Something rotten in the state of Arsenal

When the junk press run almost identical stories twice you know there is something odd going on.

We saw it last season when the story went around that Arshavin was so unhappy with his Arsenal contract that he was going to re-neogiate straight away – and that this would bankrupt the club.  It was pathetic first time around, and doubly so next time, but that didn’t stop the papers from running the piece.

We also see it all the time with the Cesc to Barca story.  Some of that is of course just sour grapes from Barca – they hated the fact that we “stole” Cesc from them, and have waged a war against Arsenal ever since, ranging from “he’s not that great” through to feeding the Sun and Mirror so-called “translations” of his TV interviews in Spain which had nothing to do with what Cesc actually said.

But in the last few months the campaign has taken a more incidious turn with the story that Kronke has not paid for the shares in Arsenal he has bought.  The Times claims he owes other shareholders £50m.

Just to be clear, here’s the opening paragraph of the Times article

“STAN KROENKE still owes Arsenal board members £50m despite edging closer to taking full control of the club. The American billionaire last week moved a step nearer to owning 29.9% of the London club, which would force him to make a formal takeover bid. However, he has paid for only half his shares since making a £100m commitment to increase his stake from 12.38% to 28.3% last December.”

To understand what is going on, and to take a pot-shot at who the “insider” is who is leaking these stories, it is important to consider business transactions at the simplest level.

If my company wants to sell your company something, we would probably not ask for payment up front, but would instead arrange for payment by a set date – often 30 days after the deal is struck.   However that rule breaks down in some cases – and if I am anxious to make the sale, I might extend the deadline for payment by months and months.  Anything to get the deal.

Now why should anyone want to do that if selling Arsenal shares?

Let’s consider this scenario.  Mr A and Mr B both have lots of shares in a company.  Let’s say for the sake of argument Mr A has 29% and Mr B has 25%.  Both men are close to making a bid for the whole company.

Now let’s say that there are other shareholders who would very much prefer there to be no takeover – but if there is one, for Mr B to make the bid.

So they say to Mr B, “you buy some shares from each of us guys, and take yourself up to 29%.  If we see Mr A buying up the remaining shares he needs to trigger a takeover bid, we’ll quickly sell to you so you can get your bid in first.”

Mr B says, “But I can’t pay for the shares – I’d need to sell something else in my portfolio to be able to get these.”

To which the the friends say, “Don’t worry – pay us later.”

That scenario will make sure that if there is a takeover, there is only a friendly takeover.  But it raises two questions.

a) Would anyone “sell” shares without getting the money at once?

Yes, providing there are sub-clauses in the deal which allow a hand back after a certain date if the shares are not paid for, and which set the price of the share at the current market value or the value on the day payment is made, whichever is the greater.  Also yes, because these shares pay no dividend, and so only have value when sold, or when the club is taken over and starts paying out dividends.   There are of course City regs to stop some of this, but if the sale is handled through the Cayman Islands most of this can be circumvented easily.  (In fact you can change the ownership of a whole club in this way, as Leeds United have so aptly demonstrated).

b) Who would stir up all these rumours?

Let’s remember that we don’t know if the story about Kronke not having paid for his shares is true.  Given the accuracy level of reporting in the Times, probably not.  All I am saying above is that even if true there can be a very good explanation for the tactic.

But that doesn’t explain why someone should spill the story.

The source of the story is “someone close to the board”.  I can make some guesses and so can you, but to avoid writs for libel I would prefer not to have this done in print – and if you are commenting on this little piece I would ask you not to mention names there.   Personally I think the story is untrue, and therefore there is no mole, but others may choose to believe the gutter press.  You pays your money…

But IF the Times story is, for once, true, and IF the source is “someone close to the board”, then that person is trying to destabilize the club from within, presumably because of some perceived past insult, or a spat.

We must be very careful indeed at this point.  The club has done wonders in reforming many of its inner workings in the past two years, as well as delivering the most sensational team, which is like a younger version of the Invincibles.  But like Aleric at the Gates of Rome, the enemies could take us out at any time.

(c) Tony Attwood 2009

The book “Making the Arsenal” which tells the story of Arsenal’s last takeover, 100 years ago, is published on 30 October price £12.99 and will be available from our on line shop.  More details here shortly, but meanwhile you can read details of Arsenal’s life in 1909 in the daily blog on

15 Replies to “Something rotten in the state of Arsenal”

  1. Good article Tony.
    In an ideal world (yeah I still dream about it sometimes….a bit foolish aint it?)people in or around the board should all work together in the best intrest of the club.
    Helas, put 2 human beings in one room and you got the start of a dispute. So rich people are no better then people who don’t have money, one could say. Maybe worse ?
    In a way it makes me sad to know that not everyone at the top (or near the top) is working for the best of the club.
    One can only hope that they not damage our club in the long run just for their personal ambitions.
    Who is the good guy, who is the bad guy? Well I actually don’t know. I can not know what the real intentions are of those people. As a fan I have my thoughts on this and I would just ask those guys to settle and arrange what ever bussines they have and think about the best for ours and their club.
    Like Tony said at the end, just at the moment the team is really on the edge of great things, we (the fans) and the players can do without these boardroom back stabbers.
    Would it help if we kicked some asses ???

