As the dust settles on Stan Kroenke's offer to buy the holdings of both Lady Nina Bracewell-Smith (16.1% of the issued share capital) and Danny Fiszman (15.9% of the issued share capital), few details of the deal seem particularly clear, other than the assurance that the club will stay publicly listed. People will, in theory, still be able to buy and sell Arsenal shares (if they can wrestle them out of Stan Kroenke's clutches that is).
Also, the status quo - i.e. the transfer policy and the people at the head of the boardroom table; Chairman Peter Hill-Wood and CEO Ivan Gazidis - will essentially stay the same. The new owner, for what it’s worth, tells us that "Arsenal are a fantastic club with a special history and tradition and a wonderful manager in Arsene Wenger. We intend to build on this rich heritage and take the club to new success.”
It all sounds pretty agreeable as take-overs go, particularly to the fans, insofar as on the face of it, nothing on the pitch or in the dugout will change - Wenger will still be the boss, his transfer policy won't change, and neither will the Gunners staunch dedication to blooding young talent rather than indulging in quick-fix, bank-breaking marquee signings that their colleagues at Chelsea and Manchester City might occasionally dabble in.
But is any of the rhetoric surrounding Arsenal's "Business as Usual" take-over by "Silent Stan“ really true? From what we hear, if Carlsberg did take-overs, this would be it, right?
To set the scene, the stance adopted by Peter Hill-Wood, Arsenal's Chairman, has changed significantly in the four years since Kroenke first invested in Arsenal. Then he said that Kroenke knew "sweet FA" about football and that Arsenal didn't "Want his type" in the boardroom. Now, he says "Mr Kroenke has shown himself to be a man who values and respects the history and traditions of this very special club we cherish”. Well a man can change his mind can't he? And £4,700,000 for Hill-Wood's remaining 400 shares sure helps too I would have thought.
Most of the sound-bytes coming out of the Kroenke camp, as well as Hill-Wood's, refer to the "ethos" and "heritage" of Arsenal, which will remain going forward, despite the custodianship of the club transferring to another American Billionaire, much in the way the ownership of Manchester United, Aston Villa and Liverpool (in the latter's case twice over) has gone.
Notwithstanding Liverpool's second American owners led by John Henry, who in January bought Luis Suarez and Andy Carroll for a combined total of £60 million, trans-Atlantic owners have struggled to win over the fans, and their insistence on keeping a low profile hardly helps either. Gillet and Hicks were run out of town, and at Old Trafford, the Glazers have saddled one of the biggest clubs in the world with a staggering amount of debt secured against the club and its assets, that their huge incomings currently struggle to cover.
But Kroenke won't do that to Arsenal, surely? Arsenal are a club of morals and principles. Well, his bank account is based in Delaware, a tax haven in the mould of my home island of Jersey. Jersey is also home to the Sunderland owners’ bank account by the way. Financial regulation in Delaware is renowned for being “cloudy” at best, so it will be difficult for the Premier League to trace exactly where the £337 million Kroenke stumps up to buy the shares from Bracewell-Smith, Hill-Wood and Danny Fiszman comes from, and whether secured finance has been used to finance the purchase in some way.
Talk of structured finance and secured debt immediately brings Leeds United to mind. Kroenke has insisted Arsenal will not be securitised (used as security) to raise debt, or saddled with debt going forward, but not knowing where his cash is coming from for this transaction, it has to be a worry. In Leeds’ case, they securitised their club on the basis that their future earnings would remain at the level they were at whilst the club was in the Champions League. When they failed to qualify for Europe’s premier club competition, they could no longer service their debt and had to sell all of their players to make up the difference - hence their tumble into League One a few years later.
If Kroenke doesn’t use secured debt, and he doesn’t have £337 million floating around in his Delaware Current Account, he might take money out of one of his other businesses, or at least secure the debt on the Colorado Rapids (his MLS team) or the St Louis Rams (his NFL team) for example. If he does this, he will have adhered to not leveraging Arsenal's balance sheet, but if you open five credit cards and max one out, the chances are you'll need to take cash out or pay for things from your other cards before you can get rid of your debt, right? If Kroenke’s other projects slow up financially, or if he wants to inject cash into Arsenal and has to take out more loans to foot the bill, it will be his whole portfolio of assets that struggles long-term – Arsenal will not be immune.
This is all worst case scenario, and the likelihood is it won't come to this – Kroenke is a shrewd businessman after all – but weren't Peter Ridsdale, George Gillet and Tom Hicks considered shrewd once upon a time?
And so to business on the pitch. Arsenal will be financially sound as long as they're reaching the knock-out stages of the Champions League and challenging for the Premier League every season. But experience tells us that multi-billionaires don’t spend the thick end of £700 million acquiring a new football team just to make up the numbers. Wenger's superb timing, saying at the weekend that he'd happily finish 2nd in the league for the next 20 years might have fitted in when Hill-Wood wrote the cheques, but Kroenke will doubtless want more. Money is all that drives these guys, and the more you win on the pitch, the more you win off it.
Nurturing talent and playing the beautiful game - two of the maxims most synonymous with Arsenal - whilst agreeable and aesthetically pleasing, have not brought Arsenal any recent success on the pitch. Only time will tell if this will satisfy the new head of Arsenal’s boardroom.
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