Arsenal Set to Be Taken Over - How Being Paid For

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Macmoish
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Arsenal Set to Be Taken Over - How Being Paid For Apr 11, 2011 6:31:13 GMT

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Post by Macmoish on Apr 11, 2011 6:31:13 GMT

Another foreign owned Premiership Club

BBC - US businessman Stan Kroenke agrees bid to buy Arsenal
Kroenke began acquiring Arsenal shares in 2007

American businessman Stan Kroenke has increased his shareholding in Arsenal to 62.89% and has agreed to make an offer to take over the club.

Kroenke Sports Enterprises acquired the stakes of major shareholders Danny Fiszman (16.1%) and Lady Nina Bracewell-Smith (15.9%).

Terms have also been agreed for KSE to buy up the remaining share capital, with Arsenal valued at £731m.

Kronke first bought 9.9% of shares in Arsenal in 2007.

He said: "We are excited about the opportunity to increase our involvement with and commitment to Arsenal. Arsenal are a fantastic club with a special history and tradition and a wonderful manager in Arsene Wenger.

"We intend to build on this rich heritage and take the club to new success. I am delighted that Peter Hill-Wood has agreed to support us by continuing as chairman.

"We especially wish to acknowledge and thank the board, Danny Fiszman and the Fiszman family as well as Lady Nina Bracewell-Smith and her family for the confidence they have had in me over the past years and in allowing us to move forward in this more prominent role."

newsvote.bbc.co.uk/sport2/hi/football/teams/a/arsenal/9453736.stm

MATT SCOTT/THE GUARDIAN

American Stan Kroenke to take full control of Arsenal•
Arsenal will be 10th Premier League club in foreign hands
• American businessman to acquire majority shares

Arsenal will make a statement to the stock exchange on Monday announcing that Stan Kroenke has control of 62% of the club, making them the 10th Premier League side to fall into foreign ownership.

Kroenke is already Arsenal's largest single shareholder, and a board member of the club. Now the American is believed to have secured formal undertakings for share sales from both Danny Fiszman and Lady Bracewell-Smith, who between them control 32% of the shares in the club's parent company, Arsenal Holdings. Added to the 29.9% he already owns, Kroenke would have 62% of Arsenal, ensuring he has complete control over the club's affairs.

For now the development remains unconfirmed, and following the club's 3-1 win at Blackpool Arsenal refused to discuss the situation, but a statement is due at the start of trading on Monday in accordance with Takeover Panel rules. Nonetheless, it is believed Fiszman has recently positioned himself to hand over his shares in an orderly succession to Kroenke, transferring the stake to a new nominee trust last December.

The 66-year-old Fiszman, who was previously the largest single shareholder in Arsenal, has for a long time been suffering serious ill health and his condition is believed recently to have deteriorated further. For the past year Nina Bracewell‑Smith has been marketing her shares across the world through Blackstone, a US financial-services firm, and the Guardian reported five months ago that she had at last found an interested party.

Kroenke is believed to have been the figure behind that approach. It appears now that he has stepped up his interest with a formal bid. Although the decision to move for the two available strategic stakes in the club triggers a mandatory takeover bid for every available share, it is the value of Kroenke's acquisitions that will point to what happens next.

Fiszman had previously diluted his position to 16.1%, with £8,500 per share having been his sale price. It is now believed, however, that Bracewell-Smith has achieved between £11,500 and £12,000 per share, meaning Kroenke may have paid £240m for the 32%.

That is significantly less than the £15,000-a-share Bracewell-Smith had hoped to achieve for her holding.

Kroenke's mandatory offer for the club will now be placed at the same price at which Bracewell-Smith sold.

The development on Sunday further sidelines Alisher Usmanov, who has a 27% stake through his Red And White Holdings investment vehicle. It is strongly possible that the Russian will decide to accept the bid from Kroenke and sell up his own shares. He would then be making a marginal profit on his prior investment. If that happens the American would hold fully 89% of Arsenal, adding the 125-year‑old club to his US sports franchises, including the St Louis Rams, the Denver Nuggets basketball team and the Colorado Rapids football franchise.

