenke to pay his loans off from the club profits, the dice would be loaded even more against the Gunners.
You have to wonder if CEO Ivan Gazidis got wind of what was coming, and decided it might be a good time to move on. His move to Milan looks inevitable now, just a matter of negotiating a shortening of his notice period with a compensation payment from the Italian club to get him quicker than they should be able to under the terms of his current employment. Who knows? Certainly, Gazidis would have a good idea of the implications of Kroenke being in complete control.
One imagines the board will now be replaced, although they are largely figureheads rather than decision makers now. The executive team put in place by Gazidis will probably report to a new CEO from within the ranks of Kroenke Sports Enterprises, who may know a lot more about financials than football.
If the club slide as a consequence of funds being extracted by the owner, it remains to be seen whether protests or apathy follow. It won’t bother Kroenke too much, as long as the club remain in the top flight of English football. He’s not too worried about winning titles, certainly not enough to speculate financially to increase the chances of success. Success for him is being part of the money-making machine that is the Premier League. Arsenal could roll along mid-table as far as he is concerned, because the TV deals for Premier League broadcast rights will guarantee healthy profit as long as the club can remain in the division. The days of regular Champions League participation could become a thing of memory.
The decline will be slow, not immediate. Arsenal are competitive now, a definite top six club. It might take five years of under-spending before they fall out of this bracket. So do not expect any apparent change immediately. This will likely be a death by 1,000 instalments, with fans drifting away once it becomes apparent Arsenal’s priorities are funding the owner rather than winning trophies.
Of course, I could be wrong. And I hope I am. Time will tell. But Kroenke’s refusal to engage with supporters, an undertaking he gave when be became the majority owner, tells you a lot. He doesn’t care too much for their concerns, which are different from his. He bought into the club not for any love of the game, but as a business acquisition.
I wonder what David Dein is thinking today, on his yacht in the Mediterranean? He persuaded Kroenke to buy his first tranche of Arsenal shares, as part of a failed attempt in 2007 to take control of the board. He didn’t do his due diligence on Kroenke, thinking he would be Arsenal’s answer to Roman Abramovich. He didn’t realise Stan wouldn’t put a cent into the club, only into buying its shares. Dein, having failed in his coup d’etat (Lady Nina Bracewell-Smith decided to side with Danny Fiszman, Hill-Wood and the other directors including her in-laws the Carr brothers) was sacked from the board, who eventually made peace with Kroenke and invited him to become a director. Danny Fiszman, on his deathbed, decided to go with an ‘anyone but Dein’ policy, and arranged the sale of his shares to Kroenke rather than risk his family selling to the highest bidder (probably Usmanov), with the rest of the board falling into line, and small shareholders being offered the price Kroenke paid for Fiszman’s shares. Those that held out and kept their shares will profit now.
But ultimately, the seeds of the club’s decline might lie at the door of David Dein. How ironic. A man who loved the club, but whose judgement was shaded by his personal ambition to control it, a consequence of his bitter feud with Fiszman.
There’s a huge story in there, although no-one involved will speak of it’s details. But ultimately, the fallout of the pair had long-term consequences no-one could have foreseen.
People are rightly excited about the start of the season under a new manager (or head coach if you prefer), with some fresh faces. Good. That is what football fans should be worrying about. Let’s face it, short-term, there is not a lot we can do to get shot of Stan Kroenke.
What needs to happen is for someone to express an interest in buying him out at a price he can’t refuse, and for that someone to have a different philosophy towards owning a football club. At that point, supporters can decide if they want to get behind the new concern and make effective and visible protests accordingly.
But as long as events on the field are going well, and the price of admission does not go through the roof (watch out in 2019 for prices rises on that front though – my guess is a 5% rise year on year from here on), then fans will not have reason to turn militant. Although with Gooners these days, the majority express themselves more with blatant apathy when things do go badly.
We’ll see. Maybe I am being pessimistic. Perhaps we’ll see a new side of Stan Kroenke. For starters, if he made a public statement that he has no intention of withdrawing profit from the club, he’d win over a lot of people. Don’t hold your breath.
The new issue of The Gooner (272) is currently at the printers, and we will have a couple of sellers out on Sunday – one on the route from Arsenal tube station to the stadium, one on Hornsey Road in the vicinity of the two cannons roundabout, not far from the Little Wonder café on the corner.
