Arsenal Ownership – The Rumours Fly Again

Rumours are flying that Lady Nina Bracewell-Smith is close to selling her shares with Nigerian billionaire Aliko Dangote back in the picture. Personally I doubt that this is true. My instinct is that the American bank Blackstone is again trying to “flush out” a buyer. Lady Nina will want any deal completed before the Chancellor of the Exchequer stands up to deliver his emergency budget in the House of Commons on 22 June.
As I’ve blogged before buying Lady Nina’s shares, especially at the price she’s said to be looking for (£13,500, valuing her stake at over £133.55 million. The stamp duty on the transaction alone would be over £677,000) would be a VERY expensive trophy asset, unless the person or institution concerned had made an alliance with Stan Kroenke and Danny Fiszman or, possibly Alisher Usmanov.
In the absence of such a pact any new holder of Lady Nina’s stake would have the same influence she has – very little in terms of the positive. Minority shareholders do have rights and can act as an effective check on any really egregious violations or changes but it’s a negative influence. The club’s publicly traded shares can’t be de-listed and the company taken private unless one owner or a group of owners working in close partnership or “concert” reach 90% of the shares, in which case the company’s shares can be taken off the open market.
At 98% the majority owner or group can compulsorily buy out the remaining 2% minority shareholders. Effectively the compulsory buy-back kicks in at 90% as – assuming the new owner or group takes their option to de-list the shares and take the company private there is no longer a market upon which to trade them.
If I had a spare £134 million or so down the back of the sofa I’d buy Lady Nina’s shares, but a) I’m mental and b) I have currently have trouble raising 134 pence never mind £134 million! Having just lashed out nearly £1,800 to renew my season ticket (which took me a year to save for) I’m skint as usual. The recession has hit me hard. I’m extremely disappointed that Lady Nina apparently cares not a fig for her family’s proud three generational record of custodianship of Arsenal. She only appears to be interested in squeezing every last penny she can out of her key stake in the club, a stake for which she nor her husband (from whom ownership of the shares was transferred to her) paid not a single penny.
She could so easily make a nice few bob to live out the rest of her days in luxury and make for herself a place in the Arsenal pantheon by selling her shares at a reasonable price ensuring a good home for them with people like the Arsenal Supporters’ Trust who only care about what’s best for our great club. She doesn’t appear interested. Even at this late stage it isn’t too late to change your mind and do the right thing M’Lady.
I’ve yet to hear anything definitive about Danny Fiszman’s health since I was told by a source I believe that his cancer is far more grave than originally thought, indeed life threatening. I hope he makes a full recovery. I wouldn’t wish that curse on anybody.
Stan Kroenke is still juggling to try and buy full control of the NFL’s St Louis Rams whilst keeping the Colorado Avalanche of the NHL and the Denver Nuggets of the NBA in family hands at least, if not his own. Given the restrictions on how much of the value of a franchise can be secured against debt under the rules of the NFL, NHL and NBA, I’m assuming he’s lined up a loan to buy the Rams secured on his property development interests.
Buried in the details of other business interests of Stan Kroenke’s disclosure declaration of 24 October 2008 when he joined the club board were directorships of over five hundred companies! Almost all of these will be in commercial property development where he made his money developing shopping malls, many “anchored” by a Wal-Mart supermarket. Kroenke’s wife Ann is one of the heiresses to the Wal-Mart empire.
It’s not an unusual commercial strategy to establish a separate corporation for each “project” or major capital investment. Infamously it’s used by shipping companies to shield them from liability in the event of accidents. For tax avoidance reasons these separate companies are often loaded up with debt.
This leads me neatly on to last night’s Panorama programme about Manchester United, the Glazer family and debt. I’m no fan of the modern Panorama’s editorial style. Far too dumbed down, tabloid and sensationalist for my taste. It also got at least one major fact wrong in saying Arsenal is £400 million in debt. We’re not. We now owe about £202 million.
All that said the programme was interesting. It showed that the Glazers’ commercial property developments in the USA are struggling. Many of them are half empty with the rent from tenants not meeting the loan repayments secured on them. Others are worth less on the open commercial property market over there (which has gone right down the toilet) than the remaining loan secured against them. The Glazers have also stopped investing in their NFL franchise the Tampa Bay Buccaneers, who have one of the lowest pay bills in the NFL. The fans there aren’t happy and the happy days of their 2003 Super Bowl triumph seem a very long way away. The Glazers have ruthlessly pushed up ticket prices whilst slashing the player payroll.
The Glazers have a reputation for being astute, ruthless and completely impervious to public opinion. Clearly the latter and penultimate are true. Last night’s programme cast severe doubt over the former. Experts interviewed said they’d loaded up on commercial property investment and debt and exactly the wrong time. Given all this it’s easy to see why the Glazers are determined to hang on to Manchester United. They intend to use the club as a cash cow.
The amounts they have already taken and intend to take out of Old Trafford whilst still leaving a huge debt pile (they’re only paying interest, not the principal) just don’t square with chief executive David Gill’s “don’t worry, be happy!” protestations. We can only hope that Stan Kroenke has been more astute and less reckless with the down-side risk of debt.
Not all debt is evil and to be avoided. The debts we’ve taken on an Arsenal were and are a risk. We all remember the angst when the bottom dropped out of the property market and the Highbury flats were selling very slowly. We have however taken on the debt load in order to build a new ground and the associated property developments, investments that have paid off with a much higher income for the club, both from the new ground and in profits that will now flow for a while as a once-off working capital injection from the property developments.
The debts taken on at both Old Trafford and at Anfield by leveraged (i.e. debt-funded) buy-outs achieve absolutely nothing for those clubs. My first instinct when anything goes wrong at either club is to laugh, but we wouldn’t think it was funny if new owners visited the same sort of financial cancer on us. Hicks & Gillett have just announced a seven percent rise in season ticket prices at Anfield which, as you might imagine as gone down with all the airy grace of a concrete parachute with the red half of the city.
All in all then, as clear as mud still on the future ownership of Arsenal.
Keep the faith!

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