Some great responses to the take-over articles, some of which are below.
Looking through, around 90% say they don’t want a Kroenke takeover.
There’s an interesting legal one from a hedge fund manager though who says: If the three/four shareholders on the board have indeed entered into a legal contract to not sell their shares for at least a year, they could be considered to be a “concert party”. In essence, their combined holding (c.44%) would be considered as one holding and as such, the director/shareholders would have breached the 30% threshold and would have to make their own offer for the outstanding share capital of the club.
Dan
I can tell you the board’s plans.
To run the club efficiently and keep debt at a managable level so that we remain a prosperous, solvent and well run business at the epoch of it’s genre for today, tomorrow and future generations.
I can also tell you Kroenke‘s plans.
To buy Arsenal by borrowing the money from banks and hedge funds. Place that accrued debt on Arsenal’s books and hope that the fans buy the club for you. Should a recession hit or football fall out of vogue or TV deals dry up, Arsenal will not be able to meet the potential £800 million liabilities they are responsible for. Kroenke will disappear, no worse off, back home and Arsenal will be broken up to pay back the lenders…
alex robson writes: I have been a season ticket holder for nearly 15 years and sit with a big crowd of people, none of whom support the “takeover”.
David Wooster says:
Whilst I respect your writing and your site is one of the first I read when a new article is posted I have to disagree with you regarding the possible take over. Unless Kroenke intends to buy the club for cash and invest money into the club to develop it further I see no real benefit to him taking over Arsenal.
Historically we already know how tough it is to run the club if it is saddled with debt. This is what we have had to do to move to AB. It has restricted spending on players and instead Wenger had the foresight to plan for this and develop the youth system which is now producing players worth millions.
Kroenke goes the same route as United he will saddle the club with even greater debt and this can only have an impact on development. In essence it will be the fans that end up paying his debt off as they are at United. In fact there has been no sign of the huge sums of money that the Glazers are supposedly investing into the club.
The net return on player transactions is in fact positive rather than negative. Surely we should carry on with the staggering progress this club is making. We have moved into a new stadium with considerable debt and managed to stay a top four team, consistently getting to cup finals and with the potential over the next couple of years to have one of the most skillful and exciting teams in world football managed by an innovative and visionary manager.
Matthew Davis writes:
I can’t agree.
I feel that the biggest issue for PHW and co is that Kroenke would not meet them first, set out his vision and reassure them that he is a worthy guardian for the club.
The likes of PHW see themselves not as owners, but as benefactors and governors – the type that need to look a man in the eye and know that he will act in the club’s best interests.
I genuinely believe that PHW and co care more about the way business is done more than what business is done.
It is clear that DD has been seen to have broken their trust and that for the PHW generation is a cardinal sin. The PHW type may be very upstairs/downstairs, may well have a “father knows best” attitude, but they do have a strong moral compass.
(Incidently – I feel that many gooners like to know that this compass sits at the heart of the club; just read the complaints about Lehmann and Eboue when they act in a way that we are all uncomfortable with…)
In the clutter of PHW’s inappropriate use of language I think that you have missed this point. PHW & co have to feel that they are handling this correctly.
It looks like DD thought he could buy-off/pension off the old school. He probably could have done had he tackled it their way.
Don’t slate the board for clinging onto their principles. Look beneath the content of the PHW rehtoric – with the right handling, the right reassurances and the right approach, they will sell.
The Board are clearly just making sure that they buy the time, set out the rules and give themselves the chance to ensure that they get the possible buyer and best possible deal to safeguard the club. That’s what boards are for and good on them for doing that….
John writes:
I have to say I beg to differ! Myles Palmer talking about a board that is backward minded and Dein being the only one with drive…. I beg your pardon, it was Dein who didn’t want the new stadium and Fiszman and Edelman who pushed through with it.
The next fact you are conveniently not mentioning is that Man U is seriously debt ridden and that Glazer loaded the club with the cost of buying it. The point is what Hill-Wood said is that the board are not in it for the money, and that is how it should be. If Kroenke took over he would be in it solely for the money – there won’t be major investments as there are no major investments at Man U, he will take money out of the club.
And what’s worse is that Arsenal would be a “franchise”, sorry I love this club and not the brand or franchise etc. The next point is that AW has had the success he had without being able to compete with Man U on the financial side – and he is building a new team at the moment which will win us titles again without “big” bucks. It is a matter of fact that no team in the world can keep on winning everything all the time – so we’ve had to painful seasons that doesn’t mean we won’t have glory days soon again.