The Arsenal Supporters' Trust, a group of minority shareholders, said: "Stan Kroenke has always been a supporter of the AST and supporter shareholders. We expect him to involve us in talks about any plans he has. The AST believes that Arsenal is a stronger institution when supporters are directly involved in its ownership structure."

Kroenke has been a prime mover in the establishment of the Arsenal Fanshare scheme that promotes equity ownership by fans. Unlike other American owners of Premier League clubs, Kroenke is therefore believed to be unlikely to push for 100% control and delisting of Arsenal.

Malcolm Glazer removed Manchester United from the stock exchange after taking control of the club in 2005, as did Randy Lerner at Aston Villa. Sunderland and Liverpool are other Premier League clubs in US hands, with Birmingham City, Blackburn Rovers, Chelsea, Fulham and Manchester City being the other foreign-owned clubs in England's top flight.

www.guardian.co.uk/football/2011/apr/10/stan-kroenke-control-arsenal

Last Edit: Apr 12, 2011 6:34:51 GMT by Macmoish

"These are the times that try men's souls"

Macmoish
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Arsenal Set to Be Taken Over - How Being Paid For Apr 12, 2011 6:33:52 GMT

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Post by Macmoish on Apr 12, 2011 6:33:52 GMT

Isn't this comparable to what the Glazers did taking over Man U, leaving them in big debt?

GUARDIAN - Matt Scott

Stan Kroenke could use Arsenal cash to fund takeover

• American has not used club's assets as security
• Alisher Usmanov fails to stop bid going through

Stan Kroenke launched his bid for full control of Arsenal in a deal valuing them at £731m but there is nothing in the agreement to prevent him using the club's own cash to pay for it.

Kroenke, the US billionaire sports investor whose properties make him the principal landlord to the Wal-Mart chain of supermarkets, launched a formal offer of £500m for the 70% of Arsenal shares he did not already own.

His acquisition of a further 32.89% of the club has effectively been confirmed and an open offer is out for the remainder. Alisher Usmanov, the Russian billionaire who has a 27% stake, made a last-ditch approach to Lady Nina Bracewell-Smith for her shares on Sunday night after news of Kroenke's bid broke. However, Bracewell-Smith rejected the offer – understood to be worth £1,250 a share more than Kroenke's – because she had given her irrevocable agreement to sell her 15.9% stake in Arsenal to Kroenke.

Kroenke has not used the club's assets as security to raise the money for his purchase, unlike Malcolm Glazer's 2005 buyout of Manchester United. But there is nothing in a long list of undertakings to prevent Arsenal's new owner using multimillion-pound annual dividends from the club to service any debts he may have secured against other assets in his investment portfolio.

Kroenke's offer announcement states: "The offer will not be funded by way of any debt finance … for which the payment of interest on, repayment of or security for any liability [contingent or otherwise] will depend on the business of Arsenal." Arsenal's own statement underscored it by saying: "Kroenke Sports Enterprises [KSE] has also stated that the offer will not be funded by debt finance secured against the Club."

However, in addition to the possibility of using dividends, Kroenke will have access to Arsenal's unrestricted cash reserve, which is approaching £100m. Another £40m cannot be touched due to restrictions under Arsenal's banking agreements.

The Guardian asked Kroenke's adviser how Kroenke had financed the acquisition and if it had involved any form of borrowing against his other assets. Kroenke declined to respond. When asked whether the director-shareholders had applied a restrictive covenant preventing dividends being drawn from the club, Arsenal responded that since it was not detailed in the offer document no such covenant exists. That opens the door to the possibility that, in a less direct way than Glazer, he may in future use the club's funds to service leverage he has taken on to fund the buyout. One Kroenke associate sounded a supportive note for the American, saying he had not used debt to finance acquisitions in the past. "Kroenke is not a Glazer," said the source.

He went on to explain that previously Kroenke has not taken advantage of the US's favourable tax structures that allow the interest in debt-financed acquisitions to be written off against taxable profits.

That should encourage Arsenal fans that their season-ticket payments – which are set to rise by 6.5% next season – will not be drained by owner dividends, but it is by no means a copper-bottom guarantee.

