FTK blog: Arsenal history about to be written…


No TGIF this week as I do not want to distract you all from the blogs that detail the AGM and the subsequent discussions. Certainly the only issue in town is the sixtieth birthday of Arsene Wenger, but apart from the many plaudits that have been rightfully laid at his door, the most significant one to my mind is the fact that he reminded us in the speech before the AGM, that Arsenal Football Club rank alongside Real Madrid and Manchester
United as the only clubs that have been in the Champions League for 12 years running. This is indeed a major distinction. Look at Real Madrid, so desperate are they to win the Champions League this year that they have now spent over £200million in order to launch this bid. I would love it to fail just to prove Arsene Wenger’s point. Ok ok, we have had fortuitous interventions like lasagne etc but overall the records will only state that we achieved qualification and not indicate the means fair or foul. Arsenal fans must continue to be patient as good things come to all those who wait. My caution is because, we do not need the additional pressure of unreal expectation upon these young shoulders. The real challenge starts at the end of January, where if we beat our rivals above us we can then start to look like serious title contenders.
Arsene Wenger is also cautious about the future and he is committed to the model of self sufficiency that he has created, together with Ivan Gazidis who also commented at the AGM about the very bright prospect of our team which has been built from the bottom up. I sense that despite the silence from Stanley Kroenke, Arsene Wenger is fully aware of the American’s strategy and future plans for the club. This may mean that Arsene Wenger has given this strategy his covert blessing and I hope that a logical consequence will be that we can all be reassured that regardless of any takeover by Stan Kroenke in the meantime, Arsene Wenger will renew his contract next year. It is important that he does so irrespective of any Silverware won this season, or irrespective of the likely departure of Cesc Fabregas for Barcelona next Summer. For Arsenal Football Club to keep hold of it’s prized asset in Arsene Wenger will be the certainty that he will shape the destiny of the Arsenal triumphs to come. What Arsenal fans must take on board is that the bigger picture is of SEVERAL titles and cups being won as finally the long awaited Arsene Arsenal Dynasty of domination on the field of football.
With this talk of dynasties, I believe that Arsenal Football Club is at a very important moment in its history. We are on the verge of seeing the end of the dynasty that was the Bracewell-Smiths and the Hill-Wood families who have been custodians of this great club for many decades. I doubt very much if Stanley Kroenke will take the entire Club into ownership immediately, as I speculate that there is the need for him to retain some of his franchises in the US. This means that part ownership is a more sensible model. Part ownership would enable funds to flow into the club without adding massively to our debts and it would enable Kroenke to make some money through his increased take from any sponsorship or broadcasting deals. But how might Stan Kroenke achieve this?, and would this strategy work? Well at the time that Stan Kroenke exceeds 29.9% of shares, this will mean that he is obliged to consider making an offer to buy up the remaining shares because he would be in effective control of the club by virtue of his percentage shareholding. He can decline of course, upon which point he would, if I have interpreted the market rules correctly, be banned from making any further takeover offer for 12 months.
Any bid made by Kroenke then has to be considered by the Board. If they recommended that the shareholders accept the offer of a certain price per share from Kroneke then several following possibilities arise. I wish to concentrate upon one scenario in which Kroenke does not have to buy the shares in total until such time that the bid becomes unconditional. Under Market Rules in the UK and the European Union, this occurs when 90% of the shares are “purchased” by the bidder. Note that really means that 90% of shareholders have agreed to accept the bidder’s terms. In this case Kroenke would become the owner by virtue of his majority holding of over 50%, but still will not have had to buy all of the shares. Now as over 40% of the shares lie in the hands of his likely opponents, the purchase or part purchase of Lady Nina’s shares would be the logical way to achieve this endpoint. It is still risky in that Usmanov could enter into an auction and either try to boost the share price or hijack the takeover. This intervention would leave the Board open to consider any other offers for Arsenal Football Club (?Arab investors), if Stanley Kroenke blinked and decided that the bartered share price was too high.
If Kroenke could manage to own over 50% of the club then we could continue with the current business models. One would probably also have to accept the payment of dividends to keep the likes of Usmanov happy and deter him from making his own takeover bid. There is of course a downside to all this takeover speculation. It relates of course to the manner of the buy out in terms of how these shares are paid for. Any takeover that uses anything other than straight cash will increase massively the debts of the club. If the club is worth £500 million for the sake of argument, then we are looking at a debt approaching that of Manchester United, nearly a billion pounds. The reality of that takeover would mean we would have to be extremely successful in consecutive seasons for a long time to come in order to service the interest payments. I cannot see Kroenke wanting to enter into a Glazer style takeover. So it must suggest that the sale of Kroenke’s share of the St Louis Rams (£450million) could be the golden egg that gives us all a win-win scenario. There are interesting times ahead, but for the moment, lets just concern ourselves with the joys of successful football to come. Bring on the ‘Ammers!

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