Arsenal News » 2009 » October » 12

When the junk press run almost identical stories twice you know there is something odd going on.

We saw it last season when the story went around that Arshavin was so unhappy with his Arsenal contract that he was going to re-neogiate straight away – and that this would bankrupt the club.  It was pathetic first time around, and doubly so next time, but that didn’t stop the papers from running the piece.

We also see it all the time with the Cesc to Barca story.  Some of that is of course just sour grapes from Barca – they hated the fact that we “stole” Cesc from them, and have waged a war against Arsenal ever since, ranging from “he’s not that great” through to feeding the Sun and Mirror so-called “translations” of his TV interviews in Spain which had nothing to do with what Cesc actually said.

But in the last few months the campaign has taken a more incidious turn with the story that Kronke has not paid for the shares in Arsenal he has bought.  The Times claims he owes other shareholders £50m.

Just to be clear, here’s the opening paragraph of the Times article

“STAN KROENKE still owes Arsenal board members £50m despite edging closer to taking full control of the club. The American billionaire last week moved a step nearer to owning 29.9% of the London club, which would force him to make a formal takeover bid. However, he has paid for only half his shares since making a £100m commitment to increase his stake from 12.38% to 28.3% last December.”

To understand what is going on, and to take a pot-shot at who the “insider” is who is leaking these stories, it is important to consider business transactions at the simplest level.

If my company wants to sell your company something, we would probably not ask for payment up front, but would instead arrange for payment by a set date – often 30 days after the deal is struck.   However that rule breaks down in some cases – and if I am anxious to make the sale, I might extend the deadline for payment by months and months.  Anything to get the deal.

Now why should anyone want to do that if selling Arsenal shares?

Let’s consider this scenario.  Mr A and Mr B both have lots of shares in a company.  Let’s say for the sake of argument Mr A has 29% and Mr B has 25%.  Both men are close to making a bid for the whole company.

Now let’s say that there are other shareholders who would very much prefer there to be no takeover – but if there is one, for Mr B to make the bid.

So they say to Mr B, “you buy some shares from each of us guys, and take yourself up to 29%.  If we see Mr A buying up the remaining shares he needs to trigger a takeover bid, we’ll quickly sell to you so you can get your bid in first.”

Mr B says, “But I can’t pay for the shares – I’d need to sell something else in my portfolio to be able to get these.”

To which the the friends say, “Don’t worry – pay us later.”

That scenario will make sure that if there is a takeover, there is only a friendly takeover.  But it raises two questions.

a) Would anyone “sell” shares without getting the money at once?

Yes, providing there are sub-clauses in the deal which allow a hand back after a certain date if the shares are not paid for, and which set the price of the share at the current market value or the value on the day payment is made, whichever is the greater.  Also yes, because these shares pay no dividend, and so only have value when sold, or when the club is taken over and starts paying out dividends.   There are of course City regs to stop some of this, but if the sale is handled through the Cayman Islands most of this can be circumvented easily.  (In fact you can change the ownership of a whole club in this way, as Leeds United have so aptly demonstrated).

b) Who would stir up all these rumours?

Let’s remember that we don’t know if the story about Kronke not having paid for his shares is true.  Given the accuracy level of reporting in the Times, probably not.  All I am saying above is that even if true there can be a very good explanation for the tactic.

But that doesn’t explain why someone should spill the story.

The source of the story is “someone close to the board”.  I can make some guesses and so can you, but to avoid writs for libel I would prefer not to have this done in print – and if you are commenting on this little piece I would ask you not to mention names there.   Personally I think the story is untrue, and therefore there is no mole, but others may choose to believe the gutter press.  You pays your money…

But IF the Times story is, for once, true, and IF the source is “someone close to the board”, then that person is trying to destabilize the club from within, presumably because of some perceived past insult, or a spat.

We must be very careful indeed at this point.  The club has done wonders in reforming many of its inner workings in the past two years, as well as delivering the most sensational team, which is like a younger version of the Invincibles.  But like Aleric at the Gates of Rome, the enemies could take us out at any time.

(c) Tony Attwood 2009

The book “Making the Arsenal” which tells the story of Arsenal’s last takeover, 100 years ago, is published on 30 October price £12.99 and will be available from our on line shop.  More details here shortly, but meanwhile you can read details of Arsenal’s life in 1909 in the daily blog on www.blog.woolwicharsenal.co.uk