Finance & Business

Unrest in the luxury suite at Arsenal

ALTHOUGH some people believe Arsenal’s current ownership structure has given the club an air of respectability and a reputation for restraint, there is no doubt it has contributed to the North London institution falling behind many of its peers. Rightly or wrongly, Arsenal, despite their undoubted financial strength and ability to generate huge revenues, have been usurped by Chelsea and Manchester City domestically and, to some extent, by the likes of Paris Saint-Germain in Europe.

That does not make Arsenal wrong or misguided in choosing a very culturally divergent path to Chelsea or City, but as the structure and philosophy of the European game has evolved into a world of big corporate football, the club’s model has proved to be something of a hindrance.

At the same time, it has also been its salvation, for many people still respect the way Arsenal have run themselves in an era of gaudy excess. If they made a mistake, it was in keeping Arsene Wenger for too long, for conservatism in the boardroom demands that high levels of innovation are needed to extract the maximum from the club’s playing resources. But in staying stubbornly over-loyal to Wenger they lapsed into a decade or more of stagnation. Big enough to stay in the upper quartile, they just didn’t have the creativity to be sustainable contenders, even though many felt they knew the answer to the club’s malaise. Another few years and top six might well have become top eight. That would make Arsenal comparable to Everton and West Ham rather than Chelsea and Tottenham. After years of calling for change, it finally happened, with Wenger moving on and Unai Emery bringing a new dimension to the club. It has been a busy summer in Ashburton Grove and London Colney with more than £ 60 million spent on new recruits.

Arsenal transfer activity for last six seasons

  Exenditure
£m
Income on sales Net Biggest outlay
2017-18 104.3 118 +13.7 Pierre-Emerick Abameyang £56m
2016-17 87.9 7.5 -80.4 Shkodran Mustafa
£ 35m
2015-16 21.5 1.8 -20.7 Petr Cech £ 10m
2014-15 85.8 38.6 -47.2 Alexis Sanchez £ 30m
2013-14 42.5 10 -32.5 Mesut Özil £ 42.5
2012-13 47.2 47.4 +0.2 Santi Cazorla £ 15m

** Arsenal have spent £ 67.4 million in the close season of 2018-19

While fans have been frustrated by Arsenal’s decline on the field, the club’s financial position has been strong and the shareholders have been well served. Arsenal remain one of Europe’s top 10 clubs, but whether the current model will prevail is open for debate if the C-suite changes.

Divided boardrooms or ownership structures rarely benefit a club. Consider the Venables-Sugar story at Tottenham or Harding-Bates at Chelsea as just two examples where squabbles and power-plays got in the way. From the outside, Arsenal does not look like a club in any sort of crisis, but they have long resembled a club with a lot of unhappy followers pleading for another scrack at serious silverware. And there have been denied whispers that the Chairman wants a move, too.

Investors want a financially sound organisation in which to place their cash, supporters, invariably, want success and a little unpredictability to satisfy their cravings. The former rarely allow their heart to rule their head, the latter often fail to appreciate pragmatism. Ego-driven owners want success and a club that dances to their tune. By contrast patience has been the mantra at the Emirates in recent years.

Arsenal’s majority shareholder, Stan Kroenke, is not like Chelsea’s Roman Abramovich, City’s Sheikh Mansour or the Qatari backers of PSG. While these clubs profit from owners take no money out of the club, Arsenal are more akin to the US approach to sports ownership. Kroenke owns 67% of the club and, one assumes, would be happy to have all the cards stacked in his favour. He may get his wish if his long-time rival, and 30% Arsenal shareholder, Alisher Usmanov sells him his stake. Usmanov made no secret of his desire to become the major holder and made a $ 1.3 billion bid for Kroenke’s stake, only for Kroenke to refuse and make a reverse bid of £ 525 million to relieve the metals magnate of his own investment.

Now Usmanov has expressed an interest in disposing of his holding, perhaps for two reasons: he realises he cannot wrest control of the club from Kroenke; and the current environment in the UK for Russian business people is less attractive than it once was. Kroenke is the natural buyer for the 30% stake, but not everyone is enthused by the prospect of Arsenal becoming wholly-owned by a US-domiciled individual.

Arsenal’s revenue streams, 2012-2017

  Ranking Total Revenues £m Broad-casting Match-day

 

Commer-cial
2016-17 6 419 202 100 117
2015-16 7 350 144 100 107
2014-15 7 331 128 100 103
2013-14 8 301 123 100 77
2012-13 8 244 88 93 62

Source: Deloitte Football Money League

There’s another twist, however, in the form of Africa’s wealthiest man, Aliko Dangote, who wants to buy Arsenal. Dangote is a character and comes up with some ambitious schemes, including a $ 12 billion project  that will make Nigeria the largest exporter of petroleum projects in Africa. He’s planning a refinery that will process 650,000 barrels of oil a day, the biggest of its kind worldwide. He has his detractors, though, notably for his reputation for avoiding taxes by invoking a so-called “pioneer status”. According to Forbes, Dangote is the 100thrichest person on the planet, with a net worth of around $ 14 billion. He loves Arsenal and claims he will “go for it” in terms of acquiring the club. But as to the type of owner he would be should he be successful – he says he will bid for the club in 2020 after he has finished the refinery – he has openly commented he will involve himself in rebuilding the team.

Arsenal will, presumably, cost Dangote more than $ 2 billion if he does “go for it”, but that’s at today’s prices. In 2020, the goalposts may have moved and the Kroenke/Usmanov story will surely have progressed. If Dangote does arrive on the scene in two years’ time, though, Arsenal will become a very different club, presumably closer to the Abramovich model than the current structure. Is this what Arsenal fans really want given their historic criticism of the ways of Chelsea and others? Will/can the club “sell-out” to become another magnate’s plaything? And with Wenger now gone, will the Emirates narrative focus on owners and club grandees?

Over to you, Mr Emery, to provide some distraction.

Photo: PA

 

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