Usmanov & Kroenkes Ongoing Stand-Off At Arsenal

By on Jun 21, 2012 in Latest, Politics | 3 comments

With international football hogging the headlines at the moment, the Premier League has been rather quiet over the last couple of weeks. Sure enough, there was the emergence of Richard Scudamore from a meeting last week wiping drool from the corner of his mouth and carrying a bin bag full of television over his shoulder, but on the whole the Premier League, which is ordinarily a publicity-hungry black hole which sucks all before it in with its gravitational pull, has been almost eerily quiet of late. Earlier today, however, an interesting story appeared in the Daily Telegraph courtesy of the formidable Matt Scott which indicates that the league may be about to agree a change to its rules which may see a little common sense thrown upon its rules over club ownership.

The continuing attempts of Alisher Usmanov to buy his way onto the board of directors at Arsenal Football Club has been ongoing for the last few years. Usmanov has been involved in attempting to build up his shareholding in the club since August 2007, when he – along with his cohort in this matter, the Iranian businessman Farhad Moshiri – purchased a 14.58% share-holding in the club from former vice-chairman David Dein for £75m. He has increased his share-holding in the club since then to 29.72% in spite of the American Stan Kroenke increased his share-holding in the club to 62% in April of last year after purchasing from Danny Fiszman – who died two days later – and Lady Nina Bracewell-Smith, but the bid that Kroenke was obliged to make was refused by Usmanov, and the stand-off has continued ever since.

That Usmanov’s attempts to hoover up Arsenal shares – which trade at in excess of £14,000 a go – should have effectively stalled at just short of 30% is no coincidence. Although owning 30% of the share-holding doesn’t offer any direct benefits such as the directorship that Usmanov seems to crave, Premier League rules stated that this is the threshold for shareholders to gain access to all of a clubs “material transactions”, which would have given him full and uncensored access to the clubs accounts, a privilege normally only offered to directors of a company and majority shareholders. There seems to be next to no chance of Usmanov getting a seat on the board of directors of the club at any point in the near future, and Stan Kroenke seems relaxed enough about the situation to not be particularly getting in the way of Usmanov buying up what shares he can at present. To have somebody that is not on the board of directors of the club and who is actively hostile to the other directors having such privileged information is not, however, a desirable situation for the club to be in. The likelihood of this happening, however, now seems to receding, with todays news that the Premier League has proposed a rule change which has been approved by its clubs which will end this practice.

This talk of boardroom manouevring would be little more than so much tittle-tattle for the business pages of the newspapers were it not for the small issue of Arsenals decline on the pitch. Last season saw the club cling onto what would have not so long ago been considered its perpetual Champions League place by only the length of its fingernails, and with Chelsea already spending more heavily than most having won that competition last year, there are no guarantees that they will necessarily do so again next season. Football supporters being football supporters, the pressure is starting to mount on Arsenal to spend more money in the transfer market, but Kroenke and chairman Peter Hill-Wood hardly seem like the types to do so. Some Arsenal supporters may well look at Usmanovs considerable reserves of cash and hold the opinion that they deserve for some of it to be spent on the football club that they support. Others, however, treat Usmanov with caution and are concerned at what he might do should be ever get full control of the club.

All of this might be considered to leave Arsenal stuck somewhere between a rock and a hard place. They seem unlikely to radically overhaul their transfer spending policy under Kroenke and Hill-Wood, but on the other hand Usmanov would represent a leap into the dark and he is also a man that is rumoured to have a past that some fear may come back to haunt him one day. His greater involvement in the club may well mean money pouring into Arsenal Football Club, but Financial Fair Play is looming and Arsenal are at present well-placed to deal with it. If they have not been particularly successful in terms of winning trophies in recent seasons, then they have at least continued their long-held reputation for being probably the most prudently run football club at the top end of English football and this is something that the club will surely benefit from in the fullness of time.

Two weeks ago, the Arsenal chief executive Ivan Gazidis told a question and answer session with supporters groups at which he told them that Usmanov would not be welcome on the board of directors of the club and that his appointment may cause conflict at a level at which the club is “unified and has a common purpose” at present. Although gauging exactly where support for Usmanov lays, it certainly seems that there are increasing numbers of Arsenal supporters now cheerleading for him. Whether this is borne of increasing frustration at the clubs barren run without a trophy or a result of the heavy spending of Manchester City and Chelsea having reaped dividends at the end of last season with those two clubs becoming the champions of England and Europe respectively is something that we don’t know, but Arsenal supporters should treat any new investor/saviour/potential owner with extreme caution.

Ultimately, however, the key point to this issue is that Arsenal supporters have very little control over what happens next in the battle for control of their club. Stan Kroenke hold two-thirds of the shares in Arsenal FC and he will – and has no obligation to – offer nothing to Alisher Usmanov unless it is in his best interests to do so, and with the recent confirmation of a vast increase in the amount of television money coming into the Premier League from the start of the 2013/14 season it could be argued that he has less of an incentive to do so than ever. There may yet be protests – especially if Arsenal end up selling any of their best players this summer and/or things don’t go brilliantly on the pitch next season - but the likelihood of anybody bar the Arsenal Supporters Trust, whose Fanshare scheme is still raising money to try and build up a shareholding of its own in the club, acting in the very best interests of Arsenal FC to the exception of all other considerations. One of English footballs great institutions, it could be argued that Arsenal FC deserves better than this toing and froing. In the twenty-first century, however, it frequently feels as if nothing other than money really matters any more.

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    3 Comments

  1. Bring on the russian with the billions who give a shit

    Rockett

    June 21, 2012

  2. I’m surprised the fan ownership brigade aren’t more upset by this change which it would seem is not going to improve corporate governance. Weakening minority owners is definitely damaging to the market for corporate control and a defensive mechanism that favours the status quo at a club. Swansea fans with 20% of the shares would also fall foul of this.

    The idea is that minority shareholders can hold the majority to task over their management of the firm, the minority shareholders are still owners of the firm and even though they don’t have control they have some influence – Arsenal for example can’t pass anything that requires a 75% majority as opposed to a simple 50%+1 at an EGM/AGM without Usmanov’s approval.

    It also seems rather odd for the Premier League to change their rules just to suit one club at a particular point in time – I can’t think of anyone else in this position can you? It suggests Arsenal still retain a (overly?) strong influence at the top of football administration.

    Ash

    June 21, 2012

  3. Ash – I think Arsenal would have had support in the rule change from the Glazer regime at Old Trafford, who have been looking to sell a minority stake in Manchester United without ceding any power.

    You’re right that it flies in the face of political talk to make clubs more open and give fans more say in their own clubs…

    oftenscore6

    June 21, 2012

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