The Arsenal Takeover Mystery

By on Mar 5, 2013 in Finance, Latest | 0 comments

In comedy, they say, timing is everything and those who fed a story to the national press last weekend stating that Arsenal were to be the subjects of a luxuriant take-over bid certainly displayed a great sense of humour, if nothing else. This, if the breathless reporting in last weekend’s Sunday Telegraph was to be believed, was the takeover to end all takeovers. The answer to a million prayers as well as the most expensive purchase of a football club yet seen anywhere it in the world. Money would be spent on players, debt would be eliminated and the owners of the club would receive a handsome profit on their investment. The problem with offers that seem too good to be true, however, is that they very often are exactly that, and if there is any truth to the rumours that started last weekend, the only significant questions that should be asked are those of whether those that started them could possibly have the first idea of what they might be letting themselves in for and of, in the event of them being scurrilous, who could possibly be behind them.

The bid valued the club at £1.5bn, around twice the amount that was paid for it during its last take-over a little under two years ago. It was, according to those with knowledge of it, for a complete take-over of the club, with those concerned offering around £830 million for Stan Kroenke’s 66.83% shareholding in the club, an amount that would make Kroenke a profit in the region of £400m on the money that he has spent building up such a powerful an amount of control within the club. The other major share-holder in the club, billionaire Alisher Usmanov, who owns 29.96% of the shares in the club, is apparently regarded as the key to unlocking control in it and it was suggested that he could be brought on board as a part of this putsch. After all, at present Usmanov doesn’t even have a seat on the club’s board of directors and, even though he would surely be unlikely to wish to sell up himself considering his long-stated desire to own and control it himself, somehow or other the pretenders to the throne are of the opinion that he could be persuaded to work with them.

This, however, wasn’t a proposal that would merely be concerned with the politics of the boardroom. According to last year’s financial results, Arsenal continue to a carry a debt of around £250m for the construction of The Emirates Stadium, and the bid promised to wipe that out as well. Doing this would free up a little extra cash, but the cost savings that would follow as a result of this would be some way off the sort of money required to fund any sort of significant activity in the transfer market, especially when coupled with another simplistic promise, to cut ticket prices for supporters. To counter this, the bid promises to spend its own money on the team, but this in turn provides another question that is singularly difficult to answer: how could this all be managed whilst staying within the constraints of UEFA’s Financial Fair Play regulations? It would make for the most difficult of balancing acts, even if we choose not to take into account the possibility of Arsenal failing to qualify for the Champions League for next season and the loss of revenue that would accompany it. This summer’s increase in television money would plug that gap a little, but this 71% increase in television revenue will be happening this summer regardless of any other considerations.

For these bidders, though, it would appear that money is no object. “From our point of view it is the perfect moment to make this bid because at this moment in time you can still genuinely justify this extraordinary valuation on the club,” however, is not the sort of statement that is likely to fill anybody with a great deal of confidence in its credibility, being, as it is, completely counter-intuitive to anything that we might realistically expect from such negotiations. Consider, for example, this quite extraordinary quote:

We will not bid for Arsenal if they go into decline. Kroenke and Usmanov will not get this kind of valuation if Arsenal do not succeed and will not get this kind of valuation ever again. We think that bidding now is the key because it is going to give every shareholder maximum value. We are giving them peak valuation.

Why, we might well reasonably ask, would any new businessman coming into Arsenal – even somebody who was, for the sake of argument, somebody with the sort of emotional attachment that would make sense of such an apparently desperate attempt to buy it – be overly concerned with giving “every shareholder maximum value?” Everybody connected with Arsenal Football Club knew and understood just how pivotal yesterday afternoon’s short hop across North London to White Hart Lane was for the club’s season and that by any sort of rational calculation a failure to beat Tottenham Hotspur yesterday afternoon could only, if anything, have an adverse effect on the value of the club. So why make such a grandiose offering public less than twenty-four hours before such a fixture? Anybody looking in from the outside can only be drawn to the conclusion that this was either a public display motivated by the utmost irrationality or, just perhaps, mischief-making. Some have already been dropping less than subtle hints into the public arena of late. Former vice-chairman David Dein (who left the club’s board of directors in 2007 “irreconcilable differences” between himself and the rest of the board over bringing outside investment into the club and who subsequently sold his 14.58% for £75 million to Usmanov’s Red & White Holdings) was recently quoted by Online Gooner at a Q&A session, as follows:

Closed the evening by stating he cannot predict the future of Arsenal. ‘Whatever happens, happens.’ Yet he closed by smirking and mentioning don’t be surprised by ‘a major event of change in the not too distant future.’

Indeed, it is only when viewed through the latter of these prisms that the story starts to make any sense at all. A little droplet of scare-mongering is introduced in saying, “The fear is that the club is facing a cycle of decline like Liverpool” (which could easily be considered a dog whistle in the direction of Spurs’ recent upturn in fortunes as well) while making reference to singing areas and, to quote the Sunday Telegraph, a desire to ‘“bring back some of the true supporters” who have been priced out or become disillusioned’ and a promise to promise to recreate “some of the feel of the old North Bank” reeks of little more than playing to the gallery. Anybody with so much as a cursory knowledge of the situation at Arsenal Football Club knows fully well that Stan Kroenke has no obligation to sell, a fact that has been writ large in his steadfast refusal to sell to Alisher Usmanov in recent years, and a fact that borne out further by the club’s swift confirmation that no bid had been received and that none would be considered either. And all of the above is without taking into account the fact that this bid was introduced, with all the subtlety of Tony Adams left foot in a china shop, through an anonymous story told to a media outlet rather than the to the club itself.

When we consider the nature of this story, there are too many jigsaw pieces that simply don’t fit for it to be considered credible – at least not in the way it has been presented in the media. If it was concocted by a mischief-maker, whether an existing minority share-holder at the club or someone formerly with a degree of control at the club who has since been side-lined, though, it becomes a different story altogether. There are people desperate to get their claws into Arsenal, nobody ever said that politicking is pretty, and there are plenty of Arsenal supporters who despise Stan Kroenke and would be happy enough to see the club fall into the hands of Usmanov or somebody of his ilk if it could somehow guarantee an end to that much talked of trophy drought. What such sleight of hand would say about those involved, however, would be a different matter altogether. If, on the other hand, this talk is exactly as presented by the media last weekend, we have some magic beans that those behind it may be interested in. Until they prove who they are, though, it is difficult to believe whether such ‘investors’ even actually exist at all.

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