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Technical failures cast shadow over payment to Kronke’s company

By Tony Attwood

According to media reports Arsenal’s latest accounts show that KSE LLC has been paid £3m by Arsenal.   The media are worked up about this because the company is owned by Arsenal’s majority shareholder, Stan Kroenke.

The money has been paid for strategic and advisory services which relate to Arsenal’s media department which earns money for the club by selling a weekly three-hour programme to the international market.

Matters are made more sensitive because Kroenke has been reported as saying, “We have a whole different philosophy I think in the States, maybe, but I think it’s time for everybody to think a little bit. I think they ought to think about who invests in these clubs. Glazer took money out of the club [Man U]. So what?  Jerry Buss [the LA Lakers owner] takes money out of his club. A lot of owners in the US do. No one ever says anything about it.”

Of course the media has to screw the news considerably to make it fit their own agenda, repeating the notion that Arsenal have “notoriously expensive tickets in the Premier League” (the Guardian), when in fact Arsenal’s lower cost seats are among the cheapest in the Premier League (which they always forget to say).  Arsenal also stand alone with their £10 tickets for the League Cup matches.

But there is a problem with any payment for anything technological at Arsenal at the moment, because of the seemingly intractable problems with technology at the club.

At the very first match at the Emirates the gates famously would not unlock to let us all in, leaving a fairly large number of people outside until way past the normal opening time.

That problem was of course a long time ago and was fixed, but others keep popping up.  For one season it was utterly impossible to hear  anything on the public address system upstairs on the north bank.   Then we had the farce of the speeches at the opening ceremony of the statues where great crowds gathered to hear Bergkamp and others – and not a single word could be heard.   (You might recall Walter’s transcription of the speeches given – a masterpiece of a report).

All of last season it was impossible to hear any public address announcement in the lower tier of the north bank.  And amazingly that problem has not been fixed this year.

Indeed that is not a matter of convenience.  I suspect it is a condition of the safety certificate of the stadium that the PA system works and can be heard.  If so, Arsenal should not be admitting crowds until the problem is fixed.

Now we have the problems with the scoreboards.   While the game against Tottenham was 0-0 one of the scoreboards showed Tottenham 0-1 up.  Then that seemed to be fixed – but the other scoreboard went wrong.

And this didn’t happen just at this game – it was the same for our previous league match as well.

These matters may all take time to sort – but just leaving them unsorted suggests an attitude by the club that the niceties of watching football are just not relevant to the club.   Yes, let’s get Liam Brady back so he can say a word or two, but who cares if a huge chunk of the crowd can’t hear him?

Well, actually, quite a few people do.

Of course I have no idea whether Mr Kronke’s company has done £3m worth of work for Arsenal – I imagine he has, because otherwise the transaction will be counter to our tax laws, and I can’t imagine Arsenal will be involved in such activity.  If they are then Revenue and Customs will soon be on the case.  You can’t just go round making up bills as a way of sneaking money in and out of companies.

But it seems so poor of a club of the stature of Arsenal not to be able to get details like having properly working public address and scoreboard systems right.  Especially when money for media services is pouring out of the club.   There is media in the club too, and it affects supporters.

——————–

There’s the usual index to past Arsenal events on this day and links to recent articles on the home page.

 

23 comments to Technical failures cast shadow over payment to Kronke’s company

  • DavidHillier'ssuitcase

    Well said.

  • porter

    North Bank lower Block 10 , the speakers haven’t worked since the day we moved in.

