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Why does AST talk of failure in the future?
I came to write this article in an extremely roundabout way. It all began when I was looking at the twitter account of Tim Payton of the Arsenal Supporters’ Trust (based on some comments by Mahdain), and came across the following slightly surprising tweet:
“Hooray. RvP does the double. Rightly Football Writers’ Footballer of year too. All Arsenal media conspiracists better take the day off….”
Naturally, this caught my attention, particularly considering that Payton posted the following tweet shortly thereafter:
Based on the above, I opted not to follow Payton’s advice and “take the day off,” but rather looked into the situation a bit, and happened to find the following interview with the Arsenal offsides blog, where Payton stated that:
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“The role of the AST is to act as a pressure group to influence ownership decisions at the club…”
From there, I actually stumbled across something much more interesting.
Specifically, I found the following article from City AM, in which Payton and the AST are reported as planning to submit a proposal for a rights issue (ie, new Arsenal stock), in the event that Arsenal doesn’t finish in a Champions League spot.
This proposal was originally submitted by Alisher Usmanov in 2009, but rejected by the board. I’m not sure what this means, to be honest, but I get the feeling that there’s something significant about it:
“The Gunners are poised to confirm more healthy financial results…But that could be obliterated if they miss out on next season’s Champions League, which would cost the club around £45m, the Arsenal Supporters’ Trust estimate.
“The AST has asked the board and majority shareholder Stan Kroenke to reconsider a rights issue, should the club miss out on the top four. Kroenke’s rival shareholder Alisher Usmanov proposed the step in 2009, arguing that the team needed fresh capital to end their silverware drought.
“The board rejected the idea then as unnecessary, citing advice from manager Arsene Wenger, but the AST believes it is time to pose the question again.”
***Note: Interesting Arsene’s role in this rejection. I’m also particularly interested in the meaning of this following part about FFP, although I’m not sure what it means yet.***
“Incoming Financial Fair Play laws would allow new money to be used to pay down remaining stadium debt, freeing up funds for Wenger to invest in his struggling team.
***Note: I also find it interesting the way that Payton appears to be pressuring Kroenke here.***
“Kroenke (right), who will fly into London for a board meeting this week, may be reluctant to endorse the move as it would force the American to either plough millions of pounds into the club or accept a watering-down of his stock. Extra shares could fall into the hands of Russian billionaire Usmanov, who has been snapping up stock in a bid to take his holding over 30 per cent.
“‘This could flush out whether Kroenke is just interested in money,’ the AST’s Tim Payton told City A.M. ‘An issue would mean that he benefits from having a stronger and healthier club.’”
This article isn’t the first time that Payton has expressed public support for the idea of a stock issue, which he apparently supports in conjunction with Arsenal abandoning the self-sustaining business model.
For example, from an editorial in the Independent headlined Tim Payton: ‘We want Arsenal to rethink the business model. We have fallen behind’:
“The club need to rethink their ‘self-sustaining’ business model. This doesn’t mean an unchecked sugar-daddy approach but it does mean reviewing options to bridge the gap such as paying down the remaining debt or undertaking a rights issue.”
From an online interview with Arsenal blog “the offside:”
“The AST does not support an unchecked sugar-daddy approach to ownership. But we do think the club should thoroughly review the options for its two billionaire shareholders – Kroenke and Alisher Usmanov…Sustainable long-term options include paying down the remaining debt or undertaking a rights issue, as was concluded to the tune of £80m also to raise money for the stadium project….”
From a similar online interview with the Goonertalk blog:
Arsenal can’t be competitive in the self-sustainability model because “Arsenal does not have the benefit of benefactor income in the way Chelsea or Manchester City have…”
“With 2 Billionaire’s controlling 95% of the club; would it do any harm to ask them to invest money into the club? The AST would certainly not support ‘sugar-daddy’ type policies, but a well managed rights issue or investment in club infrastructure that will increase revenues is something that should be actively considered.”
So, what I’m curious about here is, why the big rush to pay down the stadium debt? If we already have structured debt payments that we’re making that are allowing the club to operate normally, why the rush? Why would we need to take the dramatic step of issuing new stock in order to pay down the debt ahead of schedule?
Just to conclude, I also find the following interesting. This is what Red and White Holdings said after Arsenal initially rejected the proposal in 2009:
“Based on financial information that only they have, the board have informed us that they are confident they have adequate financial resources to support the manager to strengthen the squad, to weather the property downturn, to renegotiate the Highbury Square loan on good terms and to deal with the continuing difficult economic conditions,” said Red & White Holdings. “We do not share their view but are prepared to give them the benefit of the doubt for the moment.
“However, we will keep the situation under close review and remain committed on behalf of interested parties in the club to ensure that there are sufficient financial resources for the club to succeed at the highest level and win major honours such as the Premiership or Champions League, while operating within a self-sustaining financial model.”
What does all this mean?
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