Kroenke Sports & Entertainment Inc. (KSE) American billionaire Stan Kronke buys 30.05% of London football club Arsenal from Russian businessman Alisher Usmanov. This became known from the message of the American corporation. Usmanov, through a representative, confirmed the deal.
KSE is wholly owned by Kronke, and after the deal, he will increase its stake in Arsenal from 67.09 to 97.14% of the shares. KSE seeks to become the sole owner of 100% of the shares, Kronke said in a statement: the businessman intends to acquire the remaining shares of independent shareholders.
Arsenal Football Club was founded in 1886, it is one of the most titled English clubs, it won the English championship 13 times. However, the last time it happened was in 2004. At the end of last season, Arsenal was unable to make it to the UEFA Champions League (the main European club competition). In 2017, the club’s revenue grew by 20% to 424 million pounds, but non-participation in the Champions League in the starting season, according to analysts at Deloitte, “will significantly affect the club’s revenue for the 2017/18 season.” The failures of recent years have provoked the resignation of the famous coach Arsene Wenger, who has been with the team for the last 22 years.
The shareholders estimated the entire football club at 1.8 billion pounds, the KSE said. This means that the deal will amount to 550 million pounds ($ 712 million).
Usmanov owned 30% of the shares through Red and White Securities Ltd, registered on the British island of Jersey.
The businessman gradually increased his stake in the club. In August 2007, Usmanov and his partner Farhad Moshiri, through Red and White, bought 14.58% of Arsenal from businessman David Dein for 75 million pounds. As Vedomosti wrote earlier, the partners owned shares in Red and White on a parity basis. Thus, Usmanov could spend 37.5 million pounds sterling to buy out Dein’s share.
After that, for five years, the partners bought out small shares of the football club and in the fall of 2013 announced that their company owned 30% of Arsenal. Based on the average price of a club share in 2008–2013, according to Vedomosti estimates, Red and White could have spent 112 million pounds to increase its share (excluding a possible premium to the market price of shares). If the partners financed the acquisition of shares on a parity basis, then Usmanov’s share accounted for 56.2 million pounds. In 2016, The Guardian reported that Usmanov had bought out Moshiri’s stake for £ 200m.
Thus, over 11 years, Usmanov could presumably spend 293.7 million pounds on the purchase of Arsenal shares. Based on these calculations, then, having concluded a deal for 550 million pounds with Kronke, Usmanov will receive 256.3 million pounds of profit. That is, almost twice as much as he spent since 2007 on the acquisition of shares. According to the club’s reporting, dividends were not paid to shareholders during this period.
The Russian businessman tried to become a controlling shareholder, but Kronke did not allow him to do so. Professional sports are Kroenke’s core business. His Denver-based KSE company also owns the NHL Colorado Avalanche hockey team, the NBA Denver Nuggets basketball team, the MLS Colorado Rapids football team, the Avalanche and Denver Nuggets’ Pepsi Center, and co-owns Dick’s Sporting Goods Park, which plays Rapids. Kroenke also owns the NFL Los Angeles Rams.
Over the past several years, shareholders have fought for each other’s shares in Arsenal, but to no avail. Usmanov made his last offer in the spring of 2017, the Financial Times wrote. Then the businessman wanted to buy out Kronke’s share for $ 1.3 billion, but the American businessman refused. Buying shares, Usmanov wanted to get at least some kind of management in the club, but for all the time he did not even enter the board of directors, says Kirill Kulakov, general director of the RMA business school, which is probably why he decided to sell the asset.
Usmanov still has a desire to “manage” sports clubs, Kulakov believes, and perhaps very soon he will find a new football asset. For example, in the spring of 2018, the Italian edition of Football Italia reported that Usmanov could acquire the football club Milan. However, the businessman’s representative denied this message.
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