Friday, 15 April 2011

With $10,000 We'd Be Millionaires

   G’day g’day. Let’s start today by congratulating the NZ Breakers for progressing through to the ANBL Finals. It was a tough deciding match against Perth, and although they trailed at the end of the first quarter, they kept their composure admirably and slowly but surely ground the Wildcats into the… well, the ground. Defensively, they perhaps give up too many offensive rebounds, but they have a plethora of scoring options and will be very tough to beat in the three game series starting in Dorkland next Wednesday. And in an unprecedented turn of events, Dorklanders are actually doing a good job of supporting a local team: an hour after the conclusion of the match against Perth, 2000 of the 4800 available seats had already sold for Game 1 next week. Which is nice.
   Today’s Comments are taking a different direction from usual. We’ve been bombarded with correspondence from Arsenal supporters regarding the sale of the club this week, and so in this edition we give them an opportunity to do a little venting, starting with KoreanKurtz. Maybe this doesn’t seem of interest to many of you, but it illustrates the dangers inherent when ownership and power are channeled into the hands of the few, rather than the many. Wellington Phoenix and Terry Serepisos anyone? It’s starting to seem that Chris Knowles’ rants about Terry being the devil in disguise were disturbingly closer to the mark than any of us thought…

With $10,000 We’d Be Millionaires

   It has been a very bad week to be an Arsenal supporter. From being able to pride ourselves on having arguably the most responsibly run of the top clubs in the world, we suddenly fund ourselves plunged into total uncertainty now that American Stan Kroenke has taken over. While it’s far too early to say for sure whether he’ll be a good owner or a poor one- and most signs are reasonably positive- it’s in the long term that things look very shaky.
   Kroenke owns a number of sports teams in the US, and from all accounts has done a pretty good job with them. His nickname is Silent Stan which bodes well, as it refers to the fact that he doesn’t try to cover himself in media fame, and nor does he seek to impose himself too overtly on coaches, managers, players and staff. This is all good. Also positive is his statement that he does not intend to load the club with debt, which is what the American owners at Liverpool did, and the American owners at Man U continue to do. However it should be noted that the Liverpool owners said the same thing and then promptly went back on their words. I guess a bit of an explanation about this debt-loading thing is probably appropriate here.
   Basically it is a very dodgy means of buying a club that is facilitated by the myopic suits at the Football Association, and the greed of bankers. Imagine this: there is a club that is valued at $1000, a measure of its players, stadium, sponsorship etc. Every week, the club brings in $10 profit from ticket sales, shirt sales etc. You want to buy the club, but you only have $500. So first you go to the bank and say please lend me $500 to buy a football club. They say ok, but how will you pay us back? You promise to give them $5 every week from the club’s profits. Ok, they say again, that’s fine, but of course you’ll need to pay interest so that we can line our pockets too.
   Next, you go to the F.A. and tell them you want to buy a club, paying half with your own money and half from the bank. You have to pass what is called The Fit And Proper Persons Test, which looks at your personal and financial history. It should be noted here that Thaksin Shinawatra, with a long history of human rights abuses whilst leader of Thailand, who was proposing to buy Man City with money he had embezzled in his time as President, passed this test with flying colours. Put simply, the FA doesn’t care who you are, or whether you are going to saddle a club with debt burdens that could ultimately bankrupt it: see Leeds, Portsmouth, Crawley and many others.
   So now you have your club. You owe the bank a large sum, but that’s no problem for you because you are using the club’s money to service this debt. Yes, that’s right: you are using the club’s money to buy the club. But then problems start to arise. Your players are getting old and you need to buy new ones. Some of your players are going to other clubs that offer better wages. However, your hands are tied. Your club brings in $10 profit every week, but half of that instantly goes to the bank, so you have very limited means to keep your players, or to buy new ones (again see Portsmouth and Leeds.) So, of course, your club’s supporters become unhappy. Your team is starting to lose regularly. What is more, your stadium is old and uncomfortable, and it has too few seats. At a bigger, newer stadium, you could charge more for tickets and sell more of them. But again, your hands are tied. With only $5 a week to spend, there is no way at all to finance a new stadium (see Liverpool).
   Your club is now in a downward spiral. You owe money to the bank; your team is shite; your stadium is outdated; your supporters are livid. You need to sell up and fast, and you offload your club to the first person who comes along. And the cycle begins again.
   Now, this is not what is currently being proposed at Arsenal, which we are all thankful for. But any true supporter of the club should be taking a longer view of things, because even if Kroenke turns out to be a wonderful owner for the next five, ten or twenty years, sooner or later it will end, and he can then sell the club to anyone he pleases. If all his businesses fail, he will sell in a hurry, and who knows to which individual the club will then belong. If, and of course I fervently hope it doesn’t happen, but if he were to be hit by a bus while crossing the road tomorrow, who knows what would happen next? Would his companies be turned over to his children? Are they interested in sports? Would the board of directors give a shit about a club located in another country that plays a sport that is unfamiliar to them? These are all worrying questions, and the situation is exacerbated by the fact that his companies are registered in the tiny US state of Delaware, as are many many large companies in the US, due to its total lack of corporate transparency laws. Not good.

