Friday, September 16

Arsenals Cold War: One club, two billionaires, many questions.

By @AAllenSport

In July 2003, speaking in the aftermath of his decision to sell his stake in Chelsea to Roman Abramovich, Ken Bates prophetically remarked, “I think this could signal the arrival of overseas sugar daddies...if this is the start of the super-rich invaders it'll be very, very interesting to see how the fans react to it.”

Eight years later and attempting to distinguish any uniformity in the reaction of fans towards the influx of oligarchs, sheikhs and billionaire businessmen remains near impossible. While it is safe to say that supporters at Chelsea and Manchester City are very pleased by the investments made by their big-money donors, the anger and suspicion voiced on the terraces of rival clubs hint at a far more complex relationship between punters and board members.

Regardless of the contrasting outlooks, one fact remains clear; the football landscape in England has irrevocably changed since Stamford Bridge ushered in the era of Roman’s Roubles. Indeed, in boardrooms up and down the country, power struggles have proved as customary and bruising as a lumbering two-footed challenge by Ryan Shawcross. At Arsenal, however, the internal wrangling has played out less like a feisty Premier League confrontation and more like a stolid Cold War chess match.

While American businessman Stan Kroenke has patiently accumulated 66.67 per cent of the club and is obliged, under City regulations, to make an offer for the remaining shares, his path to a full takeover remains firmly blocked by Uzbek oligarch Alisher Usmanov who has himself acquired 29.25 per cent of the 62,217 shares issued by Arsenal Holdings plc.

As it stands, the showdown is locked in a stalemate - a state of affairs which both Kroenke and Usmanov appear willing to accept as each mulls over their next move. In the meantime, for Arsenal fans already struggling to come to terms with a six year trophy drought, and all too aware that Champions League football is increasingly difficult to secure, the issue has become divisive.

The longer ‘Silent Stan’ lives up to his nickname by failing to declare his vision for the future running of the club, the more likely his rival, still aggravated at his continued isolation, is able to stir the boardroom melting-pot from afar, while simultaneously rehabilitating a shadowy reputation.

Whether criticising a recent hike in ticket prices, questioning the club’s policy in the transfer market, absolving Arsene Wenger from any blame or promising a cash-injection, Usmanov has found it very easy to curry favour with disillusioned Gooners. A recent poll by the Arsenal Supporters’ Trust reflected the increased popularity of the Moscow-based mogul with 70 per cent of members in favour of him being given a place on the board – up a staggering 30 per cent from last year.

That Usmanov has been denied a directorial position up to now, is an issue which Ivan Gazidis and Stan Kroenke may be forced to reconsider in the near future. Approximately 460 shares short of the 29.9 per cent mark which would allow him full access to Arsenal’s accounts, the Uzbek stands close to consolidating his credentials as a thorny customer. Rather than passively allow the billionaire to continue sniping from outside, it may be easier, to aid stability at the club, to extend an olive branch to Usmanov by involving him in high-level board discussions.

Although it seems implausible, recent history suggests that a volte-face isn’t totally out of the question. The Arsenal board drastically shifted their attitude towards Stan Kroenke inside 18 months, promoting him to non-executive director in September 2008 having initially treated him with disdain.

That such a shift in attitude was forthcoming had much to do with Kroenke’s decision to sever relations with David Dein. The former vice-chairman of the club, ousted from his position in April 2007, has much to answer for. Indeed, if anyone is to blame for the current deadlock, it is Dein.

Recognising, like Ken Bates, that the arrival of Abramovich would precipitate further takeovers by other big money donors, he took it upon himself, behind the backs of his fellow board members, to sound out Kroenke about a potential investment in Arsenal.

Never in favour of the expensive move to the Emirates, Dein, who initially supported Wenger’s plan to cut transfer costs to help fund stadium loan repayments, privately reneged on his backing for the idea in favour of a quicker solution. Regrettably, having betrayed the trust of his colleagues, his removal from the board due to ‘irreconcilable differences’ had far more damaging consequences. Backed by an individual considered toxic by majority shareholder Danny Fiszman, Kroenke had little choice but to ruthlessly cut Dein loose to preserve a line of communication with fellow stakeholders.

A canny operator, Dein found a second willing benefactor within four months. Joining forces with Alisher Usmanov, he sold his 14.58% stake in Arsenal to the billionaire’s investment vehicle Red and White Holdings Ltd becoming, as part of the deal, its chairman. Making £75 million along the way, he placed all his trust in his new partner’s ability to push through a takeover. Lock-down agreements, a pact with Kroenke and sheer bloody-mindedness saw his old boardroom adversaries put an end to such hopes. By September 2008, Dein took it upon himself to resign as chairman of Red and White in the hope his decision would aid Usmanov’s relations with the board. So far it has not.

There is no doubting that David Dein has been a fantastic servant for Arsenal. Having protected the club’s interests during the advent of the Premier League, boosted its European standing by assuring entry into the powerful G-14 group and been responsible for shepherding the revolutionary Arsene Wenger era, it is guaranteed that his fingerprints will forever be embossed on Arsenal’s modern history. Unfortunately, having played an unequivocal role in the boardroom schism of the last three years, and having isolated himself in the process, his careless grubby footprints have also muddied the club he loves.

So what next for Arsenal? Will Kroenke push for a full takeover? It appears unlikely, even though he must make an offer under City rules. Would Usmanov opt to sell even if a lucrative offer was made? It seems even less plausible given his extraordinary wealth. Could Kroenke grow tired of the impasse and opt to sell to Usmanov? In time it is feasible, but given Danny Fiszman’s decision to sell his shares to the American before his passing, it appears his chosen ‘protector’ has committed to a long-term strategy. Might Kroenke and Usmanov enter a period of détente and work together for the good of the club? In an ideal world their combined might could well be harnessed for the greater good, but realistically it is a pipe dream.

In the short-term the current uncomfortable truce looks likely to continue; only time will tell if either party can find a way to end the stalemate. The Cold War continues.


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