The first to accept Kroenke's offer, with "irrevocable undertakings" to sell their stakes, were the 16.1% shareholder Danny Fiszman, and Bracewell-Smith. The club's nonexecutive directors also consented to sell their combined 0.89% holding and recommended Kroenke's £11,750-a-share offer, giving him 62.89% of the club's equity.

Usmanov has yet to decide whether to sell his stake. With an estimated total wealth of $18bn (£11bn) he has no pressing need to sell his shares, but his consideration may hang on the fact that yesterday's offer price is almost certain to be Kroenke's investment ceiling. Future opportunities to cash out are likely to be less lucrative. However, one Usmanov ally said yesterday: "Clearly there is still an option to stay in."

One thing is clearer: that Arsène Wenger can rely on Kroenke's staunch support. Kroenke's first words as the new Arsenal owner on Monday were to describe the three-time Premier League title winner as a "wonderful manager".

Arsenal's faltering title challenge has caused Wenger to come under fire from some sections of the Arsenal support in recent weeks but it looks highly unlikely that he would be displaced as manager before his contract expires in 2013. "Arsenal is a fantastic club with a special history and tradition and a wonderful manager in Arsène Wenger," said Kroenke. "We intend to build on this rich heritage and take the club to new success."

Kroenke's offer document, through which he made a full takeover bid for the club through its parent company, Arsenal Holdings, reinforced his support for Wenger. It stated his "current intention" for "existing employment rights of the executive management team and the employees of Arsenal [to] be fully safeguarded". The existing directors, despite divesting of their shares today, will remain on the board, with Peter Hill-Wood continuing as chairman.Ivan Gazidis, Arsenal's respected chief executive, said: "It's the end of an era but it's also the beginning of an era. I don't think we will see dramatic changes. At the same, I do think that Kroenke brings experience in the sports arena. He's got tremendous experience in the United States and also experience now over here in England."

www.guardian.co.uk/football/2011/apr/11/stan-kroenke-arsenal-takeover

"These are the times that try men's souls"

Macmoish
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Arsenal Set to Be Taken Over - How Being Paid For Apr 12, 2011 6:35:19 GMT

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Post by Macmoish on Apr 12, 2011 6:35:19 GMT

Guardian

Will Stan Kroenke burden Arsenal like Malcolm Glazer has United?

As with Malcolm Glazer's acquisition of Manchester United, only time will tell whether Stan Kroenke's takeover is good for Arsenal

When Malcolm Glazer began buying large lumps of Manchester United shares ahead of his hostile takeover of the Old Trafford club, he was warned of an "army of red ants": fans ready to confront and frustrate him at every turn. As another American, Stan Kroenke, is confirmed as Arsenal's new owner, not one Gooner has cracked open a pot of paint or donned a balaclava.

There are many reasons for the relative complaisance of fans who chant "red army" as they ascend the steps to the Emirates Stadium. Principally, it is that familiarity has bred contentment.

Kroenke first opened talks with shareholders about investment in Arsenal in 2005 and, after a troubled early courtship (remember Peter Hill-Wood's "we don't want his sort" bluster), the US billionaire is now a director whose full takeover offer is being recommended by the board.

Arsenal fans place much faith in their club's directors, and with good reason. Families like the Hill-Woods, the Carrs and the Bracewell-Smiths have pre-war associations with Arsenal, and Gooners value the "custodianship" their involvement has carried. Indeed, despite their dynastic nature, the club's owners have not halted progress: the transition from the delightful but dated Highbury to a £450m cash cow at the Emirates Stadium (while remaining in the borough that has been their home for the thick end of a century) has been exceptionally well managed.

And as a director Kroenke has steered a steady-as-she-goes course for Arsenal alongside Danny Fiszman, a man who commands enormous respect among Arsenal fans. Tragically it is Fiszman's ill health that has dictated the timing of Kroenke's takeover. With sons who have scant interest in their father's football club, Fiszman was unable to create a dynasty of his own. So he has sought to manage an orderly succession to a man he views as capable of continuing his own legacy of careful husbandry.

Whether Fiszman's hunch is right, only time will tell. The true impact of Glazer's 2005 takeover of Manchester United – up to £90m a year in interest and capital repayments on loans taken out to finance his acquisition of the club – could not be known until after the event.