  2. A supremely rational read on the situation, Tony. As usual.

    Were I King of England, which admittedly would be an odd thing considering my family is from Armagh and Krakow, but were I King, instead of handing out KBE’s for good and heroic deeds I would rather publish an annual list of AAH’ers. These would be “awarded” to the worst Anti-Arsenal Hacks in journalism. I think the Times and Antony Kastrinakis at The Sun would be tops of the first list for generally horrendous hackery.

  3. There is a reason why treachery is seen as a heinous act and traitors are always abhorred. I believe that it remains the only crime that still carris the death penalty in the UK.

    Hubris is the usual reson for Empires crumbling.

  4. You have become essential reading, on all matters Arsenal & football, but especially on the financial matters combined with intrigue of the press.

    If the story is true, I would imagine that the current situation is by arrangement.

    The worry should it be true is , of course, that a Kroenke takeover would be financed in the Glazier fashion.

    Let’s hope that the status quo can be maintained for as long as possible with the club under multiple ownership.

  5. Gutter press or not but there certainly is some ‘argueing” going on in the board. The thing with the lady in the board, remember. This is a “fact” which we can not forget, unfortunatly I would say.
    So we must live with it that the board, as so many boardrooms of football clubs, is a bit of a snake pit.
    So when there is smoke, there is a fire. Off course it could wel be that the smoke comes from a boardroom member who likes to smoke big cigars…

  6. Tony, I must admit one prayer tops my prayer list daily (it’s an almost empty list really); that is to not see a takeover at Arsenal. The whole business smacks of a game to me; two opposing sides at the boardroom trying to gain an upper hand by dooing deals. Besides, it is another reason for me to hate Usmanonsense. I believe that had he kept his grubby, hairy hands to himself, none of these would have happened.

  7. There may well be some truth in this story, because I remember at the time DF sold his shares to SK there was actually something published on about the deal, which indicated that there was a planned delay in the payment. I suspect that the transfer of shares was prompted by the need to strengthen the position of a powerful ally who would be in a better position to fight off the unfavoured opposition should that time arise.

  8. Like most I too hope that the status quo remains.Let the agrieved party rant and rave about the treatment meted out to them ,but hopefully they will place Arsenal FC first before any ideas of revenge or sabotage .
    RK seems to be a better choice than Usmanov.

  9. I sure hope to God that Davy D no-longer has no hand in this mess. It will be very sad for him to loose all the shreds of affection and respect that Arsenal fans have for him; that will be sad indeed.

  10. I thought as much, it sounds like he must be related to the Glaziers.

    Borrow the money and put the debt on the club.

    Bring on the Fat Russian !

  11. i tend to agree with your idea that stan didnt have enough loose cash to buy in full, and not wanting to liquidate assets in a depressed market, bought the shares on the long finger.

    this is not to say that if he is forced by jabba the hut to make a pre-emptive takeover bid, he would do a glazer. i firmly believe that being realists, the board have discussed the method of any takeover bid with stan and assured themselves that he is fully committed to arsenal.

    lets face it, he is the only parachute the board and arsenal have, to escape from the unthinkable.

  12. my information is that Stan Kroenke has no intention of making a full blown buyout attempt for the forseeable future(a statement to this effect will be made at the AGM next week – the board will once again pledge to keep the club in multiple shareholders hands and oppose any takeover for at least another year), and will in fact only do so if Usmanov or someone else makes one, then the board would favour SK and advise shareholders to accept his bid over Usmanov’s. The main reason for SK buying up to 29.9% of shares is so to make sure to be in a position to stop usmanov even if he gets hold of more than 30% of shares and launches a takeover bid.
    People seem to be under the misconception that if Stan or Usmanov launch a bid that is has to go through. In fact 30% only means they are obliged to bid for a full buyout now or have to wait a year to bid and anybid can be turned down by the shareholders. Only way a full buyout can be forced through is if a shareholder gets 50.1% of shares and they also need something like 80% of shares to then make a compulsory buyout of all 100% of shares.
    The board have something like 45% of shares and they also say they have more than 5% also willing to back them and this is not including AISA and ASSA and others who totally are opposed to a buyout and would fight a takeover by anyone including memeber of the present board.

  13. We have to keep it a multiple shareholders club as long as possible.
    If Usmanov wants to give 100 million to the Arsenal he can buy an advertising board somewhere in the stadium. Maybe above all toilets 😉 or in the toilets….

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