Arsenal give Kroenke a place on their board

NEWS:THE AMERICAN businessman Stan Kroenke was appointed to the Arsenal board yesterday as the club reported a pre-tax profit of €46.5 million for the year ending May 2008.

The move will be interpreted by many as an attempt to forestall any takeover bid by the Russian billionaire Alisher Usmanov who owns 24 per cent of the club's shares.

Kroenke has agreed not to increase his stake, currently 12.4 per cent, beyond 29.9 per cent of Arsenal's share capital in the next year unless a takeover bid is launched by Usmanov or another party, in which case he could do so with the consent of the board. Usmanov had been bound by a six-month agreement preventing him from making a takeover bid for the club but that expired at the end of August.

Red White Holdings, the biggest shareholder and controlled by Usmanov, felt the appointment showed that the board was grooming a "more acceptable" figure to buy it out in years to come. It felt that the invitation to the American contrasted with the limited contact it has accorded Red White over the last year.

The Arsenal directors insist they have no intention of turning their back on the club, pointing to the existence of a lock-down agreement, which prohibits share sales to any but "permitted persons" before October 2010, as evidence.

But Kroenke is on the board despite refusing to sign the lock-down. Indeed, although Kroenke issued a "no-bid" statement confirming he would not attempt to buy the club for 12 months, it carried the caveat that he would do so if he obtains the board's consent.

Kroenke's skills are a good fit with Arsenal's ambitions to match Chelsea's global reach. The owner of several US sports franchises, Kroenke controls Arsenal's broadband-internet business.

"I hope that my background in sports management will be an asset to Arsenal in its commercial dealings going forward," said Kroenke. It is clear from the announcement yesterday of Arsenal's annual results that any extra income will be welcomed.

Although pre-tax profit rose on €282 million turnover, the margins have been squeezed by a 13 per cent leap in players' wages to €128 million and a €63 million increase in debts.

Most worrying for Arsenal is the outlook regarding their various property interests. In the last set of accounts the chairman, Peter Hill-Wood, forecast turnover of €443 million from developments at the old stadium site, Highbury Square. But it is understood the board has requested daily updates on sales of Highbury Square flats, with one in 12 of those currently marketed unsold.

Arsenal's small shareholders believe this is the club's overriding concern. "It is very clear that the anticipated sale of the Queensland Road site for a hoped-for £80 (€101) million is not achievable in the current market environment," said the Arsenal Supporters' Trust. "Arsenal acknowledge this by stating that any surplus cash from property sales should be treated as a bonus and previous talk of a £100 (€126) million surplus can be firmly dismissed."

Guardian Service