Usmanov Rescues Arsenal From The Precipice

By Kevin Whitcher

Online Ed: ‘I will never sell to Kroenke’ statement provides glimmer in the darkness

Firstly, let’s try and understand what the reasoning would have been in Stan Kroenke making an offer to buy Alisher Usmanov’s 30% shareholding in Arsenal, media reports of which led to Usmanov releasing a statement yesterday afternoon. It would have been to take 100% control of the club and compulsorily buy out the remaining small shareholders. But with what intention? Why bother? Because currently, Usmanov’s blocking stake prevents Kroenke doing whatever he would like to do with Arsenal.

October 2007 - How times change

We know Kroenke is not particularly interested in Arsenal as a sporting concern, in terms of the club’s ambitions. As a consequence if you were to think about backing Arsenal to win the Premier League using, for example, the sportsbetting mobile app, you’d get pretty long odds. For the majority owner, it’s a good business investment. However, he has previously expressed his admiration for what the Glazers achieved at Manchester United, and saw no harm in their leveraging of the club to pay for their purchase of it. Effectively, United profits over succeeding years helped to pay for it to be bought out by the Americans by being used to repay the interest on the loans required.

Kroenke said of Malcolm Glazer: “He took money out of the club. So what? Jerry Buss [the owner of the Los Angeles Lakers] takes money out of the club. A lot of owners in the US do. No-one ever says anything about it.” Kroenke may have indicated back in 2011 that he would not leverage Arsenal (although there is no direct quote on that), however times and circumstances can change intentions. And once in complete control, Silent Stan can pretty much do what he likes without having to answer to anyone. When he made his offer to buy the shares that bought him to his position as majority owner of Arsenal, he stated a commitment to ongoing dialogue with supporters groups. He has never met one since, in spite of being challenged on this at one subsequent AGM. So who knows what his word is worth?

The reality is that his moving of the St Louis Rams to Los Angeles will cost an estimated $2 billion. And the struggle to sell seats in their temporary home at the Los Angeles Memorial Coliseum (main venue for the 1984 Olympics) - the stadium was half empty for their opening game this season – does not augur well. The new stadium is not scheduled to be completed until 2020 and Kroenke will have to raise the funds to pay for it. Given he has rebutted offers of £2 billion for his Arsenal shareholding, it would be convenient if he did buy Usmanov out and thus use the club as collateral for a loan to complete the building of the Rams’ new home.

And what would that mean for Arsenal? At United, the club did not suffer as much as feared, because their income was so huge they could cover the interest payments. But the Glazers only secured loans of between £265 million and £275 million against Manchester United's assets. Kroenke would in all likelihood put Arsenal in hock far deeper than that. Additionally, because they had such a significant annual income, United could still buy talent. When they won the Premier League in 2009, they could call upon attacking options that included Ronaldo, Rooney, Tevez and Berbatov. The latter two were bought after the Glazers had put the club in debt and neither came cheap. And of course, they were managed by a serial winner, willing to adapt his methods, change his coaching staff and move underperforming players on quickly when things were not working.

The prognosis for Arsenal would be a return to the earlier years of the Emirates era, in terms of the manager balancing the books in the transfer market. Perhaps it was significant that the club ended the last window with close to £30 million profit in their dealings, with the last minute attempt to secure Thomas Lemar almost certainly doomed to failure, given the player was on international duty preparing to play on the evening the window closed. And for the scenario of constricted financial budgeting, Arsene Wenger is the perfect manager. He can keep the team in the Premier League (with its guaranteed gravy train of broadcast income) whilst developing enough players to sell on at healthy prices to ensure net profit in the transfer windows. Wenger is not so obsessed with winning that he would demand funds to buy players, as his great love is developing footballers playing in an entertaining style. And the style of play is a more important principle to him than winning whatever it takes.

Certainly matchday income would continue to decline, and the gap in sponsorship revenue between Arsenal and the more successful clubs would grow, but as a viable business – which is Kroenke’s main concern – as long as the club remain in the Premier League, they would remain in rude health.

For those that doubt this scenario, you simply have to wonder why Kroenke would be willing to stump up over £500 million to buy Usmanov out at a time when he needs to raise funding? I am struggling to work out any other reason than using Arsenal to raise cash for the Los Angeles stadium build, but I am open to suggestions. Perhaps the move is a final gambit, an attempt to exhaust his options before being forced to sell up himself due to his commitments elsewhere.

Usmanov has stated he is not looking to sell, although he would consider a change of heart if he could sell to someone with the same philosophy for the club as his and the majority of fans – the pursuit of sporting glory. That opens the way for someone with different priorities to Stan Kroenke to take complete control of the club, assuming Kroenke would sell. There have been other bidders apart from Usmanov for Kroenke’s stake, so if the American is in need of funds, maybe, he might sell up. And if it is a party that is not interested in making profit from the club, they would not necessarily even need to buy Usmanov out.

