Three days on from the Stan Kroenke takeover it’s all starting to sink in a bit.
With hindsight the Arsenal Supporters’ Trust (AST) annual general meeting which took place on Monday night in central London couldn’t have been better timed. It is a knack AST seems to have a scheduled AST board meeting took place on the day David Dein got the shove from the Arsenal boardroom.
I completely agree with AST’s approach. We MUST maintain plural ownership at our great club. No current shareholder who hasn’t sold should sell. I also agree as I blogged on Monday that we need real in-depth binding commitments from Stan on debt, plural ownership and future plans. “John from Norfolk” who regularly comments on my blogs for which I’m grateful disagreed in a comment on my Monday blog, saying that no businessman in his right mind would agree to such binding commitments. I disagree. So did Matt Scott in The Guardian today.
Matt is a Gooner and a member of AST. I agree with him. The board could have extracted binding legal guarantees on debt and a range of other important issues if they had desired. I’ll be honest. I found a bit much a lot of the mutual back-slapping and congratulations on what good custodians they all are on Monday.
Let’s have this right. Kroenke hasn’t bought Arsenal because he’s a life-long Gooner who loves the club to bits. He didn’t find us. David Dein found him. Dein was convinced that Arsenal needed a sugar-daddy owner to compete with Roman Abramovich’s billions. Dein displayed poor judgement in so, so many ways. Aside from anything else it’s not Kroenke’s style to spend money without a very beady eye on his return on investment.
Events at Manchester United and Liverpool give us grounds for caution. Business in the USA has become addicted to debt and financial speculation in the last three decades. Taking reckless risks with borrowed money is what drove the world economy over a cliff in 2008, requiring banks across the globe to have to be propped up with our money as tax payers.
That isn’t the way capitalism is meant to work. Those businesses that take poor decisions are meant to be allowed to go under. Unfortunately too many banks have become too big to be allowed to fail without bring the rest of the productive economy in goods and services crashing down around our ears.
Kroenke has borrowed the money to fund the purchase of further Arsenal shares from Bank of America (BoA). I’ll bet the American tax payers are thrilled about that. BoA received a capital injection of US$20 billion (around £12.27 billion) PLUS guarantees over US$118 billion (£72.39 billion) of so-called “distressed assets” BoA had bought. These mere mainly so-called “collateralised debt obligations” or CDOs, packages of mainly mortgage loans sold on by the original lender. Additionally the US Federal Reserve Bank has provided access to ultra-low interest loan capital
This is meant to be loaned on to small businesses many of whom have experienced a credit strike from the banks since the financial crash. BoA has taken this money and loaned it to a billionaire to buy a controlling stake in a British football club. I’ll bet the tax payers are just thrilled about that. They currently own BoA. I’ll bet they would rather their money had been invested in small businesses in the USA, many of which are fundamentally sound but struggling with cash flow for which they need credit.
But why is Kroenke borrowing money when he’s a billionaire you ask? Because a very large part of his wealth is tied up in assets, such as the sixty percent of the St Louis Rams of the National Football League that he didn’t already own. This cost him hundreds of millions of pounds. Rather than sell assets to raise cash he has decided to borrow the money to buy the shares.
All in all, there are grounds for optimism that Kroenke will do the right thing for Arsenal as well as himself. He appears to be an astute, patient man. His record with his other sports teams in the USA, including the Colorado Rapids who are defending champions of Major League Soccer having beaten FC Dallas in the MLS Cup Final over the border in Canada at BMO Field in Toronto last November.
There is also reason to be cautious however. There’s never been a more important time to be a member of the Arsenal Supporters’ Trust. If you haven’t already joined sign up today. You can join on-line or pay by monthly standing order which only costs £2 a month. Annual membership by cheque, debit or credit card costs £30. Life membership costs £250
Keep the faith!
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