Inside the Arsenal AGM 2008 - an eye witness account.

Fabregas the King was lucky enough to attend the 2008 Arsenal Holdings AGM as a member of The Arsenal Supporters Trust. The Club distributed a press release noting that after the meeting Peter Hill-Wood would be unveiling  three commemorative bronze busts. These refer to the legends Hebert Chapman, Denis Hill-Wood the late father of Peter Hill-Wood and Arsene Wenger. The Busts will be in the Directors Entrance at the Emirates Stadium.
The Arsenal Supporters Trust (AST) distributed a booklet entitled “Custodianship at the Arsenal”.  The Book illustrates how two families, The Hill-Wood and Bracewell-Smiths have been involved in the running of Arsenal Football Club for 90 and 70 years respectively. It is a collection of archive materials composed of Chairman reports, and The Voice of Arsenal. The book reveals that doing things “The Arsenal way” was not always conservative and from the Establishment, and that several innovative schemes were introduced such as floodlights and under soil heating.
Many of the Chairmen’s reports  and statements presented clearly how the current tensions between the importance of success on the pitch as compared with the successful running of the football club are not a modern invention. In a document published 2/8/1969 Denis Hill-Wood says

“In these more modern days, the means of achieving success are more multifarious than they were in 1953 yet, on the other hand, perhaps the fan is more selective in what he thinks is success. Is fourth in the league table success? Is runner-up in the League Cup success?
We are happy about the progress but of course, we are not satisfied with the ultimate record. Today it is demanded that the successful club is the one which wins something and, let’s face it we haven’t won a first class trophy since 1953. Let us hope that we do just that in 1970!

Prophetic or what?
What comes across in the “Voice of Arsenal” and the numerous other chairman’s reports is the passion that these Chairmen have for the football club. These people were clearly dedicated Arsenal fans in their own rights and many of their statements contain pocket commentaries upon certain football results and how they may or may not affect the fortunes of the club. This book is a fascinating insight into how typically English Gentlemen whose families were no strangers to Titles and the trappings of wealth and patronage, aligned themselves squarely behind the same desires and wishes of the ordinary grass root fan.
These Chairmen wanted success and were fiercely proud of what the club stood for. If they couldn’t have the best in players and facilities, they would not pander to trophy hunters by investing in something second best. This book is a stimulating and at times moving commentary on the efforts of Arsenal Chairmen to maintain Arsenal Football Club at the pinnacle of top flight football whilst remaining loyal to the core values of sincere teamwork, respectful innovation, and prudent investment under pinning “The Arsenal Way” They exhibited an un-quenching desire for success on the pitch and off and refused to compromise standards for pecuniary gain. I urge you all to contact the AST and purchase a copy of this limited edition book if you are truly interested in the history of the great football club. It represents an important contribution to the annals of our club.
Stan Kroenke was welcomed and apologies for absence were made on behalf of Danny Fiszman. Ken Friar delivered a presentation of the Financial report. He sought to dispel what he felt were exaggerated concerns about the health of the Estates side of the business. He reiterated that the ethos of the company was to deliver a self sustaining business. Arsenal turnover and wage costs were compared to our rivals, with the usual jokes about how a certain South London club near Fulham managed to have such high staff costs.
Reference was made to the Highbury Square development. Described as the renamed Highbury Stadium square which had been redesigned to form 680 high specification one- two- and three-bedroom apartments and penthouses. The project also includes in excess of 70 shared equity and low cost housing. The Grade II listed East Stand with its famous marble halls and the West stand have been preserved around a large private garden area. Of the 655 units, 655 have been marketed, 598 have been pre-sold. It is expected to be completed in Summer 2009.
The first release of units totalled 65 of which 54 were sold, in the second release of 71 units 46 have been sold. After October this year there are 113 units due for release. 2 units have fallen through. There is a clear statement that Arsenal feel that despite the recession, most of these sales will go through and monies realised to cover the costs to break even. Any subsequent selling activity will then be a bonus.  Regular readers of my blog will recall how in September when the Financial Results were published, I was the party pooper who wrote in the article entitled “Business is business but will the gamble backfire”


“One of the problems with the construction and estates sector at the moment is the stagnation caused by the credit crunch. Put simply, if no one can get a mortgage to buy a “Bijou des res” then it unlikely that the remaining apartments will be sold anytime soon. It was bold to state in the report that “to date..” Arsenal’s estates business had not been affected by the credit crunch, but then present figures showing continual losses and what appears to be projected “downsizing” of any expected profits. The burden of increased loans coupled with expected losses on the sales is a significant threat that despite the ring fencing of that particular business.” 