As the landlord of most Wal-Mart stores in the US, Kroenke is a very rich man indeed, but his wealth appears tied up in assets. His Arsenal takeover, valuing the club at £731m, means he will have to stump up £500m in cash if all the major shareholders take him up on his offer (and there is every reason to believe they will). No one can yet tell, however, if Kroneke, whose business affairs are enshrouded in the corporate darkness of Delaware, has that kind of money sitting in a bank account.

In Arsenal's board statement recommending that shareholders take up Kroenke's £11,750-a-share offer, it stressed the following: "Kroenke Sports Enterprises [the purchasing vehicle] has stated that the offer will not be funded by debt finance secured against the club." Fine. But that could be a little misleading: it doesn't matter where any debt finance might be secured, once he owns Arsenal outright there will be nothing to stop Kroenke taking £25m a year and more in dividends to pay for KSE's leveraged buyout. That might very well rouse the red army, for Arsenal cannot afford that kind of burden.

Kroenke has taken over a business that turned over £380m last year. But that staggering number, a record for any English football-club parent company, conceals an underlying football business that is relatively anaemic. The £157m of property profits deriving from flat sales at the redeveloped Highbury will not recur.

Football revenues last season were only 7% higher than they were in 2007-8. And with football revenues pretty flat, costs are rising: the wage bill is believed now to have climbed to around 54% of football turnover. Only when Arsenal's paltry £5.5m-a-year shirt sponsorship with Emirates – cheaply forward sold to raise cash for the stadium construction – ends in May 2014 will Arsenal's football business approach the level of Manchester United's.

With money tight, Kroenke may choose to buy his club out of that below-market deal and look for new sponsors. That is his prerogative, since soon he will be the only man who matters in Arsenal's oak-pannelled boardroom.

That fact has its advantages: more streamlined decision-making, unity of purpose etc. But it also has its disadvantages, and – his long-standing ownership of the Colorado Rapids notwithstanding – Kroenke could not engage in an in-depth conversation about the merits of 4-4-2 with, say, Roman Abramovich.

So as Arsenal fans consider whether Kroenke's takeover is entirely positive for their 125-year-old club, it is worth recalling some other of Hill-Wood's words. "If you have a benefactor and he gets run over by a bus you are gone," he said. "We have got to have 50,000 people run over by a bus before we have a problem." Not any more.

www.guardian.co.uk/football/blog/2011/apr/11/stan-kroenke-arsenal-glazer-united

"These are the times that try men's souls"

Macmoish
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Arsenal Set to Be Taken Over - How Being Paid For Apr 13, 2011 7:01:38 GMT

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Post by Macmoish on Apr 13, 2011 7:01:38 GMT

David Conn/The Guardian

Stan Kroenke is a custodian of Arsenal with a different view of valuesThe American's takeover of Arsenal has unleashed the usual talk of a 'very special club' with unique 'ethos and spirit'

A shower of warm words from the Arsenal chairman, Peter Hill-Wood, washed over the sale of the club to the US investor Stan Kroenke, who will pay Hill-Wood £4.7m for what remained of a long-standing family shareholding. "The board of directors and I consider it a key responsibility to protect the ethos and spirit of the club," Hill-Wood said. Kroenke, he added, "values and respects the history and traditions of this very special club that we cherish. We are confident that he will be a safe custodian of its future."

Kroenke did not just enthuse about buying a top Premier League club, with its gleaming, money-spinning Emirates Stadium, home of the famous first £100 ticket; or of Arsène Wenger's easy-on-the-eye young side. He spoke about "a rich heritage" and "special history and tradition".

Since Hill-Wood's grandfather, Sir Samuel Hill-Wood, arrived at Highbury in the 1920s, having dropped Glossop North End in the town where the family made its cotton-mill fortune, Arsenal have been the blue-chip club with double-barrelled names in the boardroom. In recent times, despite boardroom bust-ups, shareholders cashing in and the stand-off between Kroenke and the Russian magnate Alisher Usmanov, a halo has risen above the Emirates.