  • Andrew

    Let’s get this clear. The only reason Kroenke has not taken dividends out of the club is because he needs Alisher Usmanov’s ok to do so. So he is going to start drip-feeding profit in any way he thinks he can get away with. The man did not buy the shares he has in Arsenal because he gives a damn about football. He bought it as a business investment and that is how he will treat it. Hence the unnecessary raise in ticket prices last summer (and expect a similar one next year). Kroenke actually wanted to make bigger increases but was talked out of it by his fellow directors. That the club have so much money in the bank indicates that prices did not go up because they needed to, but because the club knew that there was extra money enough fans would be prepared to pay.Unfortunately, for a good number of season ticket holders, Arsenal matches are like an addictive drug. They will pay whatever they are asked. Until enough of us ditch the habit and refuse to pay the prices, they will continue to rise. Are you going to give up your season ticket? Some have, whilst some simply rent theirs out waiting for the return of better days (although the prices won’t be coming down as long as they continue to buy them).Sadly, football supporters are an apathetic bunch for the most part, and the supporters organisations at Arsenal have had difficulty organising direct meaningful action, either through an unwillingness to do so, or a lack of a genuine strategy in terms of what supporters can meaningfully do to protest, such as boycotting a particular match or chanting in unison throughout the stadium. I think the only likely source of genuine organised protest is likely to come from the BSM in tandem with the Arsenal Supporters Trust, the two most disaffected organisations. The club have withdrawn their supports for the Trust’s fanshare movement, which will mean it has to fold. That is a clear indication that Stan Kroenke wants to cut out other shareholders rather than encourage fan ownership. AISA do not want to rock the boat and are reluctant to criticize the club whilst REDaction’s agenda is getting behind the team in the stadium rather than creating a poisonous atmosphere, which is probably what needs to happen, although they are sympathetic to moves that will keep prices at an affordable level. Let’s see what the supporters groups can come up with in terms of a strategy to influence the club not to raise prices again for 2015/16.

  • porter

    Oh can anyone explain this new licensing system that meant all the bars were closed after the game yesterday not only for alcohol but light refreshment too. This meant that those that normally stay left at the same time to go past a closed Arsenal tube station .Surprisingly the barriers were still in place tripping people that were in the slow moving parade along to Gillespie road made worse by the parking of a lorry that carries the barriers and an Ice Cream van narrowing the gap to about 10 foot. I’m sure that our local force do not suffer from joined up thinking.

  • TommieGun

    Tony I am very sorry but for the first time I think you got it completly wrong – and I really, really want to believe that’s the case.

    I think that whether Kroenke’s company took out 3 M out of the club is an issue. It’s an issue that stands by itself, and in a site like UA, which goes deeply into financials and spending and practically wrote on its flag “we delve into the small details” – it should be a topic that must be discussed. Is it portrayed failry by the media? Do we have lower cost seats? Maybe. But it doesn’t change the fact that our majority shareholder is taking away 3 M out of the club, for some services that no one really knows what they are. From what you wrote – neither do you.

    Sadly, in my line of work, “cousulting services”, “strategic services” and other obscure terms, are EXACTLY the terms used by controlling shareholders to handily shave away profits from companies. It is very, very common, and sadly, there is not a lot people can do about it. If the board of directors sanctions those transactions (as transactions involving interested parties) – they are kosher. Smelly, but kosher nontheless.

    In publicly traded companies these arrangements must be reported to the relevant governing body (SEC in the US, the FSA in the UK, etc.), together with the exact relationship between the company which provide the consulting services and the company receiving them. So the issue is not really a tax issue – it’s a way for a controlling shareholder to get paid.

    So for UA to write an article which involves a (very) big issue in my opinion – and to mix it up with things like the PA not working, or the turnstiles not working, or the scoreboards not working – is, for the best case, not giving the right focus for a VERY important issue, and for the worst case – smokescreening deliberatly on something which in my humble opinion is hugely important. Much more than the scoreboard malfunction.

    I’d loathe to think it’s the second option.

    If our majority shareholder takes away 3 M per year, it’s his right. If he said that he thinks it’s ok – makes it all the better. I’m all for transperacy. However, let us not kid ourselves – if he is here for the money, I want to know about it. That’s all. And I don’t want anyone to try and divert me from this information.

  • blacksheep63

    Tony, I’m with Tommie Gun here. I see no good reason for silent Stan to take any money out of the club unless it is for services rendered. After all he is not putting money in (for spending on the team that is). I’m hopeful that it will all come out in the accounts.

    It annoys me that the PA still doesn’t work – I would like to here what AW says per match and what the likes of Liam Brady say at HT; why should I get an inferior experience to those upstairs?

    But I take issue with Andrew’s comments about supporters groups. BSM organized a frankly pathetic demo last year and what good did it do? And if AISA are too gentle then join in and help make it more vocal. Its committee is open to anyone so if you’ve got something to add come along and say it.

  • TommieGun

    @ Blacksheep, maybe I was misunderstood.

    I think that it’s every owner’s right to take away money from a business that he owns. It’s no shame to make money out of your investments. If some people see it differently they can demonstrate, stop buying tickets, make some noise. But in truth, we saw it happening in many occassions, it will matter very little.

    It might prove that the financial stability model is not just some idealistic, angelic feel-good thing for us gunners to be proud of, but rather a business decision. Which is also ok.

