Arsenal fans are still reeling from the shock news of yet another Director departing from the Board of Arsenal Holdings Plc. To lose one director was unlucky, to lose two seems like carelessness at first glance, until you consider the motives involved.
Lady Nina Bracewell-Smith
This lady holds the key to Arsenal’s future and there is only one quotation that leaves me feeling a little nervous today.
“Hell hath no fury like a women scorned”
The quote that comes from a play called the “The Mourning Bride” by William Congreve. The complete quote is “Heaven has no rage like love to hatred turned / Nor hell a fury like a woman scorned.”
Well she was on the Board when David Dein left with immediate effect, only to cash in his shares at the height of the market for a cool £75million. Lady Nina’s holding would have netted much more, but she became a signatory to the now defunct Lockdown Agreement. Since this time she has seen the potential value of her shares plummet in the credit crunch assuming that Usmanov is not in a position to buy. (more on this later)
What exactly has caused this rift? Well no one except Danny Fizsman and Peter Hill-wood knows for sure, but what is clear is that Lady Nina may not go quietly and over the coming days, the consequences of this Board conflict will become more apparent. It is rumoured that there was a falling out between Directors over the direction that the Club is going to go once Ivan Gazidis takes up his post.
There are several possible Corporate Strategies that may have been responsible. One can only speculate what might not have been very favourable to Lady Nina. That is, perhaps a short term cash injection from the Directors in order to help Arsene Wenger acquire his January transfer targets, and to assist maintain liquidity from financial drain incurred by the need to pay back the £130 million Bank Loan on Queensland Road project. The amounts may not have been staggering in terms of each Director, but it may have been the principle. This combined with perhaps a shelving of any plans to pay dividends on Arsenal Shares,( the one incentive for keeping a large investment going in the club.) may have been the straws that broke the camel’s back.
People keep saying that the Bracewell-Smith’s do not need the money, but perhaps they needed a little recognition and pay back for holding onto such a large share holding, and this might have been the price that the rest of the Board was not willing to pay. So… exit Lady Nina stage left and from a position of relative calm and optimism, the club has been plunged into a unsettling transition that no one would have wished for prior to welcoming Ivan Gazidis to the club.
Lady Nina must now find a buyer for the shares, and the choices appear to be moving towards the Middle East as the only sector with a cash rich economy in the depths of this Global recession. Why am I discounting Alisher Usmanov for the time being? Well for him to succeed, he would have to mount a hostile takeover at a time that he needs it like a hole in the head. This has been due to the fall in the value of the Russian financial markets and of course the credit crunch. What has been the impact of the credit crunch for Usmanov?
The fall in commodity prices has seen 60% slashed off the value of many mining and ore concerns. This can be viewed as bad news if you are already an investor in these markets, or a buying opportunity for new investors. Alisher Usmanov is heavily involved across several companies and these will be distracting him from pursuing an Arsenal interest unless he sees Arsenal as a means to an end in investment terms.
According to the financial news service Bloomberg, Usmanov has lost $11.7bn (£6.7bn), the survey claims. Almost half of his estimated world assets. Usmanov is 50% owner of Mettaoinvest, and looking at it’s fortunes over the last six months gives us clues as to the likely well being of Usmanov’s assets. I reported in earlier blogs that in May 2008 from John Helmer’s excellent articles on Mineweb that
“Metalloinvest, a Russian iron ore and steel company owned by billionaire Alisher Usmanov, plans to float up to 25 percent of its shares in an initial public offer in the autumn, sources close to the deal said on Tuesday.
The sources told Reuters that Metalloinvest had picked Merrill Lynch, Credit Suisse, Deutsche Bank and Renaissance Capital to organise the placement, which is expected to take place either in New York or London.
Vedomosti business daily said earlier on Tuesday that Metalloinvest hoped to raise around $3 billion initially by offering a 10 percent stake.
Its existing shareholders will sell another 15 percent of the company in proportion to their current stakes, it said.”
However some five months later in October 2008, Mineweb reported that things had gone decidedly pear shaped…
“Metalloinvest, the Russian steel and iron-ore holding controlled by Alisher Usmanov, has failed to fix an international market value for listing and sale of its shares. This is the market interpretation after an announcement on Thursday by chief executive, Maxim Basov, that the group (also referred to as Gazmetall) will not proceed with a planned Initial Placement Offering (IPO) this year.
Basov was quoted in a Russian press agency bulletin as saying “our shareholders and management examined the possibility of conducting an IPO this autumn as an option for growth. But we decided against this. There’s a serious crisis in the world and an IPO simply doesn’t make sense.”
Usmanov holds 50% of the private shareholding; Andrei Skoch, 30%; and Vasily Anisimov, 20%. The main assets in the holding are the Ural Steel (Nosta) and Oskol steelmills, and the two iron-ore mines, Lebedeinsky and Mikhailovsky.”
So if anything, Usmanov himself may not want to make more enemies within the club, but might want to guard his investment until a bigger buyer comes along.
I have not discounted the quietly spoken Stan Kroenke, as acquiring Lady Nina’s shares would not take him beyond 29% of shares in the club. One doubts however if he sees the need to have to pay over the true market value of the Arsenal share price, which is inflated only by the activities of Red and White who appeared to have bought shares at a very expensive premium. Stan Kroenke worth has been mention by Vic Crescit earlier, one has to ask oneself what is the attraction of spending a major proportion of one’s own personal fortune upon a football club in these troubled economic times.
This leads us to the Arab contenders…
Mohammed Ali Al Hashimi
the CEO of Zabeel investments of Dubai, a private equity firm with US$6 Billion worth of assets appears keen to make a purchase of a football club. After pulling out of the Charlton Athletic deal he then was linked with Newcastle United and West Ham. The present plight of Portsmouth seem rather more attractive for his pocket and may persuade him to set his sights lower than the asking price of £700 million that be necessary to capture Arsenal.
Dr. Sulaiman Abul Kareem Mohammad Al-Fahim
The CEO of Hydra properties private real estate company worth US240 Billion, is a proven strategist from his high ranking in the World of Chess. He is part of the Abu Dhabi United Group that took over Manchester City, even though it is rumoured that before then contact is believed to have been made with major shareholders at Arsenal Football Club. The true identity of these shareholders is not known as these were private meetings, but it is possible to speculate that Usmanov and Nina Bracewell-Smith would have been high value targets in that regard.
Premier League rules prevent an individual from having more than one interest in a Premier League club, meaning that he would have to pull out of the Abu Dhabi Consortium. Not something that is likely as he seems to be lining up his shopping list for the January transfer window for Mark Hughes of Manchester City. It is rumoured that he is only interested in acquiring a controlling interest of The Arsenal which is the club that he would still purchase if the deal was right.
There is scope for any of the Royal families of the UAE to enter the market. The getting one over on your relatives in terms of public relations, and the fact that people feel that there are clubs in the Premier League that can enhance the global presence of a company through media and marketing opportunities, we cannot rule out the prospect of an outsider emerging who has not previously been talked about in the press. The very nature of the way that business is conducted in the UAE means that any purchase or attempt to buy a highly sought after prize like the Arsenal, must be free of scandal or bad publicity.
What must be made clear, is that the lockdown agreement is dead. Stanley Kroenke is not a signatory to it, and therefore it is a question of goodwill and a poker like resolve. It would be helpful if Lady Nina would make a statement of her intentions so that we could move on, but that might damage any prospects of her selling these shares at a good price. So we must wait and hope that her emotions will cool and she sees the bigger picture rather than destroying the great fondness that the Club has for the Bracewell-Smith family that have been involved with the club for many decades.
Fabregas the King.