   So I’m concerned. I do believe the club is going to be ok, both in the short and long term, but as I mentioned at the start, it is the uncertainty that sucks. Arsenal are dearer to me than any other sports team or player, and I find it abhorrent that the FA continues to treat institutions that mean so much to so many people with such utter disdain. There’s plenty of evidence out there about what can go wrong, and just how spectacularly bad these failures can be, but for some reason they choose to ignore it. And I despise them for it.

   That is all.

   KoreanKurtz folks, frothing at the mouth as per usual. Our next submission comes from Keith Geeza Bowman:

Whatto Roby
Sounds like you have a blinder of a lifestyle, keep up the good work and lovin the blog

A chance to get on me old soap box...why yes I have a few opinions on The Arsenal (as usual)

I'm just waiting to hear more about Silent Stan's intentions.  So far he's said all the right things, mainly that the club wouldn’t  be put in debt or that he'd need to levy money against the club to pay of shares, raise capital for other ventures and generally not use the $731m as purchasing power.

As a shareholder (yes, I bought into the AST scheme) the word has been to hang in there and see what is offered.  There are some legal obligations that have to be carried out, mainly that the $11,375 share price has to be the min offering that SK has to make for each share...and he is obligated to buy if someone wants to sell.

I'm fairly comfortable with SK, he seems to be a sports fan and does fit the mould of an Arsenal board member, fairly quiet, let the employed people get on with it and understands the traditions and values that a sports club needs to retain.  I hold this ethic in high regard as The Arsenal has been an important part of my local community, uniting the neighbourhood, visiting schools, hospitals, supporting the kids clubs.  A presence that I hope will continue and don't see why it wouldn't with this change.

The Fat Russian's (Editor’s note: the Fat Russian is Russian tycoon Alisher Usmanov who owns around 25% if the remaining shares in Arsenal) move will be interesting as this is a legal process that he can't bend in England so is bound by the sale conditions.  I hope that he hangs about for a couple of years for the soul reason that the remaining $147m debt for the Grove would have been paid off so his $200m of shares when cashed in won't put us in the red again.  Mind you, I don't want to see him on the board (which is unlikely) and would rather undiplomatically see him f*ck off to sp*rs and take that orange tanned right winged knob Dein with him (now that he is no use as player scout schmoozer).

Sponsorship wise, we are bound with most of them on cheaper longer deals until the 2014-15 season (so we could have some $ upfront).  After that I expect some US based products that SK has with some of his home teams (Denver, Colorado)

Most importantly, for the manager and players, it looks like things aren't going to have any immediate effect so I doubt that there will be much change.  Wenger's had cash anyway but as we all know has stuck with his youth team, an experiment that clearly needs to be reviewed objectively in the (English) summer so that we can inject some class players with experience of winning titles/cups/bingo etc...I'd like to see someone come in who did what the orange man did and a stronger no2 (sorry Pat) who can stand up to Le Boss every now and then to keep him in check.  But of course to keep Wenger.  The fact that Arsenal fans are generally unhappy with things is actually testament to how good Wenger is.  As a kid in the 70's and 80's (bar 26th May '89) I'd have given my right arm to be in the position that we are now.

   Cheers Geeza. We also received this from Ames Don’t Touch The Grapes Maxwell:

Just did some reading online cause I’m not really up with the latest on what’s happening with the sale....but from some quick reading of a few different articles on the subject I have come to the following conclusion.....

Something needs to change at Arsenal. 5 years without a trophy is too long for a club like our beloved Gunners. I don’t think its Arsene that needs to go though.  Or maybe he does but then who else can you see as Manager at Arsenal?  Stan obviously has an interest in sport to some degree if he owns as many different clubs as he does. But are they high achieving, top 4, in their respective league kind of clubs? Seeing as one of the other investors that sold him the shares died yesterday, it was obviously planned for a reason. I’d like him to come out and say what his plans are for the club. And quickly!
   So there you have it folks. Maybe not of great interest to you all, but at the very least it shows just how much clubs mean to their fans, and just how bad the effects of globalisation and economic liberalisation can be on sport as well as every other financial aspect of our lives. Geeza’s points on the neighbourhood support side of things are particularly telling.
   That’s us for today, back on Monday with football, F1 and whatever else catches our eyes other the weekend. Have a good one.

1 comment:

  1. For journalistic accuracy, I never said he was in disguise. I also said a few other things about him although it's probably a good thing you didn't repeat the comments.