Is Governance the Problem at Arsenal?

November 19, 2015

Who owns Arsenal and how is it governed? Although many fans would answer that Arsenal belongs to us, the truth is that we fans are just consumers of goods and services from the club we love. We are very important to the club but this gives us no element of ownership. Good governance would normally include ensuring that decision making bodies are representative, decisions are transparent and both bodies and decisions are accountable. It is for you to judge how well Arsenal does in these terms.

Firstly actual ownership of Arsenal is the prerogative of shareholders as a whole. Currently this means that 66% are owned by a company called Kroenke Sports and Entertainments (KSE) which is wholly owned by Stan Kroenke a US billionaire who owns a number of sporting clubs and franchises mostly in the US. 30% is owned by a company called Red & White Holdings (RWH) which is jointly owned by Usmanov and Moshiri. The remaining paltry 4% is owned by a constantly decreasing number of older fans and their families.

The current situation emerged from a volatile and active Board disagreement on the new stadium. This led to a lock-down on share disposal from the Board initially and ultimately on the death of Danny Fiszman to the sale of his shares to Stan Kroenke who then exceeded 30% shareholding and had to make a formal bid to all other shareholders. This had been pre-agreed with all Board members and other major shareholders. The primary effect was to make Stan Kroenke effective sole owner of Arsenal and as a secondary effect put David Dein who had recently been removed from the Board completely into the wilderness. As a consequence he sold his shares to and briefly led RWH who garnered at that point just under 30% of the remaining shares.  This RWH share position is important because if Kroenke were to obtain a further 9% support then he could change Arsenal to a private company and this could involve all sorts of shenanigans as any Man U supporter will tell you in the light of the Glaziers following exactly this process. So Usmanov currently has an impregnable blocking vote on that.

There is one other aspect of share ownership that must be covered before we move on. Arsenal Supporters Trust (AST) who have as their members a large portion of the small independent share holders, sought to agree with Kroenke at the point of his bid and Ivan Gazidis as CEO that they would set up a Fanshare scheme to enable ordinary fans to have an opportunity to buy shares and so participate in ownership of the club. It is noteworthy that the nearly half a billion £ Kroenke has paid for his shares has not given a penny into Arsenal coffers- only new shares being issued would do this. In spite of intensive effort and pressure the issue of new shares was never agreed by Kroenke and the Fanshare scheme is going through the long, sad and arduous process of being wound up. So much for real attempts at involving fans meaningfully.

Day to day running of the club is of course the responsibility of the Board which is elected at the AGM by the shareholders (ie Stan Kroenke). The Arsenal board is currently very small, comprising only 6 persons. Two non-executive Directors are Sir Chips Keswick, a banker, and Lord Harris of Peckham a carpet retailer and Philanthropist. Neither are shareholders of any significance. There are two employees namely Ivan Gazidis as CEO and Ken Friar a very long standing employee of the club. Finally there are Stan and his son Josh Kroenke who attend with that 66% majority in their bag. The board meets monthly and all are wined and dined well at each match including away matches with luxury travel with the first team. No mean sinecure. The only major earners on the board are the two employees. Both Kroenkes and Sir Chips, who is chairman, draw a standard fee of £25k although Lord Harris donates his to charities. Neither agendas nor minutes are public documents so transparency is almost nil.

Real matters of governance concern would be that the board is in no way representative of the fans. It has no women although they are increasingly present at the stadium. It also should be noted that any skills set analysis would find the board very narrow and inadequate. There is good management and business skills but experience at top playing or coaching level is entirely absent.

When talking of the board the elephant not in the room is of course Arsene Wenger. He probably rightly has avoided siren calls to join but has zealously guarded his right to select and train all footballers on staff. He also expects the primary say in transfers in and out of the club although we have no knowledge as to what parameters may be set by the board eg specifically on total cost or value. Arsene in particular seems willing to let the buck stop with him in these areas.

Perhaps the best way to assess Arsenal governance performance is to consider issues and I have chosen three but you may well have your own and it would be interesting to see your cases and views in comments.

