Wednesday, April 18, 2007

Pride Of London?

With a swoosh of his cloak, and a church organ almost certainly playing in the background, David Dein left the Emirates Stadium for the last time today. At least, the last time for now. The former Arsenal vice-chairman will almost certainly back at some point in the future. After all, Premiership football is about to enter a whole new cash bonanza. Such a fiscally prudent individual as David Dein wouldn't wish to be absent from such a feeding frenzy at the trough now, would he? It just doesn't quite strike me as being his his style, somehow. After all, he's been building up his stock in The Gunners since 1983, when most football clubs' actual values were not far off being the lowest that they have ever been.

The root of the disharmony at Arsenal is the interest in the club from the American multi-millionaire, Stan Kroenke. To get himself a voice at the club, Kroenke recently paid well over the market price to acquire ITV's 9.9% share in the club (purchased at the time when it appeared likely that TV companies would be allowed to buy football clubs), but there can be no question that wants more, and Dein has been one of his biggest cheerleaders in the Arsenal boardroom. The Arsenal chairman Sir Peter Hill-Wood recently stated, however, that no-one else on the board wanted to sell their shares for at least a year, and that appeared to be that for Dein - at least for the time being.

Of course, it's not quite as simple as all that. After all, Dein is the current chair of that most august of institutions, the G14, and also sits on the FA Council, as well as being the FA's senior representative on UEFA's committee for club football. There's a case for saying that he's the most powerful man in English football. On the surface, it would appear that Dein either believes that some sort of disaster will befall them if they don't sell up now (and, considering the parlous state of their finances after the massive cost of building Ashburton Grove, that can't be completely ruled out), or he's got something else up his sleeve. The key people in the equation are Danny Fiszman, Lady Nina Bracewell-Smith and the Carr family, who are Arsenal's big three shareholders. Fiszman was the man that was behind the stadium move, and is unlikely to want to see the fruits of his labour go to elsewhere. Bracewell-Smith and the Carrs are both "Old Arsenal", shareholders for decades, who have a sentimental attachment to the club that money may not be able to buy. Dein may be chasing the short term dollar. Those mortgage payments are crippling at the moment. Give it a few years of TV money, perpetual Champions League involvement and sell-out full houses at Ashburton Grove, and the pain may well start to ease.

What does Kroenke want out of it? Well, that should be obvious. One of the peculiarities of company takeovers is that one can spend hundreds of millions of pounds acquiring a business without actually paying for it. When Malcolm Glazer acquired Manchester United a couple of years ago, it wasn't him that paid for it. It was United themselves. The club itself was loaded with the debt, and recently released figures must make frightening reading for United supporters. The operating company, Red Football (which exists to bypass FA rules which prevent directors and shareholders from making a profit from their involvement in football), currently has a debt of £660m, which it is slowly paying off. It lost £137m last year alone. The club itself made a £30m profit in the same time, but this is small change, relatively speaking. Ultimately, someone is going to have to foot this bill, and the chances are that it won't be the Glazer family. Manchester United are already being aggressively marketed in a way that makes their efforts of the 1990s look like a church tombola. Ticket and season ticket prices are already being ratcheted up. Who's paying for it? Ultimately, United's supporters themselves. Kroenke knows all of this. He could end up with all of the club for a fraction of the real cost.

My guess is that Dein will be back. Should he get the chance to buy it (and there are plenty of reasons for saying that this is a postponement for him, rather than the takeover being called off for good), I can't see Kroenke wanting to actually run Arsenal Football Club. Dein could, in the event of a future hostile takeover bid, be a sweetener for the fans. He's been dining off being the man that brought Arsene Wenger to Highbury for the last decade, after all. The battle isn't over for the traditionalists by a long chalk, but the battle for what's left of Arsenal's soul starts here and, for now, the old school are in the lead. It's not very often that you can say that, is it?


Neil said...

This is completely unrelate but have a goal of the decade:

Ed said...

I think I might buy Worthing United.

Graham said...

If I was Peter Kenyon I'd be looking over my shoulder. Chelsea could have just found their way to muscle in on G14.

The Manchester United situation isn't that cut and dried. United weren't debt free when Glazer took over - they "owed" millions to their shareholders. If Glazer follows his past form, that debt will be paid off when he a re-floats the club in a couple of years time reaping a huge sum of money off the top in the process.

To quote the Simpsons, these guys didn't get rich by writing out cheques.

Anonymous said...

not that hoary old glazer apologist nonsense again about debt and shares being similar!!! Banks can demand repayment, interest etc or even force the borrower to go bust etc, shares are worth purely what someone else is prepared to pay for them.

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