As a matter of fact it has nothing to do with being left behind because all clubs will be owned by investors, maybe the secret for the future is not having some profit chasing investor running the club.
A little plea for a bit more objectivety and taking all facts into account and not jumping the gun.
Brendan Melck:
I think Myles is very trusting of the ‘good’ Americans, perhaps too trusting. While I agree wholeheartedly with his comments about Peter Hill-Wood’s snobbish remarks about not wanting ‘their sort’ over here, I think he should probably avoid throwing the baby out with the bathwater.
The reason is that I can’t see how a new owner is going to help Arsenal particularly right now. Kroenke would need to raise capital to make the bid, and would hardly be in generous mood when it comes to transfers. With the takeover at Manchester United so recent, it’s too early to decide whether it has been of benefit to the club. There have been few big signings at United since they arrived. Time will tell how generous they really are. The same is true for Liverpool. They are going to build a stadium, and will have to borrow for that too.
It is easy to say “sell! sell!” because you think things are bad, but now is the time to step back and really take stock of things, an perhaps realise that making the club vulnerable to the fluctuations of global investors’ fancy could be unwise in the long-term – despite our very real frustrations.
chris mccarthy:
Hi there. Firstly I want to say i read your page everyday, and i think its great! always my first port of call for anything arsenal news related. I was mainly wondering that if this situation with the board goes on much longer, do you see perhaps the supporters taking things into their own hands and chanting ‘sack the board’ etc in favour Dein and our potential american owner? I would rather this didnt get ugly, but i suppose we will have to see who AW appoints as director…
thanks again!
Chris.
Stynet:
…is to take money out of the club. The present board thinks that every penny earrned by the club should be re-invested in the club. If Kroenke did the same there would be no business for him. And on top of the money he wants to earn he will have to service the debt for buying the club. And even if you seem to think the present board is conservative don’t forget it was Dein who was against building the new stadium. He preferred sharing at Wembley which would have been a servere dent to the clubs soul in my opinion. Kroenke would probably have done the same. He moved Rams from Los Angeles to Colorado or wherever they are now.
guneral
If Stan Kronke, was Bill Gates and seiously rich, and could buy Arsenal including the debt package from the small change in his back pocket, instead of mearly increasing the overal debt package I may be persauded but he isnt and thats my worry.
Alex Jones
Myles/Ian
I’ve been an Arsenal fan for over 30 years and although I’ve not seen as many live matches as I would have wished I have followed the team through thick and thin. I feel the entire club is at a turning point in its history and unless the correct decisions are made now we can either push or to become a major European club or we can become, well frankly, another Spurs.
It’s obvious that the current team has huge potential but still lacks that spark to greatness and it will only take one missed CL spot to break the club. A huge risk that AW is taking, even though I have huge trust in him.
Your comments on the takeover are interesting and in many ways I support it as a change in the boardroom is needed. However, I am worried that we know nothing about the so called “silent Stan” and his intentions. As an Arsenal fan I think the supporters deserve to know more about his long term goals and aspirations for the club. Business is a cut throat world and he is limited as to what he can say but his almost complete lack of comment is still worrying. It’s a given that he wants to make money and the best way to do that is to invest in the club. However, how much investment and how is he going to finance it is the major unanswered questions.
We must not forget that he would be getting the almost complete package; new stadium & training ground (no risk left like at Liverpool), players with huge potential and the one of the best and most prudent managers in the world. That should not be sold lightly.
So I just hope that this summer does not break the back of the club we all love.
Regards
Alex Jones
Nick Chester:
Hi, I’ve been keeping up to date with a possible takeover, and one of my main concerns is that Kroenke will dump debt on Arsenal as Glazer did to United. To your knowledge has he done this to any other of his sporting clubs?
Thanks, Nick
El Cid
Mr Palmer,
You seem to have a strong opinion on this subject, yet what exactly do you know about Kroenke? I don’t want my football team — my second family — to become just another brand in a portfolio of product lines — like a Jif to a Persil. There is nothing inevitable about this.
The robber-baron bottomless pit of billions invested by Abramovich is a one-off. What exactly would a conventional non-fan U.S. businessman bring to club? No, really? The chance to compete more effectively in the short-term?
