Ownership of Arsenal F.C.

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The ownership of Arsenal Football Club is considerably different from that of other clubs in English football. It is owned by a parent company, Arsenal Holdings plc, which has relatively few shares which are infrequently traded. Historically, the club has been owned by descendants of the Bracewell-Smith and Hill-Wood families, but since 2007 the club has attracted outside interest and two rival tycoons have acquired significant share holdings. As of 1 July 2011, the majority shareholder in the club is the American Stan Kroenke, who holds 66.64% of the parent company. His rival, the Russian-Uzbek Alisher Usmanov, owns 29.11%.[1] Under Takeover Panel rules, Kroenke must in due course make an offer for every available share in the club.[2]

Overview[edit]

Arsenal's parent company, Arsenal Holdings plc, operates as a non-quoted public limited company, whose ownership is considerably different from that of other football clubs. Only 62,217 shares in Arsenal have been issued,[3] and they are not traded on a public exchange such as the FTSE or AIM; instead, they are traded relatively infrequently on ISDX (AFC), a specialist market. The 2011 takeover bid by Stan Kroenke puts the club's market capitalisation value at £731m.[4] At 31 March 2012, a single share in Arsenal had a mid price of £16,250, which set the club's market capitalisation value at approximately £1000m.

Arsenal Holdings plc wholly owns twelve subsidiary companies, covering the group's activities. These include Arsenal Football Club plc (the football club itself), Arsenal (Emirates Stadium) Limited (which develops and owns Arsenal's Emirates Stadium), Arsenal Stadium Management Company (which manages the stadium on matchdays), and Arsenal Overseas Ltd (which manages retail operations). Other subsidiaries deal with property development on the site of Arsenal's former stadium at Highbury and the associated property holding and financing.[3]

Financial performance[edit]

The club made an operating profit (excluding player transfers) of £72m in the year ending 31 May 2010, from a turnover of £379.9m.[5] In April 2009, business magazine Forbes ranked Arsenal as third most valuable football team in the world, after Manchester United and Real Madrid, valuing the club at $1.2bn (£605m), excluding debt.[6] Accountants Deloitte rate Arsenal fifth in the 2011 Deloitte Football Money League, a ranking of the world's football clubs in terms of revenue, with the club earning £274.1m in the 2009–10 season.[7]

History[edit]

As an amateur club, Royal Arsenal FC, Arsenal started out as a mutually owned club but after turning professional, converted to a limited liability company in 1893. The company struggled in the club's early years, with its location in industrial Woolwich resulting in low attendances. The club was liquidated and reformed in 1910, and taken over by the owner of Fulham FC, Henry Norris. Norris owned the club for the next nineteen years, moving it to Arsenal Stadium in Highbury in 1913. Norris however was forced to resign as chairman and leave Arsenal in 1929 following an expenses scandal.[8]

By the time of World War II the majority of Arsenal shares were held by Samuel Hill-Wood and Sir Bracewell Smith, the MP for Holborn and a future Lord Mayor of London. In those days the shares were not considered to be valuable and have never paid a dividend, and were seen largely as a charitable exercise to provide recreational entertainment for the working people of North London.[9]

After his death, the shareholding of Sir Bracewell Smith was divided between his son and daughter and ended up in the hands of his grandchildren, Sir Charles Bracewell-Smith, Clive Carr (Life-President), Richard Carr (still a director) and Sarah Carr, now Lady Phipps-Bagge.[10] Samuel Hill-Wood's shares passed first to his son Denis and then his grandson and former Arsenal chairman Peter Hill-Wood; he sold much of his family's shareholdings in the 1980s to David Dein, who sold some of them on to Danny Fiszman (a London diamond dealer).[11] In the early 2000s the club sold a 9.9% stake to Granada Holdings Ltd, a subsidiary of ITV plc,[12] and a significant stake was also bought by hedge fund Lansdowne Partners.[13]

Current shareholders[edit]

