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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.

Can Kroenke and Usmanov Co-Own Arsenal?

Arsenal’s Chief Executive, Ivan Gazidis has been talking about our three main shareholders, Lady Nina Bracewell-Smith, Alisher Usmanov and Stan Kroenke.

 

Lady Nina Bracewell-Smith, who owns 15.9%, was ousted shortly before Gazidis was appointed.  She has spent more time in India recently. Her shareholding is vital as to who will control the club. 

 

Gazidis said, “I certainly plan to meet with Lady Nina and have a productive ongoing dialogue. She is a significant shareholder and she deserves to be treated as such.”

 

Gazidis has also had meetings with Alisher Usmanov, and expects these meetings to continue.  This is a pragmatic approach rather than that of Hill-Wood who wishes to ostracise anyone who is not “his type.” 

Gazidis stated, “I’ve spent some good time with him and I’m going to keep the contents of those meetings private but it’s a dialogue that is important for us to have. I have responsibilities not only to the board but to all the shareholders.

 

Gazidis also stated that Kroenke is a long-term investor in Arsenal Football Club.  Kroenke recently increased his stake in the club to 20.5%, having acquired 5,000 shares from fellow Arsenal director and tax exile Danny Fiszman.

 

Gazidis said, “He is a long-term investor who thinks about the sports business very carefully and philosophically is very close to the traditional Arsenal ethos.

 

“The club has some unique assets that will appreciate in value – it’s a London club, it has one of the best stadiums in the world, it has a tremendous squad of players who will get better year on year, a fantastic manager and a good business model.

 

“I think for all those reasons, he thinks it’s a good investment.”

 

Arsenal are in very fluid situation, Lady Nina wishes to sell her shares, whilst the recent disposal of 5,000 shares by Fiszman clearly indicates that, despite his protestations, Fiszman is a seller.  The two big beasts are Usmanov and Kroenke. Kroenke is a long-term investor, which means he will sell once the price is right.  People need to remember the Manchester United takeover when the Irish duo built up a stake as a “long-term” investment, only to sell once the price was right. 

 

Usmanov’s drive to buy the club has been dented by the current economic crisis that has seen his wealth fall from $9.1 billion to $6 billion. 

 

Matters need to be resolved at Arsenal we have two shareholders who want to sell, whilst there are two who appear to wish to increase their stakes. We could end up with a USA / Russian alliance owning Arsenal, with David Dein installed as Chairman.  Dein resigned as chairman of Red & Whist Holdings (Usmanov’s company) in September 2008, opening the way for him to be the “honest” broker between the Kroenke, whom he introduced to the club and Usmanov to whom he sold his shareholding.

Arsenal – The Future Ownership

The current Arsenal board consists of Peter Hill-Wood, Danny Fiszman, Lady Nina Bracewell-Smith, Richard Carr, Ken Friar, Lord Harris of Peckham and Sir Chips Keswick.

A wide and varied group, but the all Danny Fiszman, are drawn from Arsenal’s two ruling families, the Hill-Woods and the Bracewell-Smiths. Lord Harris and Sir Chips Keswick are friends of Peter Hill-Wood.

A few years ago, Granada TV bought 9.9% of Arsenal plc as part of a joint venture with the club. This stake soon became a burden for the television company and they sought to sell this, and that is when Arsenal plc’s future and the direction of the club came into question.

One of the most influential men in Arsenal’s recent history, David Dein, realised that with the new stadium, Arsenal had to start to think big and to achieve the goals that club had set itself, it had to look for outsiders to either bring in financial power or new marketing techniques to Arsenal or both. At several meetings, Dein proposed that Steve Kroenke, who had by now acquired the Granada TV stake and had increased his stake to 14%, be brought into the boardroom as a director. Whether Dein meant for Kroenke to buy the club, we will never know. Dein was made to resign from the board and left the club.

The remaining board members then closed ranks and decided to go on the attack and distance themselves from Kroenke. The most barbed comments came fro Arsenal’s chairman Hill-Wood who said, that Kroenke knows “sweet FA about our football” and a claim that “we don’t want his sort” at the club. This is despite the fact that Arsenal had entered into a co-operation agreement with Kroenke’s MSL team Colorado Rapids.

It soon be came apparent that the board woudl not listen to Kroenke and that Kroenke did not have the money to buy out David Dein’s stake in the club. In August 2007, Dein sold his stake to Alisher Usamov’s company Red and White Holdings Limited. Dein was appointed managing director of the new company. Red and White Holdings has since rasied it’s stake to 24.14% and is now the largets shareholder.

Having seen their nemesis move into a position to buy the club, the directors of Arsenal have agreed not to sell their shares until October 2010, furthermore in a complete volte face, the board and Hill-Wood in particular are making overtures to Kroenke, who is now be welcomed with open arms by his former critics.