The parliamentary committee on culture, media and sport, inquiring into whether football supporters are "ill-served" by the game-turned-global business, were guided around Arsenal as the supposed moral stand-out, next to the other big clubs. Scrabble through all the talk of ethos, spirit, tradition and heritage, however, and this is what happened yesterday. Kroenke announced that he has agreed to pay £11,750 for each share owned by all the Arsenal directors and Lady Nina Bracewell-Smith, who inherited her shares from her great-grandfather-in-law, Sir Bracewell Smith, the builder of the Park Lane Hotel in the 1920s.

Lady Nina will pocket £116m. Partly the sale is happening now because Danny Fiszman is seriously ill – he will be paid £117m for his stake, adding to the £42.5m he made from selling 8% to Kroenke two years ago. Shortly before that Fiszman moved to Switzerland, so he is a tax exile, paying no UK tax on the capital gain he is making on the Arsenal shares.

Hill-Wood sold some shares to David Dein just before the 1992 Premier League breakaway and subsequent commercial revolution which made shares in football clubs lucrative for the first time – not the "dead money" Hill-Wood called them, famously, in the 1980s. He made £850,000 selling some more shares to Kroenke in December 2009, before disposing of the rest this week.

This bonanza is a long way from what Hill-Wood contemplated when Dein was thrown off the Arsenal board in April 2007 for encouraging Kroenke to buy his first 9.9% stake. Hill-Wood said then that he, Bracewell-Smith, the Carr family and Fiszman would be "horrified to see the club go across the Atlantic".

Then Hill-Wood, expanding on whatit meant to be a "custodian", said of Kroenke: "The club has been run for the benefit of supporters, staff and players and the shareholders would prefer to stay in control than sell out to some stranger without the years of support they have. Having a few extra million pounds in the bank is of no interest. We're here for Arsenal Football Club. Not to make a few bob."

Now Hill-Wood says Kroenke, after a couple of years on the board, is the right person to control Arsenal, a man who will protect the "ethos and spirit" of the club. Arsenal tend to wave the word "custodian" around, however, so perhaps it should be explained, in the light of football's "history and tradition".

"Custodian" was what directors and shareholders used to call themselves in the 100 years when buying into a club really did represent "dead money". Their responsibility – not always discharged with distinction – was to safeguard a club for its supporters, its town or city. Football's guardians said that the motivation, as Hill-Wood claimed four years ago, was opposite to wanting to make money.

Andy Green, the writer of the andersred blog on football's financial search for its soul, recently unearthed a Daily Sketch article from 1909 which stated: "The Football Association does not allow the private proprietorship of clubs for speculation and profit." A club then, growing tremendously on loyalty of the masses around it, had to be "a genuine club, formed by the voluntary effort of a number of people resident in the locality".

The FA lost the confidence to guide football's moral compass years before Kroenke rode into Islington. Now it has no role to play, and nothing to say, in the takeover of one of the greatest clubs. The statements on Kroenke's behalf yesterday embraced the image of Arsenal as having special traditions but there is reason to be cautious in the detail. His company, which will hold the shares, is registered in Delaware, where there is no tax to pay and next-to-zero transparency.

Kroenke stated that the £239m he is paying Fiszman, Bracewell-Smith, Hill-Wood and the other Arsenal directors will not be funded "by way of any debt finance … which will depend on the business of Arsenal". Tom Hicks and George Gillett made a very similar claim in their 2007 offer to buy Liverpool but then, in Gillett's words, "circumstances changed". The pair took millions out of the club in order to pay the interest on their own borrowings.

There are no guarantees. Nor does it appear Kroenke intends to put money into Arsenal itself, only to pay his millions to the outgoing shareholders. That is what all yesterday's talk of the "self-sustaining business model" means – that Arsenal will run on what the fans pay over, for the £100 seats and other pricy tickets. Kroenke himself will not be contributing.

The American may indeed turn out to be a long-term, competent owner of this club of grand tradition. He may not turn a quick fortune for his Delaware holding company. But the word "custodian" is being debased and its principles need to be reclaimed.

www.guardian.co.uk/football/blog/2011/apr/12/stan-kroenke-arsenal-takeover-custodian

"These are the times that try men's souls"

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