Arsenal – Prudence Or Spend, Spend, Spend?

Monday night saw chief executive officer Ivan Gazidis undertake his first question and answer session with members of the Arsenal Supporters’ Trust. Fàbregas The King blogged on this yesterday so I won’t go over the ground he covered, except to make a few brief comments of my own.
I hope it doesn’t sound too arrogant to say I was probably amongst the minority of Gooners who’d heard of Gazidis before his appointment at Arsenal. As an out and proud international football anorak I’ve followed the development of Major League Soccer in North America, of which Gazidis was Deputy Commissioner, with interest. I thought the appointment of Gazidis would be a good one for us. I’m even more convinced of that now.
Comparing him with his last permanent predecessor Keith Edelman I’d say Gazidis is a rapier to Edelman’s bludgeon. I never warmed to the former’s personality, but he does deserve credit for bringing the Grove in on time and on budget. A task of  Sisyphus if ever there was one. In the end though, he didn’t “get” football or football fans. He also seemed to have trouble playing nicely with others at times. Gazidis definitely “gets” the game. He’s played and watched it all his life.
He’s certainly a much more engaging man than Keith Edelman. Some of the ideas he has for shaping the administration of the club will take time to bear fruit but will definitely be worthwhile.
The media and the blogosphere have been chokka this past week with much weeping, gnashing of teeth and rending of garments from various observers and members of the Gooner Nation. One thoughtful observer of events Arsenal on another blog is demanding the head of Arsčne Wenger. This blogger’s poison pen describes any Gooner who thinks Le Boss’s canister shouldn’t be placed on a spike outside the directors’ entrance as “morons”. Brings me in mind of that old Monty Python skit on the film Bring Me the Head of Sergio Garcia. In Monty Python’s version it was Bring Me the Head of Don Revie.
We all get restless when the team isn’t doing as well as we’d like. Me as much as any other Gooner. The last couple of performances have been about as bad as I can remember under Wenger, although there has been the odd shocker over the twelve and half years of his reign. The question is, what should be done to take us back into contention for honours?
David Dein came to the conclusion that we needed to flash the cash. He wasn’t always of that opinion. When Roman Abramovich first plotted up at Chelsea he accused him of parking his tank on our lawn and firing volleys of £50 notes at us. He came to oppose the building of the Grove and pushed the rest of the board as far as making a formal cash bid to buy the old Wembley Stadium before it was sold by its previous owners (it was in private hands then) to the Football Association.
This would have solved our capacity problem. But would it have been a long-term solution? The only decent thing about the old Wembley apart from the pitch was its history. The facilities and all too many sightlines for fans were kak. It lacked the cash-generating bells and whistles of modern grounds. From a selfish point of view I’d have hated travelling out there and back every home game, especially for midweek matches when the Tube and suburban trains are banged out with commuters. As I live in Islington, staying in the borough and moving just around the corner from the old place of blessed memory suited me just fine. The Grove is even closer to my flat than Highbury. I appreciate Gooners from further afield won’t necessarily share that view.
In any event we’d have had to spend billy bundles tarting up Wembley to get it up to modern standards. This would probably have ended up costing a similar sum to that we’ve laid out for the Grove. Dein also came to believe that we needed our own “sugar daddy” to bring in shed-loads of cash. It was his attempt to bounce the rest of the board into this that ended in his defenestration. Having become persona non grata in the Arsenal corridors of power, he took his ball home and sold his shares to Alisher Usmanov. Nice move David. Thanks for that.
Some Gooners would welcome old Beelzebub himself if he plotted up at the Grove with a large lorry-load of readies – Sterling, Dollars, Euros, Swiss Francs, Yen, Roubles, Riyals, Dirhams, Baht, who cares? Well, er, I do. I don’t care where a person comes from. If they’re a Gooner they’re a Gooner. But multi-billionaires who can honestly demonstrate their credentials as a citizen in good standing of the Gooner Republic are few and far between.
Even if they did exist, I’d want plural ownership at Arsenal to continue, preferably with a large and growing stake for supporters. Football club owners and directors often answer the cry for supporter representation on the board of their club with the response “We’re supporters too.” That may be the case. I have no doubt whatsoever that David Dein, to take an example, was, is and will remain a Gooner. That fact didn’t stop him trousering a profit of some £85 million on his trading in Arsenal shares. The only money Dein ever put into Arsenal was the £292,000 he paid for his original stake in 1983. He also received a handsome salary and some very healthy bonuses during his time as an executive director at the club.
Having a sole owner is betting the whole club’s future on one person. Not ever a good plan. In any event rushing around the planet spending money like a drunken sailor is no guarantee of success. Just look down the road at Spurs to prove that. Or at Chelsea. Ken Bates spent very large in the transfer market and on player wages at Stamford Bridge. So big the club was within days of becoming insolvent before Roman Abramovich bought it in 2003. His total trophy “haul” was two Football League Division Two (old money, Football League Championship today) titles, an FA Cup, a League Cup and a European Cup Winners’ Cup. The Abramovich era has seen two Premier League titles, two FA Cups and a runners-up spot in the Champions League. Not a lot for a total outlay of about £578 million, plus the cost of buying the club. And all that without building a new ground.
Even if we wanted a “sugar daddy” the only way the club could start splashing out in the transfer market and on player salaries would be if he either gave the club an outright gift or more shares were authorised and issued. The legal agreements covering the existing loans (called “banking covenants”) taken out to cover the cost of  the Grove have strict conditions requiring the club to keep high cash balances which are monitored and tested quarterly. Any breach of these covenants and all bets are off with the banks. The only way round this is for somebody to give Arsenal free money or for the club’s holding company to authorise and issue new shares. This would require a special resolution of the shareholders which needs a three-quarters majority. All the senior shareholders would have to agree – Stan Kroenke, Danny Fiszman, Lady Nina Bracewell-Smith, and Alisher Usmanov.
This would “dilute” the holdings of the current shareholders. To take a simple example, if we issued 31,108 new shares (50% increase on the current 62,217 voting shares authorised and issued at the moment), Stan Kroenke’s current 28.3% stake would reduce to 18.9%. If the new shares were sold at £10,500, £3,750 above the current PLUS market trading price and the top p rice Stan Kroenke paid the Carr family, it would raise just under £327 million. But who is going to splash out that sort of money and still only own a third of the club? In any event the current shareholders are likely to want a MUCH higher premium over the current market value of the shares to maintain the cash value of their reduced stakes. Pretty much a non-starter.
I think we can also discount the stories about London businessman Stephen Perry wanting to buy into the club to keep in plural ownership. This appeared in the Sunday Telegraph. My contacts don’t think it’ll go anywhere.
Which brings us back to only spending the money we generate. Whether we’re getting the best value out of the £100 million plus we’re spending on player salaries at the moment is a question which Ivan Gazidis raised at the AST meeting. That’s where we need to be concentrating our efforts as a club I think. Gazidis is already there.
In Friday’s blog I’ll bring you news from Arsčne Wenger’s audience with shareholders on Thursday night.
Keep the faith!

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