In further developments, Arsenal’s Managing Director, Keith Edelman, recently left the club under a cloud. It is widely believed that it was Edelman who was the catalyst for Dein leaving the club and was also instrumental in imposing a strict wage structure at the club. A structure that has caused much anguish over the last couple of seasons with Hleb, Adebayor, Flamini and van Persie amongst some of the players who are not content with the wages Arsenal are offering in comparison with other clubs nor with Arsenal’s new income streams at the Emirates.

Usmanov has made it clear that he has the finances to buy the club, he is worth £4 billion. He has recently made overtures to Lady Nina Bracewell-Smith to acqurie her shares and thus enable him to launch a takeover for the club.

The question Arsenal fans are asking is should Usmanov take over Arsenal with Dein at the helm or do we continue with the current board and set-up?

The current board have led us to a new stadium and sound financial footing, but do they have the ability to take us to next level? We have no managing director, though the board have stated we will have someone appointed in the next month or two. What does this all mean? Well in the past Dein took care of all the transfer and wage negotiations, transfers seemed to happen more smoothly and we never had major issues over contracts and wages. Are the current board prepared to relax the wage structure at the club to ensure that the likes of van Persie and Fabregas stay at Arsenal, are will they act like ostriches and stick their heads in the sand and ignore the realities of football in the 21st century?
When we look at the current board composition, what do we see? Danny Fiszman the main shareholder, is a tax exile, he spends little time in the UK and does not have day to day involvement with the operating of the club. The rest of the board consist of small shareholders who owe the positions due their families’ heritage and past ownership of the club. Is this really a right make-up of a board of a company with a £200M turnover never mind a football club with all the other complications?

What is Alisher Usmanov bought the club, what would that mean? THe first issue is will the borrowings of Red and White Holdings be loaded onto the club in the way that the Glazers and Hicks and Gillet have done at Manchester United and Liverpool? If this is the case it will be a total disaster for Arsenal. The club will be saddled with £600M of additional debt, that will simply cripple Arsenal. But will someone like Dein allow this to happen to his beloved Arsenal? I do not think Dein would allow this to happen.

Any prospective takeover would be sure to earn support from many Arsenal fans who, despite initial concern and resistance, believe the Russian’ billionaire’s considerable wealth would help consolidate the club and give Wenger valuable transfer funds to compete with the likes of Manchester United and Chelsea.

At the European Championships in Austria, Dein warned the club’s board that they are in danger of slipping out of the Champions League places unless they sell to Red & White, fearing failure to qualify for Europe’s elite club competition would threaten dire financial consequences.
Dein said: “It is a worry. I can see more investors coming in to football. I can see Liverpool being sold, Spurs being sold.
“We want to help Arsenal. He [Usmanov] would change the whole dynamic of the club. At Arsenal, something has to break.”

Dein has stated that unless Arsenal change tactics in terms of wages and transfers, then we will fall behind our rivals. We have seen this over the last two seasons, when Manchester United have bought £52M worth of players last season and Liverpool spent over £40M, we financed all of our purchases through disposals. Such a scenario cannot be allowed to continue and the board needs to come to terms with the new realities of 21st Century Premier League football.
With Dein back at the helm, he will free up finances for Arsene Wenger to acquire players like David Villa, Christian Zapatta and Miguel Velosso without it causing the consternation’s we are currently having. Dein will look at the finances and pay the likes of Adebayor, Fabregas and van Persie the going rates for players of their calibre.

The current board appear incapable of making the transition in terms of finances and mentality from a 38,000 Highbury to a 60,000 Emirates, they are still operating under the older Highbury budget contraints. This inability to change track is resulting in strains between the dug-out and the board.
Wenger has stated that wages are a problem. He says he has fought for the players, but obviously in the case of Flamini the board closed their ears. This explains why Hill-Wood will come out annually and pronounce we will not break the structure for any player.

Many former Arsenal players are not happy with the current situation. Arsenal legend Ian Wright constantly questions Arsenal’s transfer and wage strategy on his radio show.

Former Arsenal captain Frank McLintock has been critical of the current board and their tactics and in a recent interview said, “There is a danger that the supporters could get impatient and frustrated.”
“I can’t see Arsenal winning trophies until they change their approach to transfers. It’s difficult for supporters to come to terms with paying out so much and yet seeing so little spent in the transfer market.”

The board must realise that for Arsenal to compete with Europe’s top clubs and to attract and keep the best players, they must stop paying lip service in terms of statements to the press about money available and start demonstrating to the fans that we can compete by buying the best players and paying our players the wages they deserve. The clubs finances are sound and the club can afford to pay more without endangering the future of the club. Failing the above, they should allow someone else to takeover at the helm of the club and there is nobody better than David Dein to take the club on and forward. He would allow Wenger to buy the players he wants and to ensure that players are paid the correct wages to keep them at the club.

Failure to change will see Arsenal lose it talent year after year, players are not prepared to play for a team that does not reward them financially nor win anything year after year. Already Fabregas has drawn the line in the sand to state that not winnign the title for four years in a row is hard for him to accept, especially if Real Madrid come calling.