Arsenal will be soon be Kroenke’s club

Stan Kroenke is manouvering his way to the top of the pecking order in the Arsenal board. Since his introduction to the club in 2007 we have seen him steadily accumulate shares, and this culminated him being invited to join the Board as a non-executive director in September 2008.

He has now taken a 20% stake – buying 8% from Danny Fiszman, and becoming second largest shareholder after Usmanov – spending £42 million – he is serious about this.

Kroenke took an 11.26% share off ITV in April 2007, and the Board were initally hostile – it was the beginning of a period of turbulence which saw Dein lose his position on the Board, and is still having repercussions today. Dein then sold his stake to Usmanov and suddenly Kroenke seemed like the good guy. The Board invited him in and is now setting him up as the defence against Usmanov and Dein.

This sale has come at a very important time – April 2009 is the end of the lock-down agreement set by the Board – they may now sell their shares to whoever they want. By increasing Stan’s share they are effectively blocking Usmanov. The situation was dangerous as Lady Nina is known to be unsettled and may sell her shares very soon.

Share in Arsenal

  • 25.0% Alisher Usmanov
  • 20.5% Stan Kroenke
  • 16.1% Danny Fiszman
  • 15.9% Lady Nina

Fiszman has given up his position as the second biggest holder, but still wields considerable clout. Usmanov seems unlikely to increase his stake; owning 30% would mean that he would have to launch a take-over bid – not likely at a time when his personal wealth is dwindling.

The lockdown agreement allowed Board members to trade between themselves – and this is the important part – it allows them to leave Usmanov in the cold. This is why Kroenke was invited onto the Board; to allow him to acquire shares. Kroenke is the Board’s choice to lead Arsenal.

The fact that Gazidis was appointed in January 2009, a man who has had contact with Kroenke in the MLS, is important. He may well have been Stan’s choice and hints further at the large scale shift in power within the club. The partnership with Colorado Rapids – Stan’s US football team also points to closer ties.

Personally I would prefer the Board to stay in the hands of the ‘old guard’, but Kroenke has made some promising comments:

“I will continue to work closely with my board colleagues to maintain the stable environment in which the club operates and to preserve the self-sustaining business model enjoyed by the club.”

This makes me hopeful that Stan is the right man for us. It seems inevitable that Arsenal will be in foreign hands in the near future, but Stan has experience in sports clubs and is a proven stable investor.

If he really is interested in maintaing Arsenal as a sustainable club then I am all for him.

Kronke joins the Board as Arsenal’s profits announced

Stan Kroenke, an American shareholder has joined the Board as a non-executive director. He owns a 12% stake in the club and Arsenal say he was invited in because of his experience in managing sports businesses and in expanding financial prospects.

The BBC reports:

“His firm Kroenke Sports Enterprises (KSE), owns the Denver Nuggets basketball franchise, the Colorado Avalanche ice hockey team and Major League Soccer side Colorado Rapids.”

It’s an interesting move, but one which I thought was likely. It makes sense for the Board to try and recruit a sensible ally if they are to maintain any control over the club from outside investors such as Usmanov.

They are pre-empting any takeover by forming an alliance with Kroenke, which also protects them from buyouts, as Kroenke now has agreed not to sell his 12% without consulting the Board.

This news comes as Arsenal announced a £36.7 million pre-tax profit for the year ending May ’08, rising more than £10m over the previous year’s profits.

Turnover was also up, from £200.8m to £223m, the move to the Emirates, and lucrative TV sponsorship are cited as major factors.

Peter Hill-Wood, the Chairman told the press:

“This club is ambitious for success and I believe that the strong financial position which the group has established, as confirmed by the results for the year, provides the best possible platform from which to deliver that success for the long-term,

“We are committed to operating the club as a business which is financially self-sustaining. This is clearly demonstrated having achieved our second highest ever pre-tax profit of £36.7m.

“Over the last two seasons Emirates Stadium has taken our football revenues to a new level, but we cannot be complacent. Accordingly, we recognise the need to further develop the business commercially on a worldwide basis.

“We have reported significant growth in turnover to £223m reflecting a growth in our core football business. There are two main reasons for this. Firstly, new Premier League domestic and overseas TV deals have led to a rise in broadcasting income of £24.1m to £68.4m, and secondly, matchday income was £94.6m and remained the most important component of the Group’s income.”

“We moved to Emirates Stadium in order to compete with top European sides, not only on a financial footing but from a footballing perspective,” he added. “The healthy financial returns from moving to the Emirates are the fruits of our labour so far, but just as important is the team’s performances at our new home.

“Given that we have only lost one match in 58 competitive matches since moving here in 2006, Emirates is certainly becoming the fortress that Highbury once was.”

“The most significant factor is the new TV deal which has increased income by just over £24m. In addition, the inaugural Emirates Cup which we hosted in 2007 brought in £4m.”

On transfer funds, Hill-Wood had this to say:

“In answer to your question, yes funds will always be made available to Arsene to improve the quality of the squad and we have consistently stated that adequate funds are available to him if needed.

“We maintain a constant dialogue with Arsène and whilst there is not a set figure in place we are always able to buy additional players should he choose to buy. We have every confidence in Arsène and trust in his judgment, so he decides whether he needs to strengthen his squad.

“The accounts which we have released today show that the Group had cash balances of some £93m at 31st May 2008. This is clearly a very healthy position from which to support the manager’s spending plans.

“However, it must be recognised that £31.5m of this cash is held as security for the debt service of our Bonds and its use is therefore restricted, also there is a strong degree of seasonality to our cash flow with season ticket renewals during May having a positive impact on the year- end cash figure.”

“We have every confidence in Arsene and trust his judgment. It is not about spending a specific amount of money, it is about investing in the right people. It’s about having the right players with the right quality and the right spirit. People easily forget that we were not too far off winning some silverware last season. The margins are so small.

“We may have a young squad but they are talented and have one more year’s experience. They are managed exceptionally well by Arsene and we have every confidence that they will have a successful season.

“We strongly believe that to compete at the highest levels of professional football the club has to have a viable business that can pay its own way. We strongly believe this is the only way in the long-term.”

So, in summary, the move to the Emirates has been crucial in building financial strength, so now we can compete with the best in Europe. Wenger has money available and the backing of the board. In our current situation we can survive as a business which can pay it’s own way – i.e. no big investors like Abramovich!

PHW prefers Kroenke as Arsenal push for stability

Stan Kroenke is likely to be invited to join the Arsenal Board.

The American investor has a 12% share in Arsenal. It seems that the Board have realised if we don’t get him on our side then we will have to face Usmanov, who owns 25% and is pushing to get a blocking stake in the club.

Hill-Wood had this to say:

“Contrary to what I said before, I now believe he may have a vital contribution to make to the future of this football club. I am not denying I said what I said, but I made those observations before meeting Stan. I have now got to know him and I have changed my opinions.

“When I hadn’t met him, yes, I didn’t think he was the right person to take control of Arsenal Football Club. Now I know him as a man who is very much steeped in sport. He is a sports man. He already has a link through our broadband rights and there is every reason to expect that we shall discuss further how his involvement can be extended,”

I think this is definitely a tactical move on Hill-Wood’s part. We would all rather have no interest from these people, but if you have to choose one, choose the one who looks less threatening.

With Kroenke on their side the Board may be able to more effectively fend off Usmanov, whilst keeping control over Kroenke.

This issue is a thorny one, we have seen the problems with foreign ownership at Man City this season, with Eriksson on his way out after the club’s best season in years. The Board will have to be very careful in how they handle this, because it could end badly.