Ownership - Time For Arsenal’s Own Cannon Custodians?

Manchester United has its Red Knights. Today I make a call for our own Cannon Custodians. I’m sure they’re out there. Arsenal supporters who care passionately about our great club and have a few million tucked away with which they’d like to do something of lasting value for the Gunners.
This week we’ve seen Lady Nina Bracewell-Smith put her Arsenal shares on the auction block. We’ve also seen Alisher Usmanov’s Red & White Holdings increase its holding in the club. Red & White is now well on its way to owning 27% of the shares in Arsenal Holdings plc. Stan Kroenke has decided to exercise his option to buy the sixty percent majority stake in the NFL’s St Louis Rams to go with his current forty percent minority stake. That’ll cost him $450 million (around £310 million).
All the senior shareholders at Arsenal talk a good game about their role as custodians. I’ll be honest. I’m sceptical. Their actions seem more aligned to their own narrow interests than the club’s. I don’t want Arsenal to end up in the same mess into which Liverpool and Manchester United have descended. Let’s not be taken in by warm words, rather let us be persuaded by concrete deeds.
When the Glazer family took over at Old Trafford, the then sports minister Richard Caborn invited them for tea. They told him what he wanted to hear. They also said all the right things to the fans, some of whom were naive enough to believe them, all evidence in their other business dealings to the contrary. They then did exactly what they intended to do all along – loaded all the debt THEY’D run up to buy United onto the club. Completely legal, entirely immoral. The Tom Hicks & George Gillett circus then rolled into Anfield, again saying all the right things and doing all the wrong things. Oh no, they said, we won’t be like the Glazers. We’ll take Liverpool into a brave new future complete with a shiny new stadium. My rear end! They’ve been shown to be what they are. A couple of chancers on the make.
Then the three ring circus of chancers with big mouths and empty bank accounts rolled into Portsmouth. The administrator is still looking for more financial unexploded time-bombs. Surely we’ve learnt by now? But Stan Kroenke and Alisher Usmanov are different, aren’t they? Maybe. But who knows? Kroenke has his sports holdings registered in the US State of Delaware. That state proudly boasts of being the place to register your company if you don’t want to be bothered by the pesky requirement of publishing annual accounts, ownership records, details of assets, debts and so on.
Even where companies are publicly quoted on the stock exchanges and/or registered in places that insist on openness in business affairs that isn’t a complete defence. Enron was a publicly quoted business, one of the biggest in the USA. Its accounts were independently audited. It imploded in 2001 with debts of US$31.8 BILLION (around £21.93 billion). It claimed revenues of US$101 billion in 2000. Four thousand people were put out of work. Many employees lost all their pension savings that the company had encouraged them to invest in company shares. And it’s not just in the USA that these things happen.
Over here the Bank of Credit & Commerce International, formally registered in Luxembourg but with most of its business centred in London, was found by American and British investigators enquiring into its collapse in 1991 to have “set up deliberately to avoid centralized regulatory review and operated extensively in bank secrecy jurisdictions. Its affairs were extraordinarily complex. Its officers were sophisticated international bankers whose apparent objective was to keep their affairs secret, to commit fraud on a massive scale, and to avoid detection.”
The bank’s auditors Price Waterhouse and Ernst & Young, two major transnational accounting and auditing practices approved the bank’s accounts, despite them being all smoke and mirrors.
During the recent international banking collapse, American Bernie Madof’s investment business collapsed in 2008. Records show that US$65 BILLION (around £44.82 billion) had been stolen from clients in a giant pyramid investment scheme (where the money of later investors is used to pay out inflated returns to early investors which in turn draws in more money from investors looking for a high return). Madof was allowed to continue his fraud despite the whistle being blown on him to the regulator, the US Securities & Exchange Commission (SEC) as far back as 1999.
He got away with financial murder for the best part of a decade. As the Americans do, when they threw the book, they launched an entire library his way. He was sentenced to 150 years in prison (I kid you not) in June 2009. Even with two-thirds time off for good behaviour he’ll get out when he’s 121 years old, barring a presidential pardon or commutation of sentence. That’s not out of the question. He made a lot of political donations in his time and, more importantly, he knows where the bodies are buried. He’s got a lot of dirt to dish if he wants to. Money doesn’t talk, it swears.
And what has this got to do with Arsenal? Well, the three examples I cite are proof that all that glitters isn’t gold. Alisher Usmanov operates in a business, legal and political environment that, to say the least, is opaque and capricious. What matters most is not that you’ve got something that people want to buy that you can sell at a price they’re prepared to pay on which you can make a profit.
The essential condition of staying in business in Russia  is staying onside with the powers that be in the Kremlin. Likewise in most of the newly independent sovereign states of the former Soviet Union with their local elites. Investigative journalists in Russia who get too close to the business, criminal or political elite have a habit of being bumped off. Russian journalist Anna Politkovskaya was gunned down in the lift of her Moscow apartment block in 2006. Seventeen other journalists have been murdered since 2000.
That’s not to say that Alisher Usmanov is involved in any of that. Who knows? It is however the fact that it’s extremely dangerous to ask too many questions of the rich and connected in Russia. Usmanov is known to be well-connected in government circles over there.
As far as Stan Kroenke goes, it’s hard to know what his plans for Arsenal are, especially after his announced intention to buy out the rest of the NFL’s St Louis Rams. It’s possible that this is a manoeuvre to extract a higher offer for his minority forty percent Rams stake. Only time will tell. He’s the only one who knows at the moment. He’s not known for enjoying conflict and he’s setting himself up for one by putting himself in breach of the NFL’s cross-sports ownership rules which prevent NFL owners controlling teams in other sports in cities other than their NFL franchise. It could be that he’s squared this up in advance or he intends to sell his Denver based clubs. Again, who knows?
