Yesterday bought us news that Silent Stan Kroenke has upped his stake by two hundred shares to 18,594 or 29.9%. One hundred of these shares were bought from our esteemed chairman Peter Hill-Wood, he who famously pronounced that we didn’t need “his sort” when Kroenke bought into the club via ITV plc’s 9.9% stake. How times change.
It’s highly unlikely that Kroenke will push himself over the thirty percent threshold which would trigger the requirement for a mandatory bid anytime in the near future. Aside from anything else a bid in the coming months would have to be pitched at £10,500 a share, way more than Kroenke will want to pay. The soonest he could bid at a lower level will be next summer.
Kroenke has a history of likely to be undisputed master of all he surveys. Contrary to that however he’s held a large minority stake (40%) in the NFL’s St Louis Rams. The majority stake in the Rams is currently on the auction block. Kroenke has the right to match any bid submitted for the majority interest. I can’t see that he will want to fund a bid for both the total ownership of the Rams and majority ownership of Arsenal. If he were to sell his minority interest in Rams this would raise around $500 million (£312.5 million), which would give him a considerable cash war chest to fund a bid for Arsenal. Based on a price of £8,500 he would need just south of £371 million to bid at this level for the 43,263 Arsenal Holdings shares he doesn’t already own.
Kroenke still owes around £50 million for the shares he bought on tick from the Carr/Bracewell-Smith family and Danny Fiszman. A large cash injection from a sale of the Rams would fund a large portion of a bid for Arsenal. American business has grown addicted to credit in the last three decades, starting with the orgy of so-called “leveraged buy-outs” in the 1980s and 1990s. A new generation of corporate raiders bought publicly listed companies using credit (so-called “junk bonds”) and took them private, often breaking them up and selling of the company’s assets piece by piece, to raise cash to pay of the loans often making huge profits in the process.
The growth of so-called “hedge funds” brought a new wave of leveraged buy-outs, buying publicly quoted companies and taking them into private hands. With credit now very tight following the wave of banking insolvencies which was the root cause of the world economic crash, this route is now very difficult to take. Banks have become ultra-cautious in their loan policies.
Let’s be clear about one thing. Stan Kroenke isn’t buying into Arsenal because he loves either football or Arsenal. He thinks he can make money out of his involvement in Arsenal. Now that he’s put himself in the driving seat in the club boardroom we need to ask searching questions about his plans for the club we all love so much. On the positive side of the ledger he does have a sound record of being a long-term investor not too preoccupied with short-term gain. He’s looking for long-term capital growth. He has invested in a new stadium and training facilities for his Major League Soccer team the Colorado Rapids. They have yet to come close to winning the MLS Cup, North America’s major club trophy however. Neither has his National Hockey League team the Colorado Avalanche or his National Basketball Association team, the Denver Nuggets won either the Stanley Cup (ice hockey’s major prize in North America) or the NBA championship under his charge, although the Avalanche did win the Stanley Cup before he bought the club.
Apparently basketball is his first love as a sport. We can’t expect him to ever have the emotional ties we have to Arsenal as a sporting institution. I think the Arsenal Supporters’ Trust is spot on in the “red lines” they’ve laid down as a litmus test of any Kroenke majority ownership – No debt-financed takeover and a continuation of plurality of ownership in the club.
Contrary to what I’ve written in previous blogs the trigger level which would give Kroenke or any other new owner the right to make a compulsory offer for remaining shares owned by others is not 90% but 98%. This difference is however academic as at 90% the owner of the majority can “de-list” (remove the remaining shares from public trading) without requiring the consent of the minority shareholders. There being no remaining market for shares, the owners of the remaining ten percent are almost bound to sell.
I’m afraid we’re all doomed to have to be concerned about the future ownership of Arsenal for a good while yet. We all need to back the Arsenal Supporters’ Trust on this issue. If you haven’t already joined, do it TODAY. It’ll only cost you £2 a month if you pay by standing order (you choose which day of the month you want to pay) or £250 for life.
On a completely different subject those good people at the Football Supporters’ Federation are campaigning on the ill-treatment and unjustified bans of Sunderland fans returning from a pre-season friendly in Scotland against Hearts. They’ve launched an on-line petition on the subject which you can find, along with further details of the whole affair.
I urge you to sign the petition. It could be us next. I hope you’ll also consider joining the FSF. Both the Arsenal Football Supporters’ Club and Arsenal Independent Supporters’ Association are affiliated. Individual membership is absolutely free, gratis and for nothing. You won’t get a better offer than that!
Tomorrow we travel to the Black Country for a tea-time kick-off in the League against Wolverhampton Wanderers. We need to focus like a laser beam on this game. We need to start putting together a string on wins to keep on propelling us towards the summit. Our young side isn’t the finished article yet and still has its weaknesses. We are a better, more resilient team than we were last season though. It’s still early doors but I am more optimistic about silverware than I’ve been for a while. Molineux isn’t an easy place to go, the Wolves fans are a noisy bunch, although the travelling Gooner Nation always does us proud as a club.
Keep the faith!