We don’t need Kroenke.
Arsene has invested Arsenal’s medium-term future in developing a team from near-scratch. And with the stadium, we have the cashflows to fund that. Sure, we are indebted in the short-term. But that will slowly but surely be paid down and we will still be in control of our destiny.
If it don’t work, then, MAYBE, we look at plan B. But we’re not willing to sacrifice 121 years of glory to some U.S. corporate powerpoint presentation.
As the Catalans say, “Es mes que un club.”
I’m no Luddite Mr Miles, and, as you’ve said yourself in the past, you’re not exactly a 100% Gooner. You have no right to pontificate like that.
If ANR want a proper debate, then print this letter.
Yours
Damian
Sorry Myles I disagree with your article on the Kroenke takeover. As Arsene said there is no evidence that any of the takeovers so far has resulted in increased investment.
The Glazers, Lerner, Gillet and Hicks have yet to put their money where their mouth is and as business people will only invest what they can get back and more. Only Roman at Chelski has rolled up with a barrel of cash. If you take away the chimera of additional investment exactly what are the advantages of a takeover? I can’t think of any.
Steve Gorac
Quite how has Kroenke proven he is a ‘good American’?
By erecting a bunch of shopping malls around Walmart stores? …
And let’s remember – he ain’t gonna use his own money and people associated with Walmart are profit driven.
Hence viva Hill-Wood.
Nazir
Even with a takeover and injection of cash, would Wenger realistically spend big? Or is what he has right now enough?
Amos
So far the only argument you have put forward in support of Kronke is that he isn’t the existing board and he is a rich American so he must be good for the club. Why not ask what he plans to put into the club? What funds are available? Where are they coming from? How long will they be available for? How does Deins vision of a club renting Wembley square with the long term health of the club?
It has always been a pretty stupid argument to say it is not what we have now so therefore it must be better.
John Pickford writes, adding more cons to my pros and cons piece:
Let’s add a few more cons hey? Lets say he not only piles arsenal full of expensive debt but lets say he doesn’t inject any net investment into the team after all Man Utd have only received net 1mil in two years.
Let’s also say he decides to raise ticket prices at Arsenal. We are already just about the most expensive team in the world to watch.
As well as the Highbury redevelopment you have mentioned theres also more profitability to come from Ashburton Grove developments
And the new broadcasting contract will kick in from next year with an estimated 30m minimum available to each Premiership club.
Its also apparent that any return of Dein will undermine the current board (theres irreconcilable differences isn’t there) and it would be hard to see any of the directors being retained, therefore stewardship reverts to a completely new team headed by Dein. is this what we really want, especially if it is a hostile takeover which is going to upset a lot of fans, especially if there are huge debts transferred over.
Oh and the current shareholders demand or recieve no dividend for their investment and this should be of considerable interest in any takeover scenario where the option is burdening the club with expensive ( high interest paying) debt.
BTW here’s the net spending of Man Utd in their two years under Glazer, takeovers do not necessarily mean an investment on the pitch despite all their promises.
2005 – in Van Der Sar 2m / Park 4m / Vidic 7m / Evra 5.5m
out – P Neville 3.5m / Kleberson 2.5m / Jones 1m / Ebans-Blake .2m
£10.5m
2006 – in Carrick cost an initial £14m but say £18m
out – Obi Mikel 12m / Spector .5m / Van Nistelrooy 10.2m / Bellion 1m / Howard 4m
£-9.5m
Net investment £1m in 2 seasons since Glazer took over and apparently by getting rid of Keane and RVN and stripping back on their playing squad in general they have greatly reduced the wages bill.
FOR
Aman Mahal
Hi Miles,
Long time reader, haven’t really emailed before because I generally prefer not to argue / discuss blog comment such as yours but just appreciate absorbing different views on the game.
However, as someone that currently works for a hedge fund and has done a significant amount of work on shareholder rights, I thought I’d clarify a few points about a potential takeover.