It now turns out that my fears were credible and there is a real prospect that margins will come under intense pressure. This is for reasons that may not seem very obvious. The Club raised a loan of £137 million of which there remains a balance of £133 millions. This money is to enable release of the apartments, as the refurbishing, decorating etc must be paid for up front prior to eventual sale. This means that unless those units are sold, the costs incurred remained as a form of additional debt. The presentation indicated that this loan is due for repayment in April 2010. This must mean that sums approaching £50 million must be found by the Club over the next 6 months to start the repayment process.
These are considerable sums, and even though the club has £93 million in cash reserves, they have to set aside £36 million as contingency to pay Interest charges. of the remaining 50 odd million, there has to be a running amount to meet immediate expenses such as wages and the upkeep of the stadium. The match day income of £3 million will not be sufficient to cover those costs. So where is the money going to come from?, add to this the expectation that Arsene Wenger may wish to strengthen the squad in the January transfer window, then hard ready disposable cash is somewhat in the amount need to meet the repayments of this loan appear limited .
Questions from the floor were answered by Peter Hill-Wood, who was clearly suffering from a heavy cold.
Q: How was the £137million loan to be serviced?
A: He said that the Board were confident that the sale proceeds would help pay off the loan and that thevaluation figures of the units were considered reasonable.
Mr PHW let slip that the Board were in discussions with the banks concerning the payments due. Which to my non expert brain, means attempting to reschedule the size of the repayments. Not the kind of negotiations that the banks would welcome at the moment. Good luck is my reply.
Q: Why are we spending more on property than upon players?
A: PHW refuted that suggestion and pointed out that well over 90% of the units were pre-sold. Only 2 people had defaulted and when looking at the overall costs of the business, the Board had the expenditure upon players as a top priority. Arsene Wenger was responsible for the player budget and it was expected that the spending would stay at current levels or indeed increase.
PHW referred in another answer to the assertion that 40% of match day income was derived from premium seating (Club Level)  that the percentage was much lower than that but did not specifically reveal the true percentage. He repeated that Arsenal Football Club were better placed than most to ride the financial uncertainty over the next two years.
There then came the re-election of Directors of the current Board. They were all successful with Stan Kroenke receiving a unanimous vote from the floor. There then came shareholder questions from the floor. I shall refer only to selected items that I hope that you will find interesting, without repeating the points already made. I have paraphrased some of the questions which had some preamble and were quite lengthy.
Q: Official attendance at matches when empty seats are clearly visible?
A: The official attendances are based upon tickets sold for the fixture, NOT the number of people throguh the turnstiles.
Q: Following the departure of Keith Edleman, was there any truth in the circulating rumours about the reasons for his departure?
A: (Delivered tersely) PHW refuted the rumours and  admitted that there was a mutual vow of silence about the detailed reasons for his departure. (very interesting! -Ed.)
Q: Future of the lockdown agreement?
A: After next April inter family sales of shares would be allowed, and the Board would continue to protect the Club’s heritage robustly. He used the phrase that “Arsenal runs through my veins”
Q: Has the Board considered dividing the roles of CEO between the Board financial needs and those related to direct football matters?
A: The Board has no intention of splitting the roles. The CEO would be appointed soon and if the new incumbent required an additional resource for a particular area of expertise, then the CEO need only approach the Board.
Q: What are the future planned relationships with Red & White Holdings?
A: We are having a dialogue with the largest shareholder of the club and these remain confidential, but we intend to work upon the relationship.
Q: If the worst were to happen, could the Board think about allowing a 90% takeover thus allowing small shareholders to remain?
A: No, we want to maintain the status quo, and there are no plans to revise the Share scheme.
PHW in answer to other questions noted that the Board was ambitious and would take every necessary step to protect the Club’s heritage and interests. He added that people should not always believe what they read in newspapers.
Arsene Wenger’s report.
Arsene started with a light hearted jibe about the atmosphere in the Stadium being subdued, these comments were delivered with a braoad smile and certainly contained non of the rancour being reported in the gutter press. Arsene went over his usual hobby horses of the excellence of this squad of players and how the club being well run was very important to him. He pointed out that Arsenal were one of only four clubs in Europe who had consistently qualified for the Champions league season after season for the last ten years, he also pointed out in reply to a question that Arsenal were in the top two for total goals scored over a season.
He accepted full responsibility for maintaining this consistency and declared that young players required much more support than older players, often it was a confidence thing and this was not helped by fans making their displeasure widely known. Arsene Wenger is very proud of what this young squad has achieved, and he went on to add that they were upon the brink of acheiving great success. He was naturally optimistic and positive as this was one of the ways that young players can be reassured. He replied in questions from the floor, that the team was the most important item not necessarily individuals. Success was based upon a support mechanism than would ensure a young player that had given many years to the club, would be rewarded by playing in the teams.
He wanted to develop players who loved Arsenal football club and under those circumstances,  we would be less likely to lose players to other clubs. There were many excellent English players coming through the ranks, and this would ensure not only continuity but meet our obligations under the proposed new changes to home grown players. he was a fan of video technology and felt that managers should be allowed two challenges to poor refereeing decisions each game.  Eduardo was 3 weeks away from playing and Rosicky would be available at the end of January. With regard to transfers he would rule nothing out and he was always looking to strengthen the squad, but any players needed would have to be better than the players already in the squad. ” Why displace a young player with a 27 yr old name who is no better?”
Arsene Wenger was keen to remind everyone that the product “Arsenal” was now associated not only with prudent football management, but also a certain style and quality of football. One could go anywhere in the world and mention the word “Arsenal” and we would be recalled for these attributes. Arsene reminded the AGM that their share values had risen greatly since his arrival at the football club, from around £400 to now well over £8,000. he asked for their continuing support of this great club and together we would soon taste victory. he sat down to marvellous applause.
The meeting then ended.
by Fabregas the King.

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