It would seem that the old adage of "the more things change, the more they stay the same" will be most apt following Stan Kroenke's move to take control of the boardroom at Arsenal FC.
The American businessman is now in receipt of 62 percent of the club and is facing an uphill battle to take full control of it after both Alisher Usmanov (26 percent) and the Arsenal Supporters Trust (claims to own 3 percent and represent up to 15 percent) both refused to sell him their holdings within the club.
As such, the boardroom is now locked in a stalemate; on the pitch the club are more interested in finishing in the top four than winning trophies and given Stan Kroenke's past, this philosophy looks like it will be continued into the future...
When Stan Kroenke became the major shareholder at the club he invited other Arsenal shareholder to sell their stakes to him. This was initially met with optimism but the situation changed quite quickly.
AST issued a statement upon rejecting KSE's advances:
"Arsenal is too important to be owned by any one person. The AST wants to work with Stan Kroenke to keep Arsenal supporters involved in the club’s ownership structure.
“The AST and the Arsenal Fanshare scheme will not be selling the shares it owns and urges all supporters to reject this offer."
The AST statement was quickly followed by Alisher Usmanov also refusing to part with his shares in the club. In a phone interview with Bloomberg he said;
“I’m not going to sell; I love Arsenal, that’s why I’m a shareholder. My principle in regards to Arsenal is that it can’t do without me,”
"The board of Arsenal always held the position that none of the shareholders should take control over the company, that is why I never did any offer to increase my stake more than 50 percent. But probably something has changed, to my surprise.”
“We know that Kroenke is a large investor in sports brands. We hope that experience will help Arsenal.”
The refusals from Usmanov and the AST virtually leave the Arsenal boardroom in the exact same state it was in before "silent Stan" Kroenke increased his shares in the club. With two major exceptions.
- KSE can now take more money from the club in the shape of management fees.
- KSE must now provide the vast majority of funding for the club going forward.
Over the last couple of years Usmanov and Kroenke have been playing something of a game of blind man's bluff with each other by increasing their holdings by a single percent at a time. Every time bringing them closer and closer to the magic 30 percent takeover figure.
In the end Kroenke moved first and snatched up the late Danny Fezzan’s (16.1 percent) and Lady Nina Bracewell-Smith's (15.9 percent) shares while they were available. This move gave KSE considerable power in the Arsenal boardroom but they needed to break the 75 percent barrier to have real power.
By Usmanov refusing to part company with his stake, Stan Kroenke has found that he cannot make the changes he undoubtedly wanted to force through. Both he and Usmanov are now locked in a spiral that will decide the destiny of the club for years to come.
If and when KSE decide to change the board, Red and White Holdings can now quite rightfully demand a place at the table, and with it a further say in the club. Red and White Holdings are now actually in a more powerful position that before the KSE takeover as they can force Kroenke to produce documentation to prove that they are in a position to own the club.
They are also in the position that they can demand KSE provide double the financial support that Red and White Holdings would be asked to provide for such things as stadium and squad improvements.
So while things have changed greatly in the boardroom they have not changed much at all.
Reading further into the Kroenke takeover one only has to look at the further statements by KSE and one Arsene Wenger.
The KSE statement to the Stock Exchange read:
"Mr Kroenke believes that the self-sustaining model which is currently followed is the most effective way to ensure the longevity of Arsenal, whilst maintaining its unique history and traditions."
"He [Kroenke] intends to use his experience to help Arsenal continue to grow its global brand and fan base, and to enjoy further success on the pitch.
"It [the takeover] will provide Arsenal with continued stability from an individual who not only understands and greatly respects the history and traditions of Arsenal, but who also has a proven record of successful long-term investment in sport."
"We will celebrate the best in sport and entertainment by recognizing the diversity and human spirit around us, and by working within our community to improve the lives of all those within the community.
"We will strive to perform this mission within a viable and self-sustaining business model."
There is nothing special in the statement but twice within those 141 words are clear references to Arsenal as a "self sustaining model."
From that you can take that KSE will not be bankrolling the Gunners into becoming another Manchester City.
To emphasise that point all you have to do is look back at Stan Kroenke's involvement with his other franchises.
According to Arsenal.com, Mr Kroenke is an American businessman who has a portfolio of high-performing, well managed sporting assets. These teams include the St. Louis Rams of the National Football League ("NFL"), the Denver Nuggets of the National Basketball Association ("NBA"), the Colorado Avalanche of the National Hockey League ("NHL") and the Colorado Rapids of Major League Soccer ("MLS"), in all of which Mr Kroenke has been a long-term investor or owner.
Mr Kroenke acquired a 40 percent stake in the St. Louis Rams in 1995, as the NFL returned to St. Louis. He received unanimous approval by NFL owners in 2010 to purchase the remaining 60 percent of the franchise. The St. Louis Rams were one of the most improved teams in the NFL this past season.
Mr Kroenke has owned the Denver Nuggets and the Colorado Avalanche since 2000. Under Mr Kroenke's ownership the Colorado Avalanche won the NHL Stanley Cup championship in 2001, sold out more than 400 consecutive contests at one point and reached the postseason in seven of the past 10 years.
The Denver Nuggets are one of only three NBA teams to make the playoffs over each of the past eight seasons, whilst the Colorado Rapids are the defending Major League Soccer Champions. All Mr Kroenke's sports investments have enjoyed stability and growth under his ownership.
Looking at the Franchises that Stan Kroenke is involved with one is struck by three distinct items of interest.
- The franchises are financial cash cows.
- The St. Louis Rams won the Superbowl in 2000, the Colorado Avalanche won the Stanley Cup in 2001 and the Colorado rapids won the MLS in 2010.
- KSE invest just enough money to reach the playoffs, where all the real money is made from TV. To read further into that just look at Arsenal's finishing positions over the past couple of years.
This philosophy is echoed by Arsene Wenger.
In a recent press conference the Arsenal manager was questioned on a number of topics, one of which was why the Gunners have not been successful over the last six years.
"Trophies are one way to judge a club," he said. "They're not overrated, as it allows you to say you've won a trophy, but would you swap winning the FA Cup for playing in the Champions League?
"Is it a trophy or not to be in the Champions League? Is it more important to win the FA Cup? We do as well as we can, and if it's not good enough it's not good enough."
Over the last couple of years Arsene Wenger has confirmed that the first priority every season is for Arsenal to finish in the Champions League positions. When this is achieved the Gunners can lay claim to serious television revenue streams. This is vitally important for Arsenal because they do not make as much money through sponsorship, advertising, and merchandise as many of their closest rivals in the Premier League.
However, prioritising finishing in the top four and disregarding domestic cup competitions has also sent a message to the players saying that winning trophies is not important.
This is the limbo that Arsenal finds themselves in now. They are making good money, but are not winning good trophies. Fans are now starting to become restless and are now openly questioning the clubs philosophy. Asking Wenger is the club there to make money or to win trophies?
Looking at the current philosophy of the club and Stan Kroenke's philosophy for his other brands, one might be forced to think that this culture will be the one carried over into the new regime.