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Silent Stan is the man with the plan

The news that Stan Kroenke was planning to takeover Arsenal Football Club broke yesterday after the Blackpool game but was heralded by vaguer rumours earlier in the week. Now it has been formally confirmed on the clubs website following an announcement to the markets this morning.

The offer commits to continuing to operate in line with the existing self sustaining policy and states that the offer will not be funded by debt finance secured against the Club. Kroenke has also said he has asked the current board of directors Peter Hill-Wood, Ivan Gazidis, Ken Friar, Sir Chips Keswick and Philip Harris to remain in place.

The price offered is £11,750 per share for which he already has agreed options to purchase Danny Fiszmans`s 10,448 (16.11%) and also has irrevocable undertakings from Lady Nina and the other Arsenal directors holding shares, other than Fiszman and himself, to accept the offer. The options on Fiszman's shares are to be exercised no later than 20 business days after Fiszman's death which, with it's tragic undertones, seems to be a mechanism to allow KSE the cash position to fund any shares that he is forced to buy under mandatory takeover rules. The current undertakings gives him an interest in 62.89% of the total issued share capital of the club and therefore he already assumes effective control of the club.

Kroenke has issued the following statement "We are excited about the opportunity to increase our involvement with and commitment to Arsenal. Arsenal is a fantastic Club with a special history and tradition and a wonderful manager in Arsène Wenger. We intend to build on this rich heritage and take the Club to new success. I am delighted that Peter Hill-Wood has agreed to support us by continuing as Chairman. We especially wish to acknowledge and thank the Board, Danny Fiszman and the Fiszman family as well as Lady Nina Bracewell-Smith and her family for the confidence they have had in me over the past years and in allowing us to move forward in this more prominent role."

Peter Hill-Wood in paying tribute to Danny Fiszman`s involvement with the club and that of the Bracewell-Smith family said "Mr Kroenke, although relatively new to Arsenal, has shown himself to be a man who values and respects the history and traditions of this very special Club that we cherish. We are confident that he will be a safe custodian of its future."

Arsene has also apparently endorsed the takeover saying that "I have worked with Stan Kroenke at board meetings over the past couple of years and I believe he has the best interests of Arsenal at heart. He understands the Club's heritage and traditions and our ambition to run the Club in a way which protects our long term future."

With Stan Kroenke set to own at least 62.89% it is not known how many other shareholders will take up this offer. Usmanov's Red & White Holdings owns a little over 27% which would seem to leave less than 10% with small shareholders. If Usmanov were to take up the offer it would give Kroenke Sports Enterprises more than 90% which under stock market rules could allow them to compulsorily purchase the remaining shares though his endorsement of the Arsenal fanshare scheme would suggest this is unlikely but the offer document acknowledges the possibility in given circumstances.

So is it a good thing for the club or not? There was a problem of succession with Danny Fiszman`s shares which given the 66 year olds poor health would have needed to have been resolved sooner rather than later and Lady Nina's shares have been on the market for some time. This at least adds certainty to those open issues and prevents the less popular Usmanov from extending his influence over the club. Whether Usmanov now sells out could be significant as currently his blocking stake provides some sort of protection against increasing debts if that were his inclination.

There is some comfort in that this isn`t a cold takeover. Kroenke has been involved with the club as a shareholder since 2007, was appointed to the board in September 2008 and actively running it with the support of Fiszman for sometime so he knows how the business has been run and has helped to shape it. Ivan Gazidis was his appointment and it is he who will give a video interview on the takeover to be posted on the club website soon.

