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!