    My problem is the (apparent, and I apologize in advance if I’m wrong) attempt here at Untold, of all places, to try and stick it under the bed, brush it under the carpet, whatever.

    I just want the truth.

  • insideright

    The truth is that the money ‘taken out’ represents less than 1% of the Clubs turnover and in no way prevented it from operating at a high level in the transfer market, increasing salaries to an even more competitive level and making a profit into the bargain.
    I wouldn’t mind knowing exactly what services or expertise was bought and whether or not the tasks were put out to tender – but if I never found out then I wouldn’t lose any sleep over it.
    99.9% of fans have only an emotional investment in the Club (not a financial one) and while I agree with much of what Tony wrote it was from the point of view of a customer at the stadium rather than as a shareholder who has seen the value of his shares decline because of profligacy from the Board.
    My enjoyment and the value for money that I get are much more spoilt by time-wasting on the pitch than it is by this insignificant payment.
    What do we think of players agents fees?

  • Notoverthehill

    Tony, the Auditors are very strict with Related Parties Transactions.

    Is Tommie Gun, implying that the Auditors were duped?

    Objective of IAS 24
    The objective of IAS 24 is to ensure that an entity’s financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with such parties.

    I do not have a copy of the Final Accounts for 2013/3014.

    KSE UK Inc. was set up on 30th March 2007, by the Corporation Trust Company. File No 4326823.

    I would expect every entry made at Highbury House in London, to also appear automatically in the accounts of KSE UK Inc.

    There will be proof positive that the Related Party Transaction(s), were kosher.

  • Pete

    I think the £3mm on its own is not hugely significant. However, if it is a test run for something more substantial in the future then it is significant. I think it is important that full details of the services rendered are made available.

    I think Tony’s point is that if the related supplier is domiciled overseas (which if it is an LLC would be the case – although I haven’t checked the small print) then HMRC would be concerned that transfer pricing is at a fair price. This would be a classic way of moving profits, and hence taxes, offshore. Think Amazon, Starbucks etc. But, if as I suspect, KSE LLC is a US Corporation (probably Delaware) then there doesn’t seem a huge tax advantage to doing this?

    Andrew mixes some fair points with some ludicrous ones. If he is waiting for the “return of better days” he may have a long wait. We over-achieve under current management – the oilers have spent net half a billion each over the last decade or so – matching that spending would have an impact on ticket prices for sure! It just may not be the impact Andrew wants. And where is the evidence for his stated fact that the Directors talked Kroenke out of a higher price rise? And why does Kroenke need Usmanov’s approval to pay a dividend?

  • Mandy Dodd

    Pete, agree with you…..am a bit wary of Mr Kronke myself…..thin end of the wedge and all that. Keep being told he will never take money out of the club. Of course he has done nothing wrong….and it may be as This article says. Not sure what Kronkes long term aim is but I know one blogger who thinks it may be ultimately to do with arsenal broadband….leading to huge profits eventually over media rights but I know nothing of such things.
    I am not going to go into an anti Stan rant, don’t know enough about him…or his aims….not sure anyone does! In fairness to him, revenues have hugely increased under his watch, we are buying top players, hear sports science, medical and training facilities to be invested in as well. Wouldn’t have him down as a dream owner, that would probably be Dennis B..but as one poster on here said a while back….maybe the best,we can hope for is that he leaves us alone and let’s Ivan and Wenger get on with it.
    As for Andrew, not worth giving him the time of day. His post on this article Is lifted from the latest online Gooner article….starts around about paragraph 11 if you feel the need to bother reading the original. Sadly some….but of course not all of the critics on here….just not capable of articulating their own thoughts. Don’t say much for them. Copy a couple lines of what they write…put it into a search engine, always comes up as an article on Le Bridge or Online Looner. That is the intellectual capacity of many who challenge us on here. Sad.

  • Brickfields Gunners

    THE PASTOR’S CAT

    This particular story just made me laugh. Every time I think about it, the vision of that poor cat just amuses me to no end. Hope the story leaves a bright spot in your day. Whoever said the Creator doesn’t have a sense of humor?

    Dwight Nelson recently told a true story about the pastor of his church. He had a kitten that climbed up a tree in his backyard and then was afraid to come down. The pastor coaxed, offered warm milk, etc.

    The kitty would not come down. The tree was not sturdy enough to climb, so the pastor decided that if he tied a rope to his car and pulled it until the tree bent down, he could then reach up and get the kitten.

