The inevitable is finally happening – a billionaire is buying Arsenal. Will it make Arsenal a rich man’s play thing? Will there be money available to the manager? Will Wenger have a sword hanging over his head? Will the Gunners be laden with the burden of debt? Will Usmanov sell his stake? What about the AST, Fanshare, and other minority shareholders? The takeover has raised many questions and it will be interesting to see how events pan out.
For now, both parties are offering predictable responses. According to the tailored statements, Kroenke will continue in the traditions of the club , the self-sustaining model will be adhered to, debt will not be imposed on the club, Arsene will continue to get the support he has been getting from the current board who in turn will keep their places, and minority shareholders will not be forced out.
I’m not quoting all the comments and relevant aspects of the offer as plenty of publications have done so already. If you want to read the details I recommend spending a few minutes on the official website. Start with this article and follow the links at the bottom.
I am dividing my thoughts into some broad categories,
In the past I have registered my displeasure at the way the current board has handled certain issues. Now that some of them are pocketing hundreds of millions it begs the question, why weren’t fresh shares issued at some stage so that at least part of the money went into the club?
Well, it the owners’ prerogative and their shares so they can do what they feel is right. But I have my disappointment and opinion that I have the right to share. Imagine if 20 percent of this takeover cash had gone into the clubs coffers rather than the individual bank accounts, how it would have improved Arsenal’s competitiveness in the market.
It would have been a completely legal and ethical way of improving the clubs finances. That money could have been used to reduce the stadium debt, buy out the low-value Emirates deal, investment in the squad, or any other expense that directly improved the club.
I don’t completely agree with the allegation but there is some truth to the notion that the present board cares a lot about their own wealth. Whether that has reduced the pressure on Arsene to deliver titles is difficult to judge because to me Wenger seems to be the kind of person who would put more pressure on himself to win than any external factor/person could.
However, I do respect the board for doing things the right way and developing a model club that countless others would love to emulate. Since E. Stanley Kroenke has been around for a few years and has seen the madness and troubles at other clubs, one can hope he realizes the strengths that Arsenal have.
The Russia based oligarch, Alisher Usmanov, is reportedly unhappy with the current developments. He even tried to buy Bracewell-Smith’s shares with a couple of generous counter offers. Unfortunately for him, the deal was already done. Since NBS’ shares were on the market for a while now, the Russian can only blame himself and his advisors for their laxity and indecisiveness. It could also be that they didn’t expect Kroenke to make his move but that is also a failure of understanding the situation on their part.
Some fans want Wenger sacked and significant investment in the squad. Usmanov would have been more likely to go down the uncertain cycle of splash-demand-sack that would more likely have lead to instability and chaos rather than trophies. Funnily enough, many fans who wanted to go down that road don’t support the Russian.
I’m not sure how Usmanov will proceed in the next few days. He seems to have a choice between selling his stake for a decent sized profit or staying put with a minority stake that can prevent Kroenke from making certain changes at the club.
It is possible that if the Russian does sell his stake, the American might squeeze out the minority shareholders and take complete ownership of the club. This is an aspect that might worry the AST and those involved with the Fanshare scheme along with other smaller shareholders. But based on most reports that I have read, Usmanov does not intend to sell his shares. I think in the short to medium term it will be good to have a person like the Russian keeping the American in check.
With David Dein closely associated with Usmanov and his earlier involvement in introducing Kroenke to the club, we might see a good working relationship developing between the two billionaires. Having Dein back on the board might be a good move for the club but I don’t want to speculate on that right now.
On a different note, I’m not sure whether Usmanov has any legal options to challenge this deal. I hope the club will not be dragged into a dirty legal battle just when the run-in is heating up.
Wenger and the Squad
For many fans, the above two sections might not be very relevant. These fans would care about trophies, great players in the squad, and enthralling performances on the pitch more than the background dealings, which is fair enough.
I don’t expect any serious changes to the football side of things under the new ownership, at least not at the moment. I guess the paperwork for the transfer of shares and other relevant details might easily extend the process into the summer.
Let’s not forget Kroenke is a business man and will want to eventually make some profits out of his investment. From that point of view it could be a nightmare for the Arsene-out brigade because if their allegations have any truth, why will the American sack a manager who is making him good money while keeping the expenses in control?
We don’t know where Kroenke is getting his money to finance this deal. If he does have sufficient cash he could pay off some of Arsenal’s debts and might be able to negotiate better commercial deals after buying out the old ones. This could generate extra cash for investment in the squad but I would not expect big investments in the short-term. However, even if there is an additional 15-20M generated it could lead to an extra player in the squad.
Irrespective of the takeover I was expecting some jiggling of the squad in the summer, although not as many transfers as those predicted by the sensationalist media and doom-mongering blogs. Even after the change in ownership I don’t see Arsenal buying big names for crazy money.
According to the confirmations given to the board, Kroenke will not use debt to fund the takeover. At least no debt will be placed on or serviced by Arsenal. But to me that doesn’t mean much. If the American does get control of the club he can withdraw the cash in the clubs accounts to suit his needs. He can also pay himself generous dividends to cover for any kind of interest payments or other financial matters.
In effect, once a person is in charge of the club it is not easy to control how he runs it and what he does with the revenues or cash generated by the club. The previous owners of Liverpool or Manchester United could never have predicted that their clubs would be in the state we have seen them get into. So the statements by the Arsenal owners justifying the sale and predicting a continuance of the traditional, sensible approach don’t carry any significant weight. However, that doesn’t mean Arsenal are guaranteed to get into a miserable mess like the aforementioned clubs.
In that regard, having someone like Usmanov in a minority shareholding position that is at least able to block certain decisions could turn out to be a good thing.
Something does tell me that Kroenke will not exploit Arsenal and will turn out to be the right man but it’s difficult to explain.
In the immediate future we are not likely to see any changes to the status quo. Some fans will undoubtedly prefer greater demands being placed on the manager in terms of trophies and the new owner’s stance in this regard will be worth noting. The impact of that might not be seen this summer but I expect to get a better understanding based on the summer dealings and the statements made during that period and all through the forthcoming season.
The most significant impact can be made in terms of improving the commercial deals and marketing/branding of the club. Hopefully, Kroenke will be able to move these issues in a more decisive, purposeful, and beneficial manner than the present board.
A lot will also depend on the way Alisher Usmanov deals with the cards in his hand. I’m hoping he will stick around and make a constructive contribution. While I have nothing against E. Stanley Kroenke, complete control of the club in the hands of one person doesn’t seem like a good situation at the moment. Of course, future events might tell us that having the American as the sole owner is much better for the club. It’s difficult to be certain one way or the other. We’ll just have to wait and watch.