Amy, Amy, Amy. Whatever will we do with you?
Fellow Gooners, over the last couple of days, I kept seeing this article being retweeted and referred to. Lots of people, including Tim Payton of the AST no less, were saying how once again Amy Lawrence of the Guardian had nailed it. She had laid out the problems at Arsenal. What struck me as odd was that I had already read it, and concluded that she was full of shit because she clearly didn’t understand the most fundamental issue relating to ownership at the club. So here it is: her article combined with my responses.
Arsenal will not make any progress while they are so dysfunctional
By Amy Lawrence of The Guardian.
See the Original Article here.
“Arsenal’s billionaire owners, Stan Kroenke and Alisher Usmanov, will not talk to each other. This is no way to run a business
The open letter sent by the Russian billionaire Alisher Usmanov has taken Arsenal into very destructive territory. Photograph: Sergei Karpukhin/Reuters
When Stan Kroenke made one of his rare trips to London to drop in on his soccer franchise last season, the closest he got to witnessing discontent about the way the club is being run was a few pointed heckles at the AGM. This being Arsenal, the tone was more courteously indignant than outright insulting. But when he travelled back to the USA, he would have at least been aware that there was a section of the fanbase that was no longer buying into the “self-sustaining” concept.
Me: OK. So far… just some blah, blah, blah.
There is a marked difference between some of the small shareholders applauding awkward questions and a rival major investor lobbing over a hand grenade. The open letter sent this week from Alisher Usmanov, who owns a shade under 30 per cent of the club, has taken Arsenal into very destructive territory. The twain have not been minded to meet before. Now a wholly uncivil war has broken out.
Me: OK. Now you actually said something. But there is NOT a civil war yet, just the rhetoric. To have a war, you would need an army. We are that army. There is only a war if we, the fans, fight it for R&W.
What a peculiar situation. Arsenal are owned by two billionaires, neither of whom bankroll the club at all. Kroenke and Usmanov share a business interest and yet they will not talk. Both need Arsenal to flourish to make the best out of their investment but they are at loggerheads about how to do so. You don’t need to be Baron Sugar to realise that this is no way to run a successful business.
Me: Amy, firstly, well run businesses do not generally get bank-rolled by their owners. You must have confused us with poorly run football clubs. Yes, they do get bank-rolled by their owners.
Secondly, Arsenal is not owned by 2 billionaires. It is owned by 1 billionaire, Stan Kroenke. He owns 65% of the company. Anyone owning less than 50% of the company, (I am talking to you, Alisher) is entitled to zero, that’s right, zero say. You have no power.
Now, I know it’s politically and technically correct to talk about shareholders, small and large, as being owners of a company. I am 1 of the owners of IBM for example. The AST, or rather Fanshare, is one of the owners of Arsenal.
But a shareholder is an owner in the same sense that I once told my 7 yr old daughter that she could help her mummy and daddy pick out their new house. It feels nice.
Your second mistake, Amy, is that you said they both need Arsenal to flourish. Again, as many have noted, 1 of them needs Arsenal to stumble and fall, to help his civil war. Alisher wants to own the whole thing.
Exhibit A, van Persie lobs his hand grenade against the club and within 24 hours R&W lob in their hand grenade. So transparent that NOT EVEN THE MEDIA was fooled, not even the supporters. But it hasn’t stopped many fans saying, “well it was reprehensible what R&W did, but he does make some excellent points.” Hmmm, does he, indeed?
And seeing as you bring up Baron Sugar, he would be able to tell you that Usmanov is not involved in running the company. Baron Sugar would also tell Usmanov to get lost because Baron Sugar knows an enemy when he sees one.
And finally, regarding the statement that they never talk. Undoubtedly, their people have talked to their people. Apparently, Stan doesn’t trust Alisher and/or doesn’t want his advice. And therefore is not interested into entering into a Kabuki dance which Usmanov will then PR-spin to his advantage.
It is hard to see how Arsenal can ever make serious progress while they are so dysfunctional from an ownership point of view. The statement by Usmanov’s Red and White was blatantly designed to stir up public feeling and garner support for change.
Me: Incorrect, Amy. Arsenal’s future progress is all about increasing revenues off the field through commercial success and has nothing to do with R&W squabbles, unless the fans do Usmanov’s bidding for him, and take their protests “to the terraces and the media.”
These days, as far as the Arsenal fans are concerned, you either back Kroenke and the status quo, or feel if you can’t beat the oligarchs you had better join them. Regardless of any sides, what is undeniable is that one of the key parties will not even entertain sitting down with the other. Reading between the lines, that seems to irk Red and White more than any of the criticism about how to help Arsenal to challenge for trophies. The ownership struggle would certainly be a less divisive issue if Kroenke at least sat round a table with Usmanov before dismissing his ideas out of hand. In most hostile situations there is some form of an exchange of views to work towards the greater good. But not here.
Me: This is Alisher Usmanov, not Shirley Temple. Alisher would revel in a big “Summit between the billionaire owners” which would raise every fans excitement level to orgasm with rumours that a 100 million pound cash injection was in the offing. And then Usmanov would love even more the destructive anger fueled by the disappointment of the outraged fans that Stan Kroenke was now the only obstacle in the way of this cash gift, or as we call it, “an equity injection,” or as it still is, 100 million in borrowed* cash. Nominally, the purpose would be to spend 100 M on the squad. Sounds kind of Oil Money-ish to me. What about you? Start as you mean to go on, eh?! If you can’t beat the Oligarchs, become one. Credit Card Economics vs Sustainability.