With regards to the issues raised with minority shareholders:
1) Under UK law, the directors do indeed have a fiduciary duty to all shareholders of a company, precisely to stop dominant shareholders from controlling a club for their own benefit. Failure to act on behalf of all shareholders could in fact lead to a direct legal action against the directors. In addition, the UK Combined Code lays down guidelines that states best practice is to have a majority of directors on the board who are independent from, amongst other things, large minority shareholders. In this case, Arsenal’s corporate governance can be seen to be greatly lacking;
2) UK case law provides for remedy against a “fraud on the minority”. A fraud on the minority occurs when dominant shareholders attempt to benefit themselves rather than consider the impact on minority shareholders. Minority shareholders can thus launch a “derivative action” against the directors, so-called because the rights of minority shareholders are derived from their vested rights in ownership of the company. In essence, the company (through minority shareholders) would be legally challenging the board. This would force the board to listen to all value-maximising offers received;
3) If the three/four shareholders on the board have indeed entered into a legal contract to not sell their shares for at least a year, they could be considered to be a “concert party”. In essence, their combined holding (c.45%?) would be considered as one holding and as such, the director/shareholders would have breached the 30% threshold and would have to make their own offer for the outstanding share capital of the club.
The 30% threshold is an interesting point in this context. This threshold exists, conceptually speaking, as if someone wishes to control a company they must pay a “control” premium (typically 20-30% above market value). The 30% threshold exists to ensure that a shareholder cannot exert effective control without paying this premium. In this case, this concert party would indeed be considered to be controlling the club without paying the control premium.
In overview, numerous corporate governance issues exist and I think it is clearly only a matter of time before the directors back down and listen to any takeover approach.
Now, switching to a possible takeover itself, it should be noted that:
1) There has been no indication that there will be a takeover. Yes, Stan Kroenke(?) owns c12%, but if we accept that he is a financial investor, his financial incentive to invest is slowly ebbing away with each increase in the share price. Indeed at some point, he may benefit more financially from selling his 11% stake back to the market;
2) If he decides to hold onto the shares, it becomes a question of timing. There is certainly no reason for Stan Kroenke not to wait a full season for the expiration of the contract signed between shareholders. If he waits for the press to cool down over this, tempers to calm amongst board members, and indeed if Arsenal have a shocking season next year due to under-investment, these are all excellent reasons to WAIT a year as the price of shares will plummet. Personally, if I was trading these shares, I’d be looking to start shorting these stocks (selling Arsenal shares now that I do not own with a view to picking them up cheaper in 9-12 months when the price falls).
Regards,
Aman
Paul writes:
For once, Myles, I’m forced to agree with you. A very good article, well done!
Andy Kelly:
I don’t always see eye-to-eye with you but this is a great article.
One thing that gets me about Hill-Wood is that he doesn’t want the big shareholders to sell but he had no problem with selling his shares to Dein in 1983. I doubt that he knew too much about Dein at the time.
I’ve met David Dein a few times and either he is the world’s greatest liar or has an incredible passion for the club (and by “the club” I include ALL of the employees and the fans). I would rather have Dein involved in the running of Arsenal than Hill-Wood who has shown he has very little interest in the club or Lady Nina Bracewell-Smith who I cannot believe for one minute has any interest in football.
fungster:
Couldn’t agree more. Have been living abroad the past 4 years and used to have a season ticket in the upper east. I went to Man city game last week, my first game at the new stadium. Don’t know if its just me, but everything has changed and feels completely different. All very corporate and money. Board need to realise that they’ve already sold the club for money! it’s now just about whether it’s pounds or dollars.
The stakes have been raised in football, Arsenal made the jump when the premiership started and left spurs, everton, chelsea and the others behind. Now, with the champions league being the place to be, Arsenal need to to do the same thing again, otherwise it will be only the FA Cup to look forward (probably turn into the ZDS cup – remember what happened to that)
peter hogg:
Yes, we should have had dennis law, when he was at Huddersfield. He played a stunner in the cup at west ham. For weeks the papers were full of law on his way to arsenal, and as kid, i was so exited. My dad bought the evening paper, i thought there had to be a mistake, but no he had sudenly signed for Man City ( the first time). i could never understand why, because they were bit of a nothing team at the time. A few years back I read his biography, he was ready to join, but typically of the time, arsenal sent their Assistant manger to tie it up, which did not impress law, even then and a kid himself, so he thought bugger it and signed for man city
I agree with many of your points but not the history lesson…as fans who suffered during the bad years will tell you we still had pride in what the club stood for and that should remain important…Chelsea stands for very little,look at their public image….do we want that? Let’s have a dignified takeover that leaves our image intact…we aren’t like other clubs. We are Arsenal, we stand for something.
David:
Hey Miles,
Well said !!
I agree 100%.