    That’s what he did, all the while checking his progress in the car. He then figured if he went just a little bit further, the tree would be bent sufficiently for him to reach the kitten. But as he moved the car a little further forward, the rope broke.

    The tree went ‘boing!’ and the kitten instantly sailed through the air – out of sight.

    The pastor felt terrible. He walked all over the neighborhood asking people if they’d seen a little kitten. No. Nobody had seen a stray kitten. So he prayed, ‘Lord, I just commit this kitten to your keeping,’ and went on about his business.

    A few days later he was at the grocery store, and met one of his church members. He happened to look into her shopping cart and was amazed to see cat food. This woman was a cat hater and everyone knew it, so he asked her, ‘Why are you buying cat food when you hate cats so much?’

    She replied, ‘You won’t believe this,’ and then told him how her little girl had been begging her for a cat, but she kept refusing. Then a few days before, the child had begged again, so the Mom finally told her little girl, ‘Well, if God gives you a cat, I’ll let you keep it.’ She told the pastor, ‘I watched my child go out in the yard, get on her knees, and ask God for a cat. And really, Pastor, you won’t believe this, but I saw it with my own eyes. A kitten suddenly came flying out of the blue sky, with its paws outspread, and landed right in front of her.’

    Never underestimate the Power of God and His unique sense of humor.
    Anyone can count the seeds in an apple; but only God can count the apples in a seed.

    GIVE ME A SENSE OF HUMOR, GOD GIVE ME THE GRACE TO SEE A JOKE TO GET SOME HUMOR OUT OF LIFE AND PASS IT ON TO OTHER FOLKS .
    AMEN !

  • WalterBroeckx

    Would it help if those sad AAAA people prayed for a little bit of happiness? 🙂
    Now that is thought. Instead of coming on Untold and moan, go outside, sit on your knees and pray for feeling happy. And even if it didn’t work, you still have left us alone in our happiness. 🙂

  • colario

    Mr. Kronke is the majority share holder of the club, does that automatically make him the owner of the club?

  • Brickfields Gunners

    @ Walter – Happiness , prayers and giving thanks ? Here’s a true and inspirational story .

    Old Guy And a Bucket of Shrimp…

    It happened every Friday evening, almost without fail, when the sun resembled a giant orange and was starting to dip into the blue ocean.

    Old Ed came strolling along the beach to his favorite pier. Clutched in his bony hand was a bucket of shrimp.
    Ed walks out to the end of the pier, where it seems he almost has the world to himself. The glow of the sun is a golden bronze now.

    Everybody’s gone, except for a few joggers on the beach. Standing out on the end of the pier, Ed is alone with his thoughts… and his bucket of shrimp.

    Before long, however, he is no longer alone. Up in the sky a thousand white dots come screeching and squawking, winging their way toward that lanky frame standing there on the end of the pier.

    Before long, dozens of seagulls have enveloped him, their wings fluttering and flapping wildly. Ed stands there tossing shrimp to the hungry birds.
    As he does, if you listen closely, you can hear him say with a smile, ‘Thank you. Thank you.’

    In a few short minutes the bucket is empty. But Ed doesn’t leave. He stands there lost in thought, as though transported to another time and place.

    When he finally turns around and begins to walk back toward the beach, a few of the birds hop along the pier with him until he gets to the stairs, and then they, too, fly away. And old Ed quietly makes his way down to the end of the beach and on home.

    If you were sitting there on the pier with your fishing line in the water, Ed might seem like ‘a funny old duck,’ as my dad used to say.

    Or, to onlookers, he’s just another old codger, lost in his own weird world, feeding the seagulls with a bucket full of shrimp.

    To the onlooker, rituals can look either very strange or very empty. They can seem altogether unimportant… maybe even a lot of nonsense.

    Old folks often do strange things, at least in the eyes of Boomers and Busters. Most of them would probably write Old Ed off, down there in Florida . That’s too bad. They’d do well to know him better.

    His full name: Eddie Rickenbacker. He was a famous hero in World War I, and then he was in WWII.
    On one of his flying missions across the Pacific, he and his seven-member crew went down. Miraculously, all of the men survived, crawled out of their plane, and climbed into a life raft.

    Captain Rickenbacker and his crew floated for days on the rough waters of the Pacific. They fought the sun. They fought sharks. Most of all, they fought hunger and thirst. By the eighth day their rations ran out. No food. No water.
    They were hundreds of miles from land and no one knew where they were or even if they were alive.
    Every day across America millions wondered and prayed that Eddie Rickenbacker might somehow be found alive.

