Trouble Brewing in the Arsenal Takeover Bid?

April 12, 2011

Greetings IJSF blog readers.  Just a bit of background before I start this post.  I am a big supporters of Arsenal, and have been for many years now (maybe it has something to do with Arsene Wenger have a degree in Economics).  Additionally, I also live in Columbia, Missouri which just happens to be the home of Stanley Kroenke, the most recent foreign investor attempting a takeover bid of another top Premier League club in England.

Yesterday news began to sprout around the sport websites that Stanley Kroenke was moving forward in an attempt to takeover Arsenal Football Club.  In moving to buy more shares, Kroenke hit the 62.89% ownership of the club mark, meaning that he now has the controlling stake of the club, and must make a cash offer to all the remaining share holders.  Kroenke’s takeover bid has hit a bit of a snag, as Russian oligarch Alisher Usmanov has refused to sell Kroenke his 27% stake of the club.  Rather, on the SkySports blog they are reporting that Mr. Usmanov tried to make a counter against Kroenke’s takeover, supposedly offering Lady Nina Bracewell-Smith a £13,000 pound per share offer, more than what she had agreed to with Kroenke for her shares.  All of that said, Lady Bracewell-Smith refused the offer, as she already had a full agreement with Mr. Kroenke.

With news of Usmanov’s defiance, the Arsenal Supporters Trust, a group of about 1,800 supporters announced that they would also not be selling the few shares of Arsenal which they held.

What does this all really mean?

In order from Kroenke to fully takeover the club, he needs to hold 90% of the clubs shares, and at that point it would force all the remaining shareholders to sell their stake to Kroenke.  However, with Usmanov sitting on 27% and trying to fight back, it seems that this is not likely to happen.  Usmanov’s hopes of countering Kroenke, and having himself takeover seem an even more unlikely happening, so Arsenal may now be facing a battle of two owners causing headaches for each other.  Kroenke’s offer for the remaining shares would have made Usmanov a nice profit, but from the look of things, it looks like Usmanov may be digging in for the long-run.

This whole episode does bring up two other interesting points.

First, many seem worried about club debts, and the use of Premier League clubs as debt servicing for rich foreign owners, as has been done by Malcolm Glazer and Manchester United.  Kroenke in his bid made sure to note that this takeover was not going to be done by taking out loans, but that he would be making cash offers for the remaining stakes, and that Arsenal would not be saddled with any of the debt.  Still, it seems that many really reject the idea of Kroenke fully taking over Arsenal, and that leads into my second point.  Currently 10 of 20 Premier League clubs are fully owned or have a majority of their stake owned by foreign investors.  Notably all of the “big” clubs have been taken over by foreign investment, with the top 4 teams in the table (Man U, Arsenal, Chelsea & Man City) all being owned by foreigners.  While many will probably not care as long as their team is doing well, there are some who are probably most likely worried about non-UK owners slowly taking over more and more of the most popular league in the world.


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