  1. For two years there has been a strong fan reaction to the news that a wholly Kroenke owned company has been paid £3 million each year for unspecified services commissioned and approved in particular by the two non-executive Directors. Now in principle I am not opposed depending on the services given and their true value. There are aspects of marketing and match day experience in which the US is a world leader but the problem is we are not told anything useful and so it is zero marks for transparency. Of course if it is just a means to pay Kroenke and avoid paying the nearly half again to RWH that a dividend on shares would entail then there are entirely new issues emerge.
  2. For several years local Islington Citizens supported by a number of fan groups and Arsenal blogs have been trying to persuade Arsenal to adopt the London Living Wage for it’s own staff and when the opportunity arises for external contract staff. This is clearly morally right for a company in Arsenal’s financial position and there are strong arguments that it would positively enhance the match day experience. And all at less cost than the Kroenke company fees. But in spite of being raised at the last three AGMs accountability is so poor that the policy still awaits a final board sign-off. Perhaps Stan Kroenke whose other half is not only better but also richer being a Walmart inheritor, where staff pay is notorious, has an undesirable influence here
  3. Arsenal are very rightly proud of the work they do as Arsenal in the Community. But it is extremely difficult to find a way of suggesting innovation. The FA has got itself into all sorts of foolish financial difficulty but there is a singular clear and pressing difficulty in developing youth and grass roots football. Could not Arsenal under the auspices of Arsenal in the Community set aside £5-£10millions to train and employ 25-50 new fully qualified coaches which could be offered to local schools and local cubs to build a new approach with the ‘Arsenal way’.

I have to say that for me the questions and principles that were posed in the opening paragraph are sadly evidenced that Governance at Arsenal is a long way from good enough and we as fans have to try to bring all the pressure we can to get improvements.

Vintage Gooner

David Dein – Judas or Guru?

August 3, 2011

Several weeks ago London (the blogger) sent in this short post giving his reaction to the call to get DD involved in some capacity with Arsenal again:-

Question: If you were the agent of any grade A player and were in the process of concluding a transfer would you finish it speedily or would you wait and see if the new Chelsea manager was interested in signing your player? Bear in mind that if it turns out that he is you would, of course, probably be able to add an extra thirty grand to your player’s weekly wages.

So, with this in mind, spare a thought for the constraints that Gazidis is working under.

The other thing that should be borne in mind is that this is not a situation that David Dein had to deal with when he was involved in signing Bergkamp. Although, what many people forget is that he did have to deal with these constraints just before he departed. He was the principle negotiator in the Ashley Cole deal; and for all you romantics who believe that with his return things would be back to the good old days when we used to sign players like DB10 you should remember that that turned out to be an embarrassing disaster.

Rasp’s response

It may be that DD would have fared no better than the current administration in procuring the players that many clamour for, but he is a highly respected figure in world football who was pivotal in the metamorphosis of the club under Arsène Wenger.

He helped his friend Danny Fiszman to get onto the Board. Fiszman subsequently became the main driving force behind the move to Ashburton Grove, although it is widely reported that Dein was against the project.

Dein’s football pedigree is impressive. He was on the board of the Football League  Management Committee and subsequently achieved a place on the FA Council. He was also one of the major architects of the Premier League  in 1992. He was the President of the G-14 group of European football clubs between October 2006 and May 2007 and has sat on various committees within FIFA and UEFA’s  including UEFA’s Club Competition Committee and Executive Committee.

Let’s also not forget that he was responsible for bringing in Arsène Wenger. He  remains a close friend and confidante to this day. In fact, he may be one of the few individuals in the club’s administration who can influence Arsène’s footballing decisions. Together they were an effective and balanced partnership……..

….and together they  signed the likes of  Patrick Vieira, Emmanuel Petit, Marc Overmars, Thierry Henry, Davor Suker, Robert Pires, Sol Campbell, Gilberto, Gael Clichy, Kolo Toure, Cesc Fabregas and Robin Van Persie – not a bad catalogue of players.

God only knows what Dein’s motivation was in selling his shares and then the ill advised association with Red and White Holdings, but it is also worth noting that he was thrown out because of the manner of his attempt to get a certain Stan Kroenke involved in Arsenal – and look where we are now!

All I know is that when Dein spoke you felt he could be trusted. His rapport extended from top to bottom at Arsenal. He had time for everyone from the tea lady to the players and most importantly he was respected by the Press. He communicated without the rehearsed sugar-coated spin we are expected to consume these days. At this time when our transfer dealings seem to be painful, protracted and often fruitless, a man like Dein could make the difference.

David Dein has already played a huge role in the creation of the modern Arsenal and I for one would welcome him back.