Does Kroenke have a moral obligation to spend big?

February 29, 2012

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.

TotalArsenal.

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What Silent Stan REALLY Wants

November 7, 2011

Stan Kroenke is going to have to think about changing his nickname. He has been blabbing so much lately that the ‘Silent’ tag is starting to feel a tad ironic, a bit like ‘Little’ John (Robin Hood’s giant buddy) or ‘Curly’ from the Three Stooges (he was bald) or John ‘Not At All Racist’ Terry. After talking to the media in the States, then speaking at the Arsenal AGM, our majority shareholder spilled his guts again to a group of reporters recently.


It was a long interiew, filled with interesting observations about all sorts of things – from the way the Glazers run Manchester United (just fine and dandy according to Stan) to the astonishing fact that it is possible to have interesting discourse with Chelsea fans.But when I read the transcript of the interview, I noticed that a certain motif cropped up repeatedly. It gave me an insight into what Stan thinks about himself and, by extension, what he values in others.

The key concept is ‘intelligence’ (or ‘smartness’, in more colloquial terms).
Look at the examples:
Asked about how he defined success (and how long he felt it was reasonable to wait for trophies) our yakety Yank said: “We (meaning him and his team) have a broader experience than anybody in sports,” adding that he was “smart enough” to know that you can’t win silverware every year.

He was emphasising that the ‘smart’ approach was in taking the long view and not being a slave to instant gratification.

When the questions inevitably led on to whether Arsenal could compete financially with the likes of Manchester City, with their bottomless well of murky oil money, Stan was clear about the way he would like to achieve success: “I would be much more proud if all our leagues were developed with the idea that you are competing on the basis of intellect and work and effort instead of just simply, ‘I am going to throw dollars against the wall.’ Anybody who is a sportsman would rather compete on the basis of intellect, cleverness.”

On one level, the subtext here is that none of us should expect Stan to start splashing money like a chav in a chip shop. But also that he is ambitious – it’s just that his ambition is to win clever, not win broke. And when waxing lyrical about the success of the NFL (the professional organisation for American Football in the States) he pointed out that success was “all about how smart are you in selecting personnel.”

Moving on to baseball, he mentioned the new Brad Pitt movie Moneyball, which tells the story of Billy Beane, a baseball coach for an unfashionable and relatively poor team who achieved success through outsmarting his richer opponents: “Moneyball is all about being smart in sports, specifically baseball. There’s a wave in the US now of statistical evaluation – this whole science of sport goes a long way. There’s some very smart people – we employ some of them – who are analysing every stat and who are connecting every bit of data and trying to make sense of it. But that really started with Billy Beane, who is the guy in Moneyball. And Billy Beane’s hero truly is Arsene Wenger. He loves Arsene.”

Even on the subject of Samir Na$ri’s controversial move to Man City in the summer, Stan was at pains to focus on intelligence: “That’s where being smart and not being smart comes in. You’ve got one year left on a player’s contract. You’ve got a large sum of money being offered. Can you employ those resources better than you could had you not taken the money, taken a chance on losing the guy for nothing in a year or perhaps overpaying for him now and having less resources later?”

And on Manchester United under the Glazers: “I think it’s time maybe for everybody to think a little bit. They ought to think a little bit about who invests in these clubs.” In summary, in the course of just one interview, there are more than 10 examples of words like “smart”, “clever” and “intellect”. This is a man speaking off the cuff to journalists, not reading a prepared speech. A psychologist would suggest that these key words, used so liberally, are evidence of what’s really at the forefront of the speaker’s mind.

To me that means that Stan Kroenke is a man who values intelligence above all other qualities. Yes he likes courage and he likes the idea of making money and not spending it unnecessarily and he likes learning about football (there are references to all these in the interview), but his overriding obsession comes through loud and clear.

He sees himself, above all, as a SMART sports business owner. One who is not swayed by the daily rise and fall of fan disgruntlement or media muck-stirring, but who has a long-term vision and strategy. In that case it’s hardly surprising that he seems so comfortable with Arsene Wenger – the thinking man’s football coach if ever there was one. He clearly values Arsene’s analytical and professorial approach to the job over, say, the passion of a Ferguson or the duck-and-dive slipperyness of a Redknapp. I think it’s a good thing.

It should mean he will empower and enable Arsene to do his thing as well as he possibly can do it. And at a time when Arsene and Arsenal get far too little credit for the “smart” way in which the club has been run in recent years, it’s a refreshing vote of support for values that we supporters can also all be proud of. Man City may well win the league this year, but ask yourself: would you rather be a City fan or an Arsenal fan? You know the answer, and so do I.

Keep the faith Gunners: what we have is worth more than anything anyone else can possibly offer, however endless their supply of petro-dollars.

RockyLives
　

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Foreign Ownership the Arsenal way.

