A plausible path to fan ownership by Bryam Gobbett
If JustArsenal.com is an accurate reflection of the sentiment of Arsenal supporters across the globe, and I believe it is, then I think it’s fair to say that Gunner fans want a change in ownership. The overwhelming belief is that we have an owner who is singularly concerned with making money and unconcerned about the long-term health and success of Arsenal FC beyond what that success might yield in terms of his return on investment. English football clubs have a long history of wealthy owners; some beloved, some despised. But are wealthy individual owners (even if they are fronted by some corporate entity like Kroenke Sports Entertainment) the most desirable form of football-club ownership/administration or is there a better way? The obvious alternative is the ‘registered association’ model employed at clubs like FC Barcelona and Real Madrid. In this model, the club is owned by the fans who elect a President to run the club. It’s probably not a stretch to say that one ownership model is a dictatorship and the other is a democracy. Is it possible to overthrow a dictator and create a democracy in the realm of football-club ownership?
Before we examine the feasability of such a transition, let’s take a brief look at the history of Arsenal FC ownership and where things currently stand. I’ve scraped the following off the internet and I believe it to be reasonably accurate, but would welcome inputs/corrections in the comments section below.
Royal Arsenal Football Club actually started out as a ‘Mutually Owned’ club before becoming a Limited Liability Company (LLC) in 1893. Those early years were fickle and uncertain. In 1910 a liquidation and overhaul resulted in the owner of Fulham FC, Henry Norris, taking over. Under his stewardship Arsenal moved to Highbury in 1913. By 1929 however a financial scandal forced Norris out and ownership in the club transitioned to Sir Bracewell-Smth (then an MP, and later a Mayor of London) and Samuel Hill-Wood. These two families maintained majority ownership of Arsenal FC until recent times, though significant blocks of shares were sold on to David Dein and Danny Fisman towards the end of the 20th century, and 9.9% of the club was sold on to Granada Holdings (part of ITV) in the early part of this century.
Stan Kroenke first got involved with Arsenal in 2007 when he purchased that 9.9% stake from Granada Holdings. It was the beginning of an aggressive campaign to acquire a majority and controlling interest in the club. By the end of 2009 he had increased his stake to 29.9%, the maximum an individual entity is allowed to own without triggering a full takeover. During this time Alisher Usmanov was acquiring significant blocks of shares in Arsenal FC, and by September 2011 he too owned just over 29% of the club. Kroenke however continued to acquire shares, extending his onership beyond 29.9% and triggering the obligation to acquire all shares in the club, including those owned by Usmanov and those owned by the Arsenal Supporters Trust. By August of 2018 Kroenke had acquired all shares and had 100% ownership of our club. His initial purchase of 9.9% of the shares in 2007 valued the club at £700M. His recent and final share purchases values the club at over £1.8 Billion. Just to put this into context, that number is still far short of other soccer clubs such as Manchester United, Barcelona and Real Madrid which are all valued at close to £4.0B.
So, Kroenke, over an eleven year period, purchased all shares of Arsenal FC. Without specific details and timelines and numbers of shares purchased, it’s hard to determine his average share purchase price, but it’s probably not an unreasonable estimation to say that he shelled out over £1.3B for the asset (Arsenal FC) that is now worth around £1.8 Bn. Now that we’ve determined an approximate valuation, let’s look at what a fan take-over might look like . . .
What would it cost to buy out Kroenke?
I’m going to speculate and say that if the valuation of football clubs such as Real Madrid, Barcelona and Man Utd are in the £4.0B range, and Kroenke has paid a price that values Arsenal at £1.8B, he’s probably not going to take anything less than £2.5B for the club. That’s a serious wad of cash!
How many Arsenal fans would need to buy in?
Enough to fill a football stadium seems to be a good estimate. Real Madrid appear to have around 60,000 fan-owners and Barcelona seem to have around 140,000. Let’s take the average of these two which just happens to be the nice even number of 100,000. At a valuation of £2.5B, each of the 100,000 fans would need to pony-up £25,000 each.
How do you find 100,000 Arsenal fans with £25,000 burning a hole in their pocket?
This is the really tricky part. Although undoubtedly there are a lot of very wealthy fans of Arsenal FC, I’m going to guess the majority don’t have £25,000 burning a hole in their pocket. But rather than asking 100,000 individuals to figure out how to come up with £25,000 each, what if there was a bank out there willing to finance the deal? Each interested Arsenal fan just signs up at the bank for a £25,000 loan. At an interest rate of 6% this would be a repayment of £277 per month over a 10 year period. I believe there could be 100,000 Arsenal supporters out there who’d be willing to pay £277 per month over 10 years to be an owner of Arsenal FC. What a fantastic legacy that would be, the ability to pass on ownership in Arsenal FC to your kids, on top of all the privileges that could be enjoyed by being a fan-owner.
Will Kroenke sell for a reasonable price?
It’s impossible to know. But if he played hardball the fans could reciprocate in kind by boycotting games. Three or four months of an empty Emirates stadium would probably force a sale at a price far less than the pre-hardball starting point.
Has anything like this ever been done?
To the best of my knoweldge, both Barcelona and Real Madrid started out as ‘registered associations.’ I don’t believe either of them were converted to that model. A number of clubs in England have converted to fan-ownership through a ‘Supporter Buyout’ but nothing even close to the size and scale of Arsenal FC.
Probably the two biggest English clubs this has ever been pulled off at are Exeter City and Wycombe Wanderers.
So, yes, if Arsenal fans were to attempt this it’d be many orders of magnitude larger than any previous Supporter Buyout. Is it likely? Probably not. It is feasible? Definitely . . . it’d just need the right person or set of people to get the ball rolling. People told Elon Musk he’d never send a rocket into space. Not only did he prove them wrong, he also created a car company and stuck one of his cars on the front of one of his rockets and sent that into space too. Anything is possible with the right person spearheading it. The big question really is, do we have an Elon Musk-like character in the Arsenal fan family, and/or do Arsenal fans want this enough?