    The men adrift needed a miracle. That afternoon they had a simple devotional service and prayed for a miracle.
    They tried to nap. Eddie leaned back and pulled his military cap over his nose.
    Time dragged on. All he could hear was the slap of the waves against the raft…

    Suddenly, Eddie felt something land on the top of his cap. It was a seagull!

    Old Ed would later describe how he sat perfectly still, planning his next move.
    With a flash of his hand and a squawk from the gull, he managed to grab it and wring its neck. He tore the feathers off, and he and his starving crew made a meal of it – a very slight meal for eight men.

    Then they used the intestines for bait. With it, they caught fish, which gave them food and more bait . . . and the cycle continued. With that simple survival technique, they were able to endure the rigors of the sea until they were found and rescued after 24 days at sea.

    Eddie Rickenbacker lived many years beyond that ordeal, but he never forgot the sacrifice of that first life-saving seagull… And he never stopped saying, ‘Thank you.’ That’s why almost every Friday night he would walk to the end of the pier with a bucket full of shrimp and a heart full of gratitude.
    Reference:(Max Lucado, “In The Eye of the Storm”, pp..221, 225-226)

    PS: Eddie Rickenbacker was the founder of Eastern Airlines. Before WWI he was race car driver. In WWI he was a pilot and became America ‘s first ace.
    In WWII he was an instructor and military adviser, and he flew missions with the combat pilots. Eddie Rickenbacker is a true American hero.

    And now you know another story about the trials and sacrifices that brave men have endured for your freedom.

    As you can see, I chose to pass it on. It is a great story that many don’t know…You’ve got to be careful with old guys,
    You just never know what they have done during their lifetime.
    In God We Trust!

  • Chapman's Ghost

    @Walter, you’re the type of person who’d be laughing at their own funeral. Would you be happy if Arsenal finished eighth or lower because Kronke started taking money out of the club? And poor old Wenger has to take all the stick as he tries to build a team on less and less finance? Not something I’d be happy about and I don’t see why people questioning Kronke’s motives are AAA or whatever you call them.

    Of course Kronke can do what he likes but if he starts being greedy and extracting big sums from the club then I’d hope that some might moan rather than just sit back and laugh about it.

  • Pete

    Tony – Mandy has done a good job outing some of the plagiarisers. Can we assume that you will block the offending posters?

    It is hard enough managing the frustration endured by a disappointing result without then having to wade through pages of knee-jerk sh*t from the inadequates…

  • nicky

    It’s been many years since I have understood a single announcement over a PA system, whether it be ‘plane, ship, football ground or church.
    But there is something gravely amiss if Arsenal FC cannot, IN 8 YEARS, sort out the problem at the Emirates.

  • WalterBroeckx

    Now that is a thought Chapman’s Ghost…

    I do admit I have stopped worrying about what might happen. Both in my personal life and when it comes to football.
    I have found out that no matter how much I worry about something it will not really change events I cannot change. So then why should I worry about it or about what might happen.
    Will we finish eight? If it happens, then I can worry about it. If it would happen would it be because Kroenke being paid 3M to his company? Or because of referees, injuries, bad luck, whatever other reason… then I will try to see why.

    I also once couldn’t sleep after problems or even after a defeat in a match. Guess what, it didn’t change the outcome if I stayed awake all night wondering how on earth we did miss all those chances and they scored from one counter.

    I now have reached the point in my life that I only want to enjoy all things and itself as long as possibly can. Well I have reached that a few years ago in fact. And since then I feel much better. And happier.

  • insideright

    Spot on Walter

  • Sammy The Snake

    Kronke would not spoil his reputation by taking a mere 3M out of the club. This is a very small amount in the world of billionaires like him.

    His payday will come on the day that he sells out, and until then he will stay very patient.

    Billionaires think big and long term.

  • ARSENAL 13

    Though I am not as much worried as some people about Kroenkes 3mil self payment….

    I wonder is it that simple. I have the same question as Colario has, does owning the majority shares make him the outright owner???…

    Isn’t he the majority holder in ARSENAL holding Plc which owns ARSENAL. Crap. Now I am confused….

  • bjtgooner

    @Brickfields

    I really enjoyed the story about the cat. Can we encourage the AAAAs to climb a tree…….