WHEN THE (SIR) CHIPS (KESWICKS) ARE (LOCKED) DOWN

“This kills any talk of takeover” said managing director Keith Edelman at Arsenal’s Annual General Meeting.

He was referring to the ‘lockdown’ agreement whereby shareholders on Arsenal’s board have pledged to sell their 45.45% stake to no-one but themselves until 2012. ‘Lockdown’ is a new word to football and finance. The dictionary definition: “confining prisoners to cells, typically to regain control after a riot” was probably what Arsenal’s Old Etonian chairman Peter Hill-Wood had in mind for ex-vice-chairman David Dein, who started Arsenal’s long-running ownership struggle…

Dein left the board in April after members refused to countenance a potential takeover by US sports tycoon Stan Kroenke. Owner of six US sports teams, including the strikingly-monikered Colorado Mammoth lacrosse team, Kroenke had acquired 12.19% of Arsenal, including ITV’s 9.9%. Dein believed Arsenal needed Kroenke’s money to compete with the Glazers and Gilletts. Hill-Wood’s statement: “We don’t need his money and don’t want his sort” hinted at reservations.

Kroenke’s ‘people’ (‘Silent Stan’ is a nickname well-earned) suggested their man was “bullish” about a takeover bid, which a 30% shareholding would trigger. The mathematics gave the idea legs. Kroenke’s 12.19%, ‘ally’ Dein’s 14.6% and, for instance, the 3.13% owned by hedge-fund Landsdowne Partners (duty bound by status to go for the money) equalled 29.92%, leaving them ‘two blokes down the pub’ short of the trigger-figure. Or, more intriguingly relevant, nearly there with Arsenal’s Supporters Trust’s shareholding.

Formula One’s Bernie Ecclestone was a briefly entertaining sideshow. Clearly not Hill-Wood’s sort but: “British. I’ve got the passport.” Inevitably, though, the irresistible charms of QPR proved too much.

However, Hill-Wood knew takeover possibilities remained, even with his financial acumen akin to a minor member of the Muppets (famously describing Dein’s 1983 Arsenal investment as “dead money” – Dein has made at least £87m from this ‘ceased to be’ £290,000). And there was a subtle shift in public statements about Kroenke – “his sort” now “welcome as a shareholder” - a change of tack made easier by the obligatory ex-Soviet joining the cast.

“Red and White Holdings” was the investment vehicle for Uzbekistan’s Alisher Usmanov, a businessman with a chequered business history beyond Ken Bates’s wildest dreams, and D. Dein as vehicle director. Usmanov bought Dein’s shares… and Landsdowne’s…and soon had 21%, the second-largest shareholder behind board member Danny Fiszman. We’ll come to him in a mo.

Despite extensive PR efforts – expenses-paid junkets for journalists, revealing that Kroenke “is the best shareholder in Arsenal” and that Kroenke’s “Colorado Avalanche hockey team, they’re very good” – Usmanov as Arsenal fan didn’t convince. Thierry Henry slipped his mind when recalling the 1998 double-winners (a bit of Stalinist revisionism some at Arsenal might have applauded). So God knows what he’d have made of questions about Jeff Blockley.

Crucially, Kroenke wasn’t convinced, edging him closer to a board viewing him as a friend in the ‘enemy of my enemy’ sense. Kroenke is reported as having a “long view on his investment”, a view Usmanov appeared to be blocking. Usmanov needs more than ‘two blokes down the pub’ to reach his 30%. And Kroenke-less, that seems beyond reach.

Poor Dein, then? No shares and no takeover prospects? Or lucky Dein. Kroenke’s talking to the board, just as Dein always wanted. And £75m nestles in his back pocket from his share sale. Whether £75m is compensation for his loss of meaningful Arsenal involvement only he knows. But if, OK when, I end up a loser, I want to lose like Dein.

The constants in this tale have been the other board members, especially ‘diamond merchant’ Fiszman, and Edelman. In as much as Fiszman has said anything, it’s hardly varied from: “I have no intention of selling my shares.” In what seemed a superfluous, but turned into a vain, attempt to quash speculation, he added: “I hope my position is absolutely clear.” Some hope.

His 2005 move to Geneva curtailed his Arsenal attendances but, apparently more importantly, his tax bill. So the feeling persists that he has a price, especially with Arsenal’s share price on an upward curve. The Mail’s Charles Sale (a far-from-unreliable source despite his paper) noted last month: “those who have worked with Fiszman are convinced (he) will sell when the price is right…prepared to play the long game (to) maximise his stake.”

However, Edelman has had trumps all along. His variants on “don’t need the money” have relied less on Old Etonian prejudice than Arsenal accounts, which long threatened to blow Dein’s arguments apart and, last month, did so. Arsenal declared a £51m operating profit. And they only lag behind Man Yoo and Liverpool in terms of debt repayments, a mere £300m.

So Edelman could say with a smile: “The club is in an incredibly good position financially. We believe producing cash for the business ourselves is the foundation for success. There’s a view out there (where, I wonder?) that you need a wealthy benefactor to chuck money. We fundamentally disagree with that.”

With this confidence, Lady Nina Bracewell-Smith, Richard Lascelles Carr, Lord Harris of Peckham and Sir Chips Keswick joined people with normal names to sign the afore-mentioned ‘lockdown’, announced to an Arsene Wenger bust at the AGM. In modern football, how nice that a club is doing the right thing in business, tradition and football terms. Pity I can’t end this piece here.

Because, as Man Yoo fans are finding to their increasing cost (you can’t imagine the Glazers discovering Arsenal’s £0.5m extra matchday income from 17,000 fewer people and just thinking “that’s nice”), the ‘right thing’ doesn’t always prevail. Edelman declared that the current board is best – regardless of circumstances. But what if a takeover bid offered ‘significantly above market value’ for shares? The board has to act in all shareholders’ best interests. And their ‘lockdown’ could be ‘restraint of trade’ if shareholders were better served taking the money. Usmanov is reportedly taking legal advice on that issue. He may have a case.

“This kills any talk of takeover” said Edelman at Arsenal’s AGM. Naïve, isn’t he?

‘MotorMurph’ is written by Mark Murphy  

 

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