Does a billionaire owner/major shareholder have a moral obligation to spend big on his football club? And, should owners of a football club be allowed to make a profit? For a while now, I have been reading comments by a number of ‘Kroenke-critical’ AA’ers, who believe that he should be spending a lot more of the club’s and his own money and, to a certain extent, I can see where they are coming from. Just to be clear: I am neither a ‘Kroenke-critic’, nor a ‘Kroenke-supporter’.
Our club needs (an) owner(s). Somebody needs to take responsibility in managing our club and achieve sporting successes in such a way that our short-term and long-term financial positions are secured. This is mightily important to all those who really care about the club and we should not take good club management for granted: it is a fine art. Running a football club is a highly risky business. Income streams can fluctuate strongly from one season to the next whilst costs are difficult to control/manage downwards in the short run.
At Arsenal, we need clever and experienced business people, with both a passion and in-depth understanding of football, at the helm of our club. Preferably, they also have an Arsenal-history and an Arsenal-heart. We are almost entirely owned by major Shareholders Kroenke and Usmanov. The latter possesses just under 30% of the club’s shares, and the former owns the best part of 70%.
Kroenke is not an Arsenal-man and neither is Usmanov. It appears that Kroenke has a more calculated business approach to our club, whilst Usmanov seems less interested in the business-side of Arsenal, but would be more prepared to spend big in order to achieve success for the club. It is not clear whether Usmanov would dig into his own pockets or whether he would be looking at entering a number of (risky) commercial endeavours in order to free up money to invest in new (world class) players and their wages. Obviously, I do not know any of the two and my above assumptions are purely based on a number of articles I have read over the last few years. However, it is clear that Kroenke, as the major shareholder, is leading the club at the moment whilst Usmanov remains in the background.
Silent, calculated Stan
Describing Kroenke as somebody with a calculated business approach, is not necessary a bad thing. Of course, I would prefer him to have a Gooner heart and past, who is happy to spend a reasonable amount of his own money on the club without the need to earn it back again in a hurry. He is a multi-billionaire, so he can afford it. But, are fans right to lambast him for not putting his hands in his deep pockets in order to spend similarly to Citeh’s and Chavs’ owners, in order to compete in this new footie world order? Is it wrong Kroenke wants to run a financially sound football-business, and maybe even wants to take a profit out of the business, say in the region of 5-8% of turnover?
I would not want us to become like Chelsea and Man City, and I am hopeful that UEFA new financial rules will put a stop to clubs being sugar-daddied with excessive amounts of oil-dollars to success. It is wrong in every sense. I am fully aware that Kroenke is very unlikely to want to be the major shareholder forever and that his strategy is based on selling his shares at some point in the future, whenever that is, at a decent profit. I do not like this of course, as we do not know who he will sell to and what would happen next with Arsenal, but there is nothing that can be done about it. Almost every football club is subjected to the same level of uncertainty.
Arsenal winning cups and financial success for Kroenke are closely linked
But one thing I know: there are a few benefits attached to having an owner who is keen to run a sustainable business and who will want to sell it one day in the future, if and when the time is right / the price is right for him. The biggest benefit is the need for such an owner to look after his club, both financially and in terms of sporting successes. What’s more: there is a strong interdependence between financial success, sporting successes and long-term value of the club – and it is this fine balance which I am pinning my hopes on. Kroenke might not have an Arsenal heart as such, but without any doubt, he will want to look after his investment. Selling a few key players every year could easily be seen as one of Kroenke’s ways of making good money out of our club, but he also knows that this could come at a high cost to Arsenal and therefore to himself. He needs sporting success in order to achieve financial success for his considerable investment – the market value of his shares being his biggest concern – and selling Arsenal’s key assets on the pitch is not going to help him in the mid to long run. I believe Arsenal had to sell players in the last few years in order to balance the books, but last summer’s sales of Fabregas and Nasri were not borne out of necessity anymore: other factors forced Kroenke’s hand this time round.
Some have argued that he is only interested in finishing in the top-4, so he can be in the lucrative Champions League, and that he will invest only as much as is needed to achieve this. However, if Arsenal were to get a reputation of only ever being able to just finish in the top-4, it would become commercially less attractive, in terms of enticing profitable sponsorships and advertising. Furthermore, Arsenal would be losing a part of its fans base, both in terms of season ticket holders and their worldwide TV audience, with further negative impact in terms of shirt sales etc. It would also be very risky to try to do just enough in order to stay in the top-four, as the short and long-term consequences could be very dire for him if Arsenal were to fail. Kroenke needs Arsenal to be successful: not just in terms of taking part in the CL but also in terms of winning trophies.
Does Kroenke have a moral obligation to invest a lot more money in Arsenal though?
The above gives me every reason to be optimistic about our future. It pays for Kroenke to invest in the club and sporting success: Arsenal winning trophies rather sooner than later is a necessity for him. However, by trying to achieve this in a financially sustainable way, he could be taking too much risk and, given the stiff ‘new world’ competition he has to deal with, he might fail and we might end up with winning nothing for years to come. Which raises the question again: should he be spending more of the club’s/ his own money in order to optimise our chances to win trophies?
I don’t think I can say he has a moral obligation to spend his own money in our club, or that he should never take a reasonable profit out of the business. He is the major shareholder and carries the biggest financial risks on his shoulders. We as fans, in particular the STH and those who go regularly to away-games, spend a hefty sum of our money on the club, but our financial risks are relatively small compared to Kroenke’s: we can chose to no longer spend any money on Arsenal in relatively short time, but Kroenke is in a different position.
Ideally, I would like him to spend more (but not crazy) money in order to compete better in the next few years, but if he does not want to do it, I will respect it. However, he is morally obliged to:
1. Look after the club in terms of managing short-term and long-term financial risks;
2. Use the club’s financial resources and commercial opportunities to the maximum, with the aim of providing all the pre-requisites for sporting successes on the field (taking into account point 1);
3. Represent our club as best as he can and always aim to achieve as high as we can (in terms of sporting successes), taking into account points 1 & 2.
4. Make sure he puts the best available people into the key positions at our club.
For me, the jury is out as to whether Kroenke is doing the very best for the club with regards to points 1 to 4, and I am looking forward to hearing your views on how you think Silent Stan has been performing since he became the major shareholder a year ago, and whether you believe he is morally obliged to spend more of the club’s and his personal money on Arsenal.