As of 4 September 2011, the largest shareholder in the club is Stan Kroenke, owner of Kroenke Sports Enterprises (KSE), who owns 41,537 shares (66.76%). Kroenke's holdings in the club began with an initial 9.9% bought from ITV plc in April 2007;[14] initially treated with hostility, he is now regarded as an ally of the Arsenal board and was appointed a non-executive director of the club in September 2008.[15] Kroenke brought his stake in the club up to 20.5% following a purchase of shares from fellow director Danny Fiszman.[16] On 1 May 2009, Arsenal announced that Kroenke had bought a further 4,839 shares from the Carr family, including Richard Carr, also a director, which made him the largest shareholder of the company with 28.3%.[17] On November the same year, this increased to the maximum 29.9% limit.[18]

A rival bid for the club came from Red & White Holdings, which is co-owned by Russian billionaire Alisher Usmanov and London-based financier Farhad Moshiri.[19] Red & White bought the stake held by former Arsenal vice-chairman David Dein, as well as stakes owned by Lansdowne and many other minor shareholders, and as of September 2011 own 18,204 shares (29.25%) of the club. This is the largest single stake owned by a non-board member. This led to press speculation of a bidding war between Kroenke and Usmanov.[19] However, Kroenke agreed not to purchase more than 29.9% of the club until at least September 2009,[15] while the rest of the board agreed not to consider a sale of their shares to "non-permitted persons" until at least April 2009, and had first option on each other's shares until October 2012.[20]

In April 2011, Kroenke extended his ownership of the club by purchasing the shareholdings of Nina Bracewell-Smith (15.9%), Danny Fiszman (16.11%) and other directors of the Arsenal board, taking his shareholding to 66.64%. Under company law Kroenke, as majority shareholder, is obliged to make an offer for the remaining shares in the club, which would include those owned by Red & White Holdings as well as any stakes held by the remaining minority shareholders of the club;[2] these include those owned by former players as well as three shares owned by the Arsenal Supporters' Trust.[21]

References[edit]

  1. ^ "Club Holdings". Arsenal Holdings Plc. 
  2. ^ a b Scott, Matt (2011-10-10). "American Stan Kroenke to take full control of Arsenal". The Guardian. 
  3. ^ a b "Arsenal FC Annual Report 2006-07". Arsenal Football Club. 
  4. ^ "DJ KSE, UK, Inc. Offer for Arsenal Holdings PLC". PLUS Markets Group. Retrieved 2011-04-01. 
  5. ^ "Financial results - year ended 31 May 2010". Arsenal.com. Retrieved 2010-10-09. 
  6. ^ "Soccer Team Valuations". Forbes. 2009-04-08. Retrieved 2009-06-02. 
  7. ^ "Deloitte Football Money League 2011". Deloitte. February 2011. Retrieved 2011-04-11. 
  8. ^ Spurling (2004). Rebels for the Cause. p. 48. 
  9. ^ Kelso, Paul (2007-04-19). "Market trader who sat at game's topmost tables". The Guardian (London). Retrieved 2010-05-20. 
  10. ^ Bond, David (2007-04-19). "Arsenal crisis as Dein is ousted from board". The Daily Telegraph (London). Retrieved 2010-05-20. 
  11. ^ "Arsenal and the Bracewells". 
  12. ^ "ITV buy Arsenal shares". 
  13. ^ "Arsenal Shares Buyout?". 
  14. ^ Scott, Matt and Allen, Katie (2007-04-06). "Takeover gains pace at Arsenal with 9.9% sale". The Guardian (London). Retrieved 2008-08-11. 
  15. ^ a b "Kroenke joins Arsenal's Board of Directors". Arsenal.com. Retrieved 2008-09-19. 
  16. ^ "Club Statement: Arsenal Holdings plc". 2009-03-30. Retrieved 2009-04-30. 
  17. ^ Kelso, Phil (2009-01-05). "Stan Kroenke ups his Arsenal stake again". The Daily Telegraph. 
  18. ^ Kempson, Russell & Smith, Ben (2009-11-05). "Stan Kroenke moves to brink of obligatory Arsenal takeover". The Times. 
  19. ^ a b "Russian buys Dein's Arsenal stake". BBC News. 2007-08-30. Retrieved 2008-08-11. 
  20. ^ http://www.arsenal.com/news/news-archive/board-announce-revised-lock-down-agreement
  21. ^ "The Trust". Arsenal Supporters Trust.