April 12, 2011

Written by Gooner in Exile

Ok, the day some of us (me included) dreaded has finally arrived. The ownership of our beloved club has moved into a single pair of hands, some of us have said not over our dead bodies, some of us have asked for it to be done the Arsenal way, some of us said its ok if its a billionaire to come and buy us trophies.

It is early days yet but all signs point to Kroenke amassing at least 60% but more likely around the 90% mark. And in the main it appears to have been done the right way, no ugly public confrontation very quick progression from breaking news to confirmed within 24 hours.

So what about those who wanted an end to the ownership uncertainty to allow more investment in the playing staff, well I think Kroenke’s successful takeover will disappoint here, it is unlikely with such a lump of cash required to buy the shares that there will be any loose change hanging around for injection into Wenger’s pocket for transfers.

To this end some would have preferred Usmanov to come in and pile in the Roubles, but we have seen how little respect that gains you in the football world and also how few trophies it buys you at the same time. As I type this I am watching the multi million pound assembled Man City getting a pounding by Liverpool three goals down in 35 minutes.

Allegedly (according to Mark Kleinman of Sky) Usmanov attempted to make a counter offer for Bracewell-Smith’s shares, Kleinman reported that he offered £13,000 and a lower offer earlier but she being an honest type rebuffed due to the irrevocable undertaking she had given to Kroenke. She has issued a statement regarding her sale:

“This marks the end of an era for our family’s association with Arsenal FC and we are proud to have had such a long history with one of the world’s greatest clubs. I am confident of Arsenal’s continued success both on and off the pitch and believe that Stan Kroenke will continue to develop the club in a manner true to its heritage for the players and the fans.”

And this is a lesson to Mr Usmanov, money can’t buy you everything especially from people who love what they are selling.

With Usmanov now nothing more than a thorn in Kroenke’s side we can hope that he is inclined to sell his lot for a quick buck and move on. Unfortunately for a man who is valued at $17.7 billion one must wonder what that quick profit will mean to him and this one could run and run.

Assuming Kroenke is successful in a full takeover (minus hopefully a token gesture for the Arsenal Supporters Trust) all I ask of him is to continue the work he has seen whilst he has been at the club and to recognise that what has made the club so valuable is its prudence, its trust in its managers, its loyalty to players past and present, and its ability to keep its dirty washing in house.

On that final point I hope that Kroenke lives up to his nickname, I don’t want the club to become more about the man upstairs than the men on the bench and the lads on the pitch. Say Chelsea and most of us think of Abramovich first, mention City and its the Sheikh that dominates our thoughts, the trophies are for them not for the players or managers, the staff come and go like the mercenaries and playthings they have become. This is where the Glazers have been successful at Man Utd, yes they have taken the club into debt, yes they have forced a hold on transfers, but could you really say they make you think of them first, no, you think Fergie, you think Giggs, Rooney and others before you think of the owners.

Comparisons will likely be made with the Glazers, neither they or Stan speak openly to the media and both made their money through real estate (one from trailer parks and one using family ties to build malls next to his Father in Laws Wal-Marts). It appears both have a penchant for sports teams too, although to that extent Kroenke is far more active having owned three top flight American Sports Teams, plus a couple of minor ones too.

Kroenke also insists that he will not be using any kind of debt financing to fund KSE’s purchase of Arsenal shares, although similar promises were made by Gillett and Hicks at Liverpool and the Glazers at United, all reneged and effectively put the clubs into debt to fund their acquisitions. We can only hope that the Board are right to believe Kroenke has the funds to make this happen without needing any extra finance secured on the assets.

Clearly a clever businessman, what of his sports teams. Everything I have read about Kroenke is that he is hands off when it comes to team matters but heavily involved with the financial detail. It is also worth remembering that American sports teams have to operate under salary caps, with the Financial Fairplay rules apparently around the corner it would seem that American ownership with experience of these conditions will be beneficial to the club.

Kroenke has owned 40% of the St Louis Rams since 1995, he bought the whole kit and kaboodle in 2010, but that has forced him to relinquish control of Denver Nuggets (NBA) and Colorado Avalanche (NHL) (both owned since 2000) due to NFL rules.

In his time as major shareholder St Louis Rams have won the Superbowl, but since his full takeover have been undergoing a bit of a rebuilding pinning their hopes on a Rookie Quarterback in 2010.  The Avalance won the 2001 Stanley Cup, and the Nuggets whilst winning their division in his time have failed to win the conference or the championship.

But to compare trophies is probably unfair as the American system does not allow any one team to dominate year after year, for example the reason the Rams have the young Rookie Quaterback was that the season before their record was 1-15 and therefore were given first draft pick.

So all we can do now is sit and wait, to be honest I do not expect any major changes but I have one final thought before I put this post to bed.

Look after our club Stan, its ours, you may own the shares at the moment, but the people make this club, the ones that have followed in their fathers footsteps to Highbury and now the Emirates, please make sure its still in one piece so we can take our children and grandchildren on the same walk. And don’t ever forget we’re by far the greatest team the world has ever seen. Make sure it stays that way.

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