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The Journalist

Writer: Amos Mail feedback, articles or suggestions

Date:Monday April 11 2011

Time: 9:13AM

Your Comments

Pre season tours to the States and the Far East inbound. Not saying it's a particularly bad thing, but he will certainly want to exercise any additional commercial opportunities we don't currently take advantage of! Interesting now to see if the fat Russian hangs around.
I think I feel ok about this. At first I was a bit concerned, but I think things have been handled correctly. Silent Stan has carefully plugged away in the back ground, learning the traditions of the club. One concern from many fans is that his nationality could mean he does not "get" our club, I'll admit that crossed my mind too, then I realised how hypocritical that would be of me. I'm a massive fan of American motorsports, I mean I love it almost as much as I love football, and I've been told on more than one occassions that I don't "get" the sports, because I'm from England, and that's just not true. So yeah, I think this is ok.
I would have preferred for plurality to be maintained, so I'm a little uncomfortable with it, but at the very least, he appears to have the support of the current board and won't leverage the buyout. I think he sees the club is run well and that there's no reason to change that, but the bottom line is he's a businessman and he'll want a return. I would expect a much more aggressive commercial strategy in the coming years. I do hope ticket prices don't become out of control.
Little Dutch
I think that this years price hike will teach him quickly that that is not the way to go. By the sounds of it there are going to be a lot of people not taking up their tickets next season, any further price hikes would only compound the situation.
For KSE to get a return the business will have to start paying dividends at some point in time. To be able to do so without compromising our existing ability to invest in the playing squad they'll have to increase revenues. That is more likely to come from commercial development than ticket prices. That's where KSE's strengths lie. The current sponsorship deals begin to unwind around 2013 and that's when the commercial revenues are likely to see significant gains - providing the club continues to be successful - and that's when dividends may be paid. Will Usmanov hang around for them? Either way little will change for the next few seasons at least.
Also suggestion that, given Stan's interest in broadband, that we could make commercial gains with lucrative overseas TV/ online streaming deals. Good piece on Swiss Ramble that says with all of his US sports interests, he hasn't only bought the club, but bought local cable/ TV stations too. He seems wily with things like that. My only concern is that trends suggest his teams prosper for a few years, then his interest wains and he moves his eye to other sports teams and there's a consequent drop off in fortunes. Also, whilst the board is the same for now, I rather think that could change in the next year or so and we'll see more of "his" men.
Little Dutch
I don't think it would be too much longer till the bpard had to change anyway, I mean how old is PHW now anyway? One hundred? two hundred years old? Maybe we've been seeking all along for a long term replacement to ensure the club is in safe hands, the objection to thst greaseball Usmanov, and then the welcome of Kronke (for the most part) is clear indication that the current board were always looking to do things the Arsenal way.
PH-W and Sir Chips are both in their 70's (75 and 71 respectively) so they won't hang around for ever. At the moment though they both give high level access to 'old money' which could be helpful to KSE in the short term. Arsenal has already become more corporate and that will inevitably be reflected in the board before long. KSE is able to generate money from sports interests so in that sense they do bring expertise and some value to the club.
Ken Friar is 78 while Philip Harris (aka Lord Harris of Peckham) is a sprightly 69.
I do hope ticket prices don't become out of control - Little Dutch. Would you consider them fair and under control now?
Well, I'm still paying them, which is really the most objective measure. But of course I'd like to pay less!
Little Dutch
Is anything fair and under control now? Petrol, Gas, Road tax, Transport prices, Insurance etc etc.
Out of control for me, but in terms of business I guess it will be measured as being out of control when matches don't sell out anymore.
With respect to season ticket prices. They will increase them for as long as people pay for them. Am I happy about it...... no! Am I renewing next season...... of course I am.
I am sincerely hoping that the prices do not rise any higher as I am hoping to become a red member next season and as it is I will only be able to afford to come to maybe three or four matches per season. It seems a common thought for Arsenal fans that the team will soon be touring in the US and Far East, surely the profit made from these trips should negate the need to increase the ticket prices further?
It's questionable whether pre-season tours generate more than tournaments like the Emirates Cup. Directly they probably don't. Indirectly in terms of developing the overseas fanbase, merchandising, sponsorship etc., they might do. Either way additional revenue is unlikely to impact on ticket prices unless they become really significant and I fear that future dividend policy might win the hearts and minds of such future boardroom ruminations.
