Blog Archives

Board Puts Club’s Future at Stake

It was no surprise to anyone that the board even though they reviewed the possibility of raising additional funds, the board has come to the conclusion that the club does not need to raise any additional funds.

 In the board’s infinite wisdom, they are able to repay the £135million loan on Highbury Square by April 2010 and give Arsene the money he needs to improve the squad without the need for an annual “marquee player” sale.

 The real reason why they have turned their backs on this rights issue proposal is that the only two board members with any shares, Kroenke and Fiszman do not have any money.  It was reported in the papers today that Kroenke hasn’t paid for the shares he bought from the Carr family and Fiszman.  The board knows that any rights issue will result in Alisher Usmanov probably buying all the shares available and thus he would become the largest shareholder and they cannot stomach that thought.  The fact that such a move would result in the club be able to clear £100million of debt is completely ignored.

 The board have stated that they do not need to raise this sort of money to compete in an over inflated transfer market.  Well they need to get a reality check, paying £20 million for an international midfielder who will add the steel and fight that is missing from your team is not over inflated, and it is reality.  The days of picking up top international players for £7 million are long gone.  Last season paid £5 million for a player who had player a few times in the Championship, is that not over inflated?

 The board state they are not prepared to put the club’s long term stability at risk, but by not investing in players that is exactly what they are doing.  Last season had many fans and in private Arsenal officials, concerned about Champions League qualification.  The reason was our inactivity last summer when we made half hearted attempts to sign Alonso (offering £12 million when the price was £16 million), Yaya Toure ( not offering him more wages than he was on at Barcelona), and last minute attempts to sing Mbia and Veloso. Unfortunately, I see the same cycle re-occuring this summer.

 Fans are not asking for the club to spend £100 million on two or three players, all we are asking is for the board to put aside their personal differences with Usmanov and do what is best for the club, reduce our debt and give Wenger funds so that he can strengthen the team.

A Rights Issue is Top Priority for the Board

This week could be a monumental week in the history of the ownership of Arsenal Football Club.

At a board meeting this week, the directors will discuss, amongst other matter the option of raising additional capital.

Alisher Usmanov has sent a letter to the club formally offering to under-write a £100 million rights issue.  Such a move cannot be ignored by the directors as it will be a dereliction of their duties. What Alisher is saying is that any shareholder who does not wish to take up his or her rights, he will buy those shares.

The purpose of the rights issue is to free-up £100 million of cash that the club has, but is needed to payoff the loan of the Highbury Square development.  Through a rights issue the club will receive the £100 million.

The club currently has 62,217 shares.  The shareholding is as follows:

Stan Kroenke                                                  17,613             28.3%

Alisher Usmanov                                            15,554             25.0%

Danny Fizsman                                               10,020             16.1%

Lady Nina Bracewell-Smith                             9,893             15.9%

Others                                                               9,137

The Arsenal shares would be valued at £8,500 each, so to raise £100 million, Arsenal launch a 6:1 rights issue, meaning that for every 6 shares you currently hold, you will be entitled to one new share which will cost you £8,500.  This is the crux of the matter.  For Danny Fiszman, who recently sold shares to Stan Kroenke, he would need to invest in excess of £14 million as would Lady Nina Bracewell-Smith, I doubt if either would wish to invest further sums into the club.  All small shareholders would have to find £8,500 for every 6 shares they own.  This would leave only Stan Kroenke and Alisher Usmanov with the financial muscle to take up their rights and the rights of the shareholders who have not take up their own rights.  

The board’s fear is that this will allow Usmanov to acquire at least 28% of the club, if Kroenke only took up his own rights, then Usmanov will have 31% of the club and will be entitled to a seat on the board.  This would be too much to stomach for certain members of the board.

A rights issue is the only way the club will reduce its debts in the short term and release much needed capital for Arsene to invest in the playing staff.  It is time the board stopped fiddling whilst the club sunk further back from the competition, they are mere custodians of the club and should in the best interests of the club, not their self centred interests.

Money Inhibits Transfer Activity

Arsene has for the first time broken his self imposed purdah on Arsenal’s transfer budget or money available for transfers.

“I am fed-up with people who think I have £100million in the bank yet don’t want to spend it. How can people think that? The pride of the club is in having moved to a new stadium while maintaining the club at the top level.

“The policy of the club is that they have backed me in what I do and the way I do it. We now have to be strong enough to stick to that. We cannot pump £100m into it, so we must keep faith in what we are doing.”

This is true, even though the club has in the region of £100 million in the bank, this money needs to be held back to cover our loans.  The club needs to repay the loan on the development of Highbury Square by April 2010.  The club has been trying to renegotiate the £135 million loan repayment, but as yet there appears little movement on this.  The only source to repay this loan is through the sales of flats, once again the club has given us any updates on the number of flats sold.  This situation will be clarified once the financial results for the year have been announced; this should be in early September.

In addition to the Highbury Square loan, the club needs to ring-fence £20million of cash as part of the loan agreement for the Emirates Stadium.

This is why Wenger states we have little or not as much money as people think and the situation will remain the same until the Highbury Square loan has been repaid.  The club have refused to accept the offer from Alisher Usmanov to repay this loan, as he would increase his shareholding in the club.  This is a classic case of cutting off your nose to spite your face.  The small shareholders who control the club are refusing to allow one of the big shareholders to increase his stake and assist the club in improving it indebtedness.

It is time the Fiszman and Hill-Wood either put their hands in their pockets and pay off the club’s debt or move aside and allow people who are both prepared and able to do so save the club.

Kroenke and Usmanov Talk to Wenger

What a turbulent week, Wenger throws away a line about Real Madrid and suddenly we felt like the roof hade caved in on our little world. Everyone came out in support of Wenger.

 Hill-Wood came out like the proud rooster, strutting his stuff about how disgraceful those shareholders were and how dare they question a man like Wenger.  This is typical of our board looking down at people, even when those people own part of the club.

 Ivan Gazidis kept quiet on the matter until Thursday, when he said, “Arsene made Arsenal what they are today, and the fans understand it perfectly,” he said. “If he was to leave tomorrow, he would do it with his head up, not by the back door.”

 It is no coincidence that Gazidis remained quiet on the matter until the press reported that both Stan Kroenke and Alisher Usmanov spoke to Arsene Wenger.  The intrigue here why would these two men, one a non-executive director and the other not even on the board speak to Wenger and what will they be speaking to him about? 

 We know that Gazidis is friendly with Kroenke and Kroenke hinted at a sizeable “war chest” for Wenger recently, which is not exactly what the board led Wenger to believe he had to spend.  We also know that Usmanov has offered to put at Wenger’s disposal £100 million by paying off part of the club loan.

 Now we hear that Wenger has a war chest that is sizeable.  Is this all a coincidence?  This is clearly the new board members, Gazidis-Kroenke bouncing both Hill-Wood and Fiszman into providing Wenger with the money he really needs to strengthen the squad.

 Clearly the old board is the proverbial lame-duck and the sooner they relinquish the reigns the sooner and faster the club will move ahead.