One things looks certain. The enmity between Kroenke and Usmanov runs so deep that the latter can afford not to sell Arsenal to the LA Rams’ owner lock, stock and barrel. And that can only be a good thing.

A final thought. Remember that banner that read ‘Love Arsenal, Hate Usmanov / Sod off Jabba’ in October 2007? A decade on and now we’re seeing ‘Love Usmanov’ tweets. Who’d have thought it?

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5th October 2017 07:41:19


Comments and Reaction

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markymark  8:25am 5th Oct 2017

Good article Kevin. My view prior to this was he was going to attempt to buy out to then potentially hawk it out to bidders but yout opinion makes sense as well. Stan has a wall of money but his business model of shopping malls and his wife’s acres of retail space at Walmart is being severely impacted by Amazon hence 150 store closures of Walmart. He may need to sell to move on. However he’ll attempt to do it from a position of strength. - Post No. 110140

Moscowgooner  9:39am 5th Oct 2017

It's a game of poker here. First hand to Usmanov. Well-played. My hope is that he can now prise Stan's claws off the club by presenting him with an offer too good to refuse - given his need to support the Rams. As far as NFL attendances are concerned; do they really matter? I guess the NFL's 68,000 average will take a huge dent from the Rams playing in front of 35,000 (and the Chargers in front of 25,000), but I assume the reason for moving to LA was to sustain tumbling TV viewership not to have more people actually in the stadium(?) There is a parallel with the Premiership... Anyway, all power to Usmanov. I hope he wins! - Post No. 110141

Bard  9:55am 5th Oct 2017

Interesting Kev we just have to hope that Kroenke is in the s*** over in the US and he will sell if can't buy up Arsenal to leverage it. Its a long shot but the better outcome. Who would have thought we would have supported Usmanov. - Post No. 110142

Exeter Ex  11:45am 5th Oct 2017

The big hope then must be Kroenke has to sell for the reasons you and others in the comments say to an owner of ambition, who would therefore as a matter of priority get rid of Wenger. What does Wenger's 'development' of players actually amount to? We know he doesn't work on their weaknesses or even like to hear them mentioned. Looks like just throw them in at the deep end and they sink or swim. - Post No. 110143

Yes its Ron  14:31pm 5th Oct 2017

I think the logic behind buying out AU is sound for SK. Its speculating to accumulate. I think SK will sell and sooner than we think. If he can sell as a sole shareholder and with the club more or less debt free at the point of sale, he ll recover his cost of buying out AU. The value of the club will heighten considerably. I'm not convinced that AU is any more ambitious than SK. We only have his occasional protestations to show and those are only made to ingratiate himself with the fans. AU has never once said anything to make us think hed come in and effect a revolution and has never as much as hinted that he thinks a change of Coach is needed. - Post No. 110144

mbg  15:06pm 5th Oct 2017

And also at United they didn't suffer as much as feared, or regress any, because they had a proper manager (and fans)who was/were ambitious and knew what he was doing and was a winner, unlike the old past it ambitionless fraud (and fans)we have. wenger out, Usmanov in. - Post No. 110145

markymark  17:41pm 5th Oct 2017

Ron - I think a new owner/s might turn Wengo into a Bobby Charlton like figure and put him on the board. Though Dangote has said he would sack him. - Post No. 110146

CORNISH GOONER  19:30pm 5th Oct 2017

Hope supporters will now concentrate their fire on Wiggy by any means possible because, realistically, his departure is the only way we will ever be rid of Monsieur Hulot. Depressing to be reminded on ANR how Pep was all lined up to take over from our Egomaniac - but, of course, Hulot changed his mind. I'm so pissed of with selfish billionaires, the Media, unambitious, lousy 'managers" & overpaid, very average footballers - a pox on all of 'em!! Good article though! - Post No. 110148

mbg  19:35pm 5th Oct 2017

I wonder what those dudes with the banner think today ? idiots, no doubt listening to all the spin from the kroenke, wenger, spin department and the anti Usmanov brigade at the time, i'm sure it hasn't seen the light of day for a long long time just like all their other so called big unfurling's. wenger out Usmanov in. - Post No. 110149

markymark  22:56pm 5th Oct 2017

I saw this on the wall behind Theresa May B ad ar Is A Co c k e - Post No. 110150