"There is some comfort in that this isn't a cold takeover. Kroenke has been involved with the club as a shareholder since 2007....." Just thought to make the point that the Glazers, together with the Coolmore duo were United's largest shareholders prior to the Glazers' takeover. I hope this one turns out better than did that particular one; at least, the club won't be securing any debts for this takeover, for starters. I am not sure what to make of this now, but will have to trust the good judgment of the board, as presently constituted.
Some big differences between the Glazers and Kroenke. The Glazers bought a controlling interest in a little over 18 months since first buying into the club. The Kroenke offer is based on assurances that there will not be debt finance that depends on the business of Arsenal. There can't be any guarantees about the future but so far this has been a far more considered takeover offer with time taken to ensure the key players weren't hostile to it. It that sense it is already very different to the ManU experience.
1. This was inevitable. A businessman like Kroenke is not going to sink millions without seeking control, ultimately 2. The timing could have been better. Couldn't this have been done a month later, once the season has ended? Or is this an admission that the season has indeed ended? 3. I really hope that Kroenke does not leverage debts to the club. I realize that he has come out and said it wont happen, but there is no guarantee of that in the future. He is going to change things positively at the club, bring in a better marketing team to exploit commercial streams better but he is not going to change things fundamentally, so that is assuring. I like the way the club is run, fiscally responsible, within budgets, a sustainable model and I dont want that changed.
Thanks, Amos; and Prits for further insights. I will take away the positives of the offer then.
Ultimately, I think Kroenke sees we're a very well run club and, though the supporters don't seem to share this view right now, he must have faith that we're set up to stay at the top table of English football for a good few years yet. I just hope in a few years people recognise that the outgoing board, as it were, really broke their backs to get us into that position. Kroenke is really creaming off the top of that labour and I hope any success we achieve in the next 10 years recognises that. But I won't hold my breath.
Little Dutch
The ticket prices are really a HUGE worry for me, I am on a lot less then the average wage in london yet my season ticket price does not reflect this. I have the most expensive ticket price in the stadium bar club level etc... This was my choice for the view etc... but in the current climate with pay freezes and inflation this really could force me to give it up or move seats which i wish to do neither. I hope the club understands that football is a law unto itself in terms of money and the wages it pays, that we normal souls could only dream of, and does not hit us loyal addicted fans in the pocket at a time we can least aford it over the last 20 years.
I don't think Kroenke is the type of person who leverages debts in sports 'franchises' he owns. If you look at his ownership of Denver Nuggets, Colorado Rapids etc he hasn't leveraged debts on any of them. He's got valuable experience in owning sports clubs. I think this is a good move. It's been done slowly and he has been integrated in very considerately by the board. Also I don't think Usmanov will stay around much longer. His shareholding has become virtually of no use. He can't even use his blocking stake now that decisions have become unilateral. Also he is going to make a profit out of selling his shares now. So I don't see him sticking around much longer.
One other thing this does is that we lose the moral high ground against Chelski
It most certainly does not mean we loose the high ground on chelski!!!!!! We are at present a club run within our means, we play attractive football not snooze football, we have always had better crowds then they have for a longer period of time, we have class as a football club, we are not chavs, stan the man has earned his money not killed bribed and underhand dealings like the Chelski scummbag, we very very very much have the honour and pride and upper hand on chelski still!! Do not ever let anyone tell you any different. Hence why we are all so against usmanov!!!!
prits, apparently (from what I've read and heard) the timing of this is due to Danny Fiszman's deteriorating condition (cancer) and the fact that his children have no interest in inheriting and keeping his Arsenal shares within the family. We all knew something like this was probably going to happen eventually - we just hoped it would be in the FAR FAR future. I detest Wal-Mart & hate that Arsenal are in any way connected to it but at least he's not Usmanov, who's far worse. I know from all the press here in the US for yrs how well Kroenke is respected. If it had to happen we could've done a lot worse in terms of business acumen and competence (Hicks & Gillett). I don't expect things to change very much footballistically. And any gooners jumping up for joy thinking that AW will now have big money to bring in big name players are delusional. It's not how Kroenke works nor is it how AW works. Give him 100,000,000 debt-free pounds to spend on players & he'll give it right back to you. Finally, even tho I know we have in fact been majority owned by foreign owners for some time now I'm still sad that all of England's top clubs now have controlling/majority non-English or non-British ownership. It's just pure sentiment on my part.
Yeah maybe not all of the moral high ground but certainly some of it.
Sorry eb= you will never catch me giving up any high ground to those bunch of CU*TS!