Or, as I am sure Stan would suggest, we could wait till we actually start earning more money in 2014 through greatly enhanced commercial deals. You see, the one advantage of being slow to improve those commercial deals is that we are like a player who runs down his contract. We are a free agent. The page is clean. We come to the market for a new kit deal and can point to the MUFC deal and say, we want one close to that. Or the LFC deal and say we want a deal better than that.
People used to worry that Stan was like other American owners such as the Hicks, Gillette, Glazer types. In for quick short-term gain, achieved by raping the club to pay for the original purchase.
Now the fans complain that he is too long-term for them. Well, the good news is they were right the second time.
There are currently two clearly defined, opposing camps – something reflected in arguments among supporters. Few teams win without people pulling in roughly the same direction. This unhealthy situation only increases the pressure on Arsène Wenger and the players to perform well. The minute they don’t, the daggers will be drawn.
Me: I think you can say the same at any club anywhere. Managers have about 5 minutes of grace when results go belly up. Arsene has handled that better than any in his 16 years at the club. Trust me, if City under-perform next year, Mancini will be under tremendous pressure. The good news is that Stan, Ivan and Arsene appear to be pulling in exactly the same direction. Alisher is surplus to requirements. So by your own metric, Arsenal should be OK.
While Wenger has always resisted the temptation to discuss the effects of the ownership schism, and players rarely get too involved in club business unless they are seeking to engineer a transfer, there is no question that Arsenal are struggling to compete within their current strictures.
Me: Is Arsenal struggling to win and compete because Alisher needs his tummy rubbed or because the oil-money clubs have corrupted the pay scales and transfer market by buying up the top talent to the point where they then send it out on loan to our competitors (Adebayor) heavily discounted, while at the same time bidding up the costs of the players we retain by inflating the market, even in a recession?!!
The board has a very different atmosphere to the old days, when the monthly meetings at Highbury saw a group of directors who were all lifelong fanatics discuss everything with the aim of trying to pass any motion unanimously. The current board feels less democratic in that most of the old school directors no longer wield any real power, having sold out to Kroenke. In the office buildings around the Emirates Stadium, the place is increasingly run like a big American corporation.
Me: Amy, I’m confused, now. I thought the club was in shambles?! Now, our problem is that we are starting to run like an American corporation? And the problem with that would be…? We might end up efficient? We might sort out our marketing and commercial act? We might become expert in worldwide brand development? You can accuse Americans of many things but you can also accuse them of being quite good at all of that.
I notice that you notice, Amy, that the club is getting less democratic. Given your concern about a power struggle between billionaires, that’s good, then isn’t it? For clarity: Stan is the boss; Ivan handles all the business for him and Arsene owns everything football for the club; and Alisher has a certificate that says he owns some shares.
Arsenal’s intention is to sit tight and hope the debate fuelled by Red and White blows over. Airing dirty laundry in public has never been their style. Besides, the board are steadfast about their commitment to self-sustainability. A club spokesman happily points out that they are in their 15th season in the Champions League and are not afraid to spend on transfers, having laid out £75m over the last financial year, and £20m so far this summer, with the promise of more to come. That is all well and good, until the words “Manchester” and “City” come into the equation.
Me: Well, Amy, re-read all of that last paragraph to yourself again, and we might end up agreeing with each other. What the club is doing is “well and good” until you mention City (or Chelsea). Correct!
It has never been harder to convince supporters paying for expensive tickets that self-sustainability can be competitive in a market dominated by benefactors. It has never been harder to convince players, either.
But the one person who needs no convincing about its merits is Kroenke. His approach to his sports franchises is to slowly sweat out his investments. Red and White may not be alone in thinking it is time for Stan to put up or sell up. Unfortunately for anyone who agitates for change, he appears to want nothing more than to do nothing.
Or to put it another way, Amy, Stan is in it for the very, very, very long haul, it seems. He sees no reason to borrow money to give the squad a cash gift when it is not sustainable. Stan, unlike almost every other purchaser of a major Premier League team (Oligarchs excluded) has not taken a penny out of the club. Conversely, he has no desire to borrow money to give his own business a cash gift, unless he is convinced that it is heading for trouble. And last time I checked, all the supporters were pretty optimistic this summer, in advanced of the 2 recently lobbed hand-grenades.
Silent Stan – Boringly dependable.
Now, can anyone tell me where is the horse Alisher Usmanov rode in on?
Note: I know many think that Stan should be putting money into the business. I’m not so sure, but let’s leave that for another post. Remember, there are no perfect owners. But there are a couple of very good ones. We might just be lucky enough to have one. Danny Fiszman selected Kroenke for a reason and avoided Usmanov like the plague for a reason.
* I use the term “borrowed cash” as we don’t yet know where those in favor of this cash gift believe the source of this money will be. Where would Stan borrow 65% of this amount from? Or what should he sell to fund it? Are we in effect demanding that he sells shares in another sports team to fund ours. We would be OK with that the other way round? The recommendation has been made to KSE to do an equity injection. Stan has turned it down. To demand an equity injection without understanding the consequences for the owner may be foolhardy for everyone.