Bard  9:47am 6th Oct 2017

I don't think we should read too much into what Usmanov has said. Its all spin to avoid rocking the boat. There is no upside to dissing Wenger right now. With the amount of money sloshing around ( and its only going to get bigger) I fail to see how Stan will sell unless he's in the brown stuff back in the US. It makes sense that he wants to use Arsenal ( a relative blue chip in the world of football) to leverage money for other projects like the Rams. Alternatively why would Usmanov tie up so much dosh for so long if he didn't have some hope ( and inside knowledge) of buying Stan out. I agree that outside the world of football Wenger is seen as a safe pair of hands so he comes as a package. The problem is that we are going backwards and can't even guarantee CL football, so our value will diminish. Whoever comes after Wenger will have a hell of a job to as the club is a mess from top to bottom. - Post No. 110151

Andrew  9:58am 6th Oct 2017

I don't know if anyone's got the facts on Stan's stadium finances, but he may not be paying for the whole thing. Take a look at this video https://youtu.be/xcwJt4bcnXs about how stadiums are paid for in the US. Try to imagine Islington Council agreeing to pay for a fishtank and a holographic projector that hasn't been invented yet! - Post No. 110152

Yes its Ron  10:28am 6th Oct 2017

Marky - i agree with you. AW will go on the Board. - Post No. 110153

Yes its Ron  11:26am 6th Oct 2017

Bard - AU probably does hold ideas on control but by holding the shares he does, he can pi-s SK off. Thats good enough reason for these type of people. Reality is that if the Board wasn't so childish and impotent AU should be on the Board. - Post No. 110154

The Man From UNCLE  12:44pm 6th Oct 2017

I just read a really good book which I'd recommend to any American Football fan "Just Win Baby" by Glenn Dickey. The Raiders had a similar problem when Al Davis moved them from Oakland (where they sold out a 50,000 stadium every season) to LA, the Coliseum is so huge that even a 70,000 crowd looks small, and the fans were quick to turn on the team when things went bad. At the moment the Chargers, having moved from San Diego to LA, are even worse off playing in a 30,000 seat college stadium with their own fans outnumbered by the visitors! The idea is that come 2020 the Chargers and Rams share the new stadium. Mr Waverley couldn't understand why last year there were no NFL teams in LA and this year there are two. It took all my secret agent talents to carefully explain to him that it's all for the love of money, as the O'Jays sang once. Actually for anyone interested in US sports the current situation in LA is well worth reading up on. - Post No. 110155

peter wain  13:29pm 6th Oct 2017

I do not see it changing that much as we do not spend all of the money we have anyway. Next window we will get more in than we pay out and next summer it is free transfer time. The big question is can we fill our subs bench next year. - Post No. 110156

mbg  14:02pm 6th Oct 2017

Bard, and to think all the WOB used to hear from AKB wengerites was,(long defunct now, lol) be careful what you wish for, as if it was going to get bad/or worse if the weasel left or was forced out, that/it has happened with him still here, LOL, idiots, you couldn't make it up. We want wenger out. - Post No. 110157

Bard  14:32pm 6th Oct 2017

Peter Wain; yes next year could be very interesting all round whether Wenger stays or goes. I believe Danny and Ramsey are then into the last year of their contracts. Bellerin wanted to go this year and one suspects a deal was done along the lines of one more year and then you can go. Sanchez, Ozil, Mustafi offski. Per retired. Cech nearly 90yo. Wally will be on his way. Given it usually takes Arsenal several years to complete one deal I would hazard a guess that Wrighty and Adams might be back. - Post No. 110158

RobG  14:59pm 7th Oct 2017

Nice piece Kev. To this question - So who knows what his word is worth? - there is a simple answer. Absolutely nothing. Not a thing. - Post No. 110169

Alsace  15:34pm 7th Oct 2017

Wouldn't it be hugely funny if somehow we could make the value of AFC just enough to make it not worth tearing down and selling for the land value but not really worth very much to its owners. In other words destroy the TV deal and cut off the global interest. The object of this selfishness would be to restore our values to the club and to expel the unwelcome consequences of foreign management ownership and playing staff. Players who couldn't care less. A manager for whom the club exists in lieu of a retirement plan, and a hostile ownership. What about selling the soulless bowl, buying the flats and restoring our stadium as well. Perfect. - Post No. 110170

Jason  17:25pm 10th Oct 2017

I think that the danger signs are for all to see should Kroenke gain sole ownership of Arsenal. Its about time our efforts went in to trying to get rid of Kroenke before Wenger. Getting rid of Wenger before Kroenke is like cutting the weeds top off and leaving the root. Kroenke gone and Wenger would follow. - Post No. 110190

mbg  21:16pm 11th Oct 2017

Jason, don't know if that's a wind up or not, but very funny. wenger out now. - Post No. 110194

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