Usmanov's 27% plus is still a 'blocking' stake. Anyone representing 25% more of the shareholding can prevent certain decisions being taken including any significant increase in debts and/or changes in the companies constitution. Essentially negative in that you can only stop things from happening but that can have its benefits in certain situations.
BTW, on twitter yesterday people were saying there's a good chance of Dein coming back to the club now that Kroenke's in control. Far-fetched? Probable?
So, just what changed Peter Hill Wood's mind...? On Stan Kroenke (2007) 'Why don't we want the American at our club? Call me old-fashioned, but we don't need his money and we don't want his sort. Our objective is keep Arsenal English, albeit with a lot of foreign players. 'Americans are buying up chunks of the Premiership football clubs and not because of their love of football but because they see an opportunity to make money. 'They know absolutely sweet FA about our football and we don't want these type of people involved.' On Kroenke (2011) 'Mr Kroenke has shown himself a man who values and respects history and traditions of this very special club we cherish.'
Not what has changed PH-W's mind but who - Stan Kroenke it appears.
I think the timing has more to do with the time it will take to complete the takeover and for KSE to know just how many shares they are committed to buying. They would want everything completed as far as possible before next season is underway. Important to note that he hasn't bought any shares yet he just has an option to buy Fiszmans and an undertaking from Lady N and the other directors to accept the offer if it goes unconditional. That's enough to make sure it goes through but there's still some work to be done.
Sorry, Y'all. My device just developed a mind of it's own. Been engaged all the while after that post and didn't realize.
I read about Dein's 'probable' return too- I don't see it happening since he got rich off of it and in so doing essentially gave Usmanov his blocking share, although we didn't know that's how it would end up at the time. I digress- despite that blogger's 'understanding' that Dein would return, he has probably cost Kroenke millions of pounds if he decides to buy the whole enchilada, and I doubt that will be rewarded with a seat on the board. In fact, it's more likely that Gunnersaurus will be replaced with topless cheerleaders than Dein returning, IMHO.
I think in the end it will probably come down to David Dein trying to convince Usmanov to sell his shares to The Kronk. Usmanov can't do much with his 27%. He can't buy further shares because of the lockdown agreement. His share is of virtually no use. I may have got it wrong about the blocking stake thing but still having the ability to block decisions as Amos said is not going to be of much use.
Oh goodness we've now turned into a 'franchise'. Never thought we'd associate that word with Arsenal ever.
In fairness, I think the word "franchise" was used heavily in relation to Arsenal around 1913.
Little Dutch
Was it?? Contemporary Yank terminology in England in the year 1913??
Aye, the word is actually a Franco-English word, (used to mean freedom, but the meaning evolved). Pretty sure I came across a letter written to the local Islington paper using that word when we moved to Highbury.
Little Dutch
Can someone explain to me why Kroenke wants to invest in AFC? I take it that's purely an investment, i.e. for the 730m he invests, he expects to see a return of x % over a number years. If that's the case, how will he make his money from Arsenal? And isn't it better to have people like the recent board who saw themselves as custodians where all the money raised went back into the Club? It doesn't seem like that will be the case any longer - or am I missing something?
KSE's business is all about generating and maximising commercial revenues from sporting enterprises. Arsenal currently has the poorest commercial revenues of any of the top ten clubs in the Deloitte money league (bar Inter). £100m+ less than Bayern and £40m or so a year less than ManU. The current commercial deals will unwind over the next 2 or 3 years. If Kroenke can use the international appeal of Arsenal to add revenues to his less exportable US sporting enterprises then he may be onto a real money spinner. Enabling him to maintain or increase the current value of his investment and generate enough extra revenue to also pay himself a good dividend as a return on it while also creating more revenue for the club. How successful he is depends on how good a businessman he is and how good the team he puts into Arsenal are but that there is sound commercial sense in what he's doing is clear enough.
Thanks Amos, now makes sense. Would be interesting to be party to Boardroom discussions on strategy. Is the idea to just bring an enterprise that appears to be under-utilising it's revenue potential to what it should be, or is it about maximising the on-pitch success of Arsenal FC to really make it a huge money spinner. It's the reality of the world today, but bit of a pity that's the way it's going.
The two go hand in hand. Maximising commercial revenues depends to a substantial extent on sporting success. It's better though to challenge every year and win say twice in 10 years than to win 3 times but only really challenge in those 3 years with 7 mediocre years out of the 10 -in commercial revenue terms if not supporters.
Looks like i was a bit hasty in questioning the timing of the takeover, with Kroenke's hand being forced by Danny's illness. Sad news, but a good time to pay tribute to Fizsman's fantastic contribution to the club over the years.

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