Meet Mr Usmanov

 

Alisher Usmanov owns about 24% of Arsenal, which makes him close to being the biggest shareholder – Danny Fiszman has just about the same level of shareholding. Mr Usmanov is what the newspapermen (in that funny sort of shorthand way that they have) a “metals magnate” which presumably means he’s made of iron or something like that. His fortune was once said to be $5.5bn but what with these pesky bankers screwing up its probably now 4p. Well, maybe a bit more.

The shares he owns came primarily from David Dein after he was kicked off the board for holding negotiations about the future of the club without the rest of the board knowing. In company terms this is the equivalent to high treason – as a board member you are answerable to the board and the board of directors alone. Except of course you don’t get hanged.

So at this moment Mr Usmanov is a shareholder – almost the biggest one – but he is not a director. Mr Kronke has a smaller shareholding but is a non-executive director – so Mr Kronke is within the club, attending the high table, and Mr Usmanov has no more rights than the average red member, although I think he has a box which must be nice when we win.

Arsenal’s position as a club is that there is no need for a wealthy individual backer, and they have made various efforts to ensure that they don’t sell to Mr Usmanov – something that is perfectly legal. While no shareholder could legally say, “I don’t want to sell to him because he is a Jew or a Muslim”, it is perfectly legit to say “I am not selling to him because I don’t like him” (although of course I am not saying that anyone has actually or would actually ever say such a thing).

So where does this take us?

It is often said in the papers that if Mr Usmanov got 25% of the shareholding he would have enormous power – but I really don’t think that is true. In my real life beyond hyperspace I am chairman of a plc – not a very big or important plc, but a plc, and as I read our rules nothing much happens at 25% apart from the ability to call an emergency general meeting of shareholders. But having called such a meeting what then? Just because he you 25% it doesn’t mean you can win any votes – so you can’t start demanding dividends based on the profit of the club, you can’t choose the team, you can’t change the colour of the strip, and in fact all you can do is be heard.

Now of course my company might be different from that of Arsenal – in fact I am sure it is, but I would say that in law nothing much happens at 25% ownership and I doubt that Arsenal have anything special in their rule book.

If Mr Usmanov was to get 30% of the shares he would have to launch a formal takeover approach, which would mean he would have to offer to buy everyone’s shares at a certain price. That is a legal requirement.

But then people don’t have to sell him any shares. And by the time he gets to 30% he will have eaten up all the little shares lurking around which are owned by people who either disagree with the board’s stance, or who have no interest in the club. If he did get 50% control he would obviously be able to vote through a lot of stuff, and eventually we move up to a position where he can forcibly buy all the shares at a set price, once he is near the 100% mark. But my point is 50% is a long way from where he is now, and unless one of the big owners sells to him it is difficult to see how he will get there.

Meanwhile, the other long term story about Mr Usmanov is that Schillings, his lawyers with the most unfortunate name (to me it makes them sound like accountants), have over the years been “in touch” as we like to say, with several websites and blogs (like this one, but not including this one) asking them very nicely and politely to take down articles that relate to allegations made against Mr Usmanov by Craig Murray, the former British ambassador to Uzbekistan.

Mr Usmanov was put into prison by the USSR, which can’t have been a pleasant thing. Mr Usmanov says that he was a political prisoner and that when the very nice Mr Gorbachev became president Mr Usmanov was pardoned, they found the key, and let him out.

The last I heard of the former ambassador it was in a news report earlier this year in which he says that “he has contacted Schillings to ensure they know where to send any writ.”

Quite obviously, I have no inside information on Mr Usmanov, I have no knowledge of what happened to him under the USSR, and I have a hard enough time trying to come to terms with how the FA have allowed Theo to be crippled in training, and then just walk away from the situation so he is not even mentioned in their press briefings. So if I can’t make head nor tail of that, I certainly can’t give real insights into anything good or bad about Mr Usmanov.

But I can say that the finances of Arsenal (and finances are more my thing – for although my job within the company has always been that of a writer I do have to chair the board meetings that look at the numbers) look very solid to me. The club receives so much money per game that the match day income alone pays off the mortgage, and leaves a lot left over. In other words even taking the mortgage into account we are much better off than we were at Highbury.

The money from the apartments has never been accounted for as potential income. We’ve paid for the work to be done, so that is gone out of the club. But when the sales money comes in, is pure profit, and will probably be used to reduce the mortgage even more. Unlike every other club Arsenal makes a profit on its transfer dealings most years, and unlike clubs such as the Tiny Fantasists down the road, it owns and has paid for its training ground.

True some of the redevelopment around the Ems is not selling, but the purchases of those old sheds and buildings has been paid for. It will be good when they sell, but we are making more than enough to allow them to sit there until the recession ends (I am told that will be June 30 2010).

Of course if the club suffered a terrible slump in its playing fortunes it might suffer financially, but the club will break even by getting into the group stages of the Champions League once every four years, and selling 50,000 tickets per match. It is obviously doing far better than that and with 40,000 on its waiting list for seasons, I think such a slump is a long way away.

If Mr Usmanov did come into the club big time, it seems certain the Lord Wenger would not want much to do with the money that Mr Usmanov offers, since the Lord Wenger is happier bringing through young players whom he can mould.

Personally I don’t see too much to worry about at this stage. If we have a problem it is years and years away – unlike Manchester Bankrupt, Everton-Bolton, and Liverpool Insolvency who face an immediate crisis and could be either bust or completely destitute within 2 years. Certainly recent league games at the very old Trafford have only managed to sell out because they went on general sale and the club is being challenged in court over its pricing policies.