Then there’s Danny Fiszman and Lady Nina Bracewell-Smith. Fiszman lives in Switzerland and is due to undergo treatment for cancer. He’s 65 years old. None of his children seem particularly interested in football or Arsenal. He owns a key 10,025 shares (16.1%) stake in the club. He’s recently made £42.5 million selling five thousand shares to Stan Kroenke. Between them they own 46% of the club, effectively controlling Arsenal.
Lady Nina owns 9,893 (15.9%) of Arsenal’s 62,217 voting shares. She’s been in the news this week having appointed American bank Blackstone to sell them for her. There are media reports saying she’s looking £10,000 share, which would total nearly £99 million. She’s 55 years old, married to Charles Bracewell-Smith, a grandson of former Arsenal chairman Sir Bracewell Smith who left his Arsenal shares to his grandchildren in his will. Charles’ father Sir George Bracewell-Smith was also an Arsenal director. Sir Charles – who is seriously ill – transferred ownership of his shares to Lady Nina whom he married in 1996. Lady Nina is a former director of the Park Lane Hotel. Lady Nina and Sir Charles have considerable wealth other than their Arsenal shares, having benefitted from the sale of the Park Lane Hotel in 1996 which was owned by the Bracewell-Smith family, up-market hoteliers by trade. Fiszman is also a very wealthy man aside from his Arsenal shares.
It is Lady Nina’s and Danny Fiszman’s holdings, a combined 19,918 shares or 32% that are the key to the future ownership of Arsenal. Alisher Usmanov’s Red & White Holdings are at a declared 16,223 shares (26.02%). Since his formal notification to the PLUS share market on which Arsenal is traded that he had passed the 26% threshold (he’s required as major shareholder not on the board to declare changes in his holding up or down by one percent or more) he’s known to have continued picking up shares. Since that date 369 shares have been notified on the PLUS market as having been traded, all for between £9-10,000, above the price that Kroenke has been paying of £8,500. We can safely assume that these have been sold to Usmanov. Assuming that to be the case he’s at around 26.7%. Stan Kroenke who as a director has to notify the market of any change in his holding, even by just one share up or down, has 18,656 (29.9%).
The Fiszman/Kroenke alliance dictates terms on policy within the club at the moment. Kroenke is 63 years old but shows no sign of slowing down. Although Fiszman has cancer, if it’s caught quickly enough and treated effectively it isn’t the terminal illness it once was. But does Fiszman really have the appetite for the strategic leadership that Arsenal needs? Is he more interested in cashing out and making a huge capital gain? Again, who knows?
The real enigma is Lady Nina. She’s known to be very hurt at what she believes was her high-handed effective dismissal from the Arsenal board (she walked, but only because the alternative was being pushed), the reasons for which still aren’t clear but which was evidentlly prompted by Fiszman. She was the third Arsenal board member to get the boot during Fiszman’s time, joining executive vice-chairman David Dein, who tried to bounce the board into selling the club to Stan Kroenke in April 2007, managing director Keith Edelman who was shown the door in the summer of 2008 and Lady Nina who was bounced just after being re-appointed to the board without opposition at the October 2008 shareholders’ annual general meeting.
I think what we need is a group of wealthy Arsenal supporters to club together to buy out Lady Nina and hold her shares in trust. Such a large holding would keep the other shareholders honest. None of them could get the ninety percent ownership necessary to take the club private. We’ve all seen where that can lead. I don’t think that the vehicle of a public limited company traded on the stock exchange is the anything like the right model for a professional football club. The private limited company is even worse however for a club of the size of Arsenal, Manchester United or Liverpool. It allows the owners to do pretty much what they like. We’ve all seen what giving the private profit motive its head with little effective regulation has done for the world economy. It’s the same in football, except more so. As a wise man once said, nobody asks for their ashes to be scattered at their local branch of Tesco.
Football clubs should be required to operate on the income they generate at the gate, from television and other media and sponsorship. Friendly father God-billionaires as at Chelsea and Manchester City should be severely curbed as UEFA intends so to do. Likewise running on debt as at Portsmouth. Debt should only be incurred as it has been at Arsenal for investment in youth development, training facilities and stadia. The game generates more than enough money to run itself. It needs neither meglamaniac multi-billionaires looking to satisfy their egos with a new toy, nor financial vampires leeching off the game whilst contributing nothing as at Manchester United or Liverpool.
So, how about it, Cannon Custodians? Fancy making a name for yourselves and getting a place in the Arsenal pantheon? If you do, get in touch with me. All approaches in complete confidence. I’m sure a deal could be struck that would secure the long-term ownership future of the club we all love so very much.
Oh, and Lady Nina, it’s still not too late to do the right thing and gift your shares to the Arsenal Supporters’ Trust. They’ll ensure that your holding will be used constructively to anchor the ownership of the club. It would ensure that the club can never be financially pillaged in the way that Manchester United and Liverpool have been. “The Lady Nina-Bracewell Smith Arsenal Share Trust Holding” controlled by the Arsenal Supporters’ Trust would be the finest possible testament to your generosity and the key role that the Bracewell-Smith family has played in the development of Arsenal since 1945.
I hope you think long and hard before just selling to the highest bidder, Lady Nina. You’re better than that, surely? To sell purely for money to the highest bidder would be a sad and wholly inappropriate end to your family’s long, proud record of service to a great national and international sporting and cultural institution. Arsenal has immeasurably raised the quality of the social experience of millions of its supporters over the decades. It stands for integrity, innovation and timeless values. Surely it has to be about more than just money, as important as that is to all of us?
Keep the faith!

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