25 April ~ Enos Stanley Kroenke (aka "Silent Stan") now controls 62.9 per cent of Arsenal and has launched an offer for the remaining shares. Kroenke has played a patient game. When he first bought ITV's 9.9 per cent stake in 2007, Kroenke was shunned by the Arsenal grandees but, four years on, familiarity has bred contentment. Arsenal's board have warmed to both the man and his methods, which very closely mirror their own. Kroenke is a long-term investor not, as initially feared, a corporate raider with an addiction to high leverage, in the mould of, say, Tom Hicks.
He made his first billion in real estate development before diversifying into sport, assembling a roster of major league teams competing in American football, basketball, ice hockey, lacrosse and soccer. It was when seeking a tie up for his Colorado Rapids, current MLS Cup holders, that he first encountered Arsenal. A lifelong sports fan, Kroenke has invested to improve his clubs' infrastructure and commercial revenues, while balancing this with steady success on the field. Kroenke Sports Enterprise's goal of "a viable and self-sustaining business model" could have been lifted from an Arsenal annual report.
Some Arsenal fans are doubtless hoping Kroenke will fund a massive spending spree to end Arsenal's "trophy drought". They'll be disappointed – Stan's not their man. Although he has the means, with a self-made fortune estimated at $2.9 billion (£1.8bn) – independent of his wife's Wal-Mart inheritance of $3.2bn – it's not his way. By contrast, Alisher Usmanov, the Russian-based oligarch from Uzbekistan, has consistently wooed Arsenal by promising to lavish more of his much larger, more liquid fortune (estimated at $17.7bn) on the club. Still, many Arsenal fans applaud their board for showing more interest than some other clubs in the origins, and not just the size, of their rival suitors' dowries.
The Arsenal board have stressed that Kroenke, their "custodian" of choice, stands for continuity. Silent Stan has never said much publicly about his plans. He has confirmed that his offer will not be funded by debt finance secured against the club and his track record also allays fears that he will pay himself dividends that drain the cash that the club needs to be competitive. So how does he intend to make a return on his investment? The likely answer, as with his existing sports interests, probably lies in Kroenke's confidence in making a capital gain over the longer term. There are signs the Premier League-era gravy train has hit the buffers and club valuations generally are in retreat. But it's a good bet that, given its obvious geographic and demographic advantages, a well-run Arsenal should achieve at least steady further asset value appreciation over time.
Kroenke's experience should help close an estimated £30-45m remaining shortfall in Arsenal's annual commercial revenues compared with their main rivals. And the value of his investment should also rise as the club's mortgage on the stadium is paid down. As a real estate man, Kroenke knows the importance of location. As the largest club in Europe's largest city, owning one of the world's most lucrative stadiums, Arsenal now enjoys substantial advantages over almost all its rivals. To reinforce these, Kroenke will be lobbying to ensure UEFA's Financial Fair Play regulations are enforced. The regulations should alleviate the threat posed to Arsenal's sustainable business model by competitors "financially doping", using excessive leverage or, like Chelsea and Manchester City, recycling their owners' piles of petrodollars, to buy success, thereby stoking rampant wage and transfer fee inflation. In a rare interview a year ago, Kroenke called the Premier League "the Wild East" but said, "I think they'll get it corrected".
Kroenke can probably rely on the support of three other clubs controlled by American sports club owners: Manchester United, Liverpool and Aston Villa. Despite America's aggressive championing of free market capitalism, its major sports are run more like cosy cartels, with salary caps, draft picks and revenue sharing, ensuring sporting success and its rewards are spread along more egalitarian lines. It's unlikely the American owners will lobby for similar changes here. The Fair Play regulations go just far enough for them, arguably helping ensure their clubs remain "more equal than others". But there are other ways they could look to stabilise revenues. American clubs never face the threat of relegation. For the biggest English clubs, it's scarcely a threat at domestic level either but how much easier would their owners sleep if they could ensure uninterrupted Champions League participation. A European super-league could be a more attractive prospect and would probably have more in common with the NFL than the Premier League.
The forces of capitalism, globalisation and economies of scale have been reshaping football for decades, leading to a concentration of power, just as in any other sector. The Arsenal Supporters' Trust opposes Kroenke's takeover, fearing it may snuff out the brief flicker of hope that supporter ownership and influence would be encouraged at a big English club. There remain alternatives. The world of retailing has become dominated by a handful of megaliths, like Wal-Mart, the chain co-founded by Kroenke's father-in-law. But there are many who shun their efficient, convenient cathedrals of commerce in favour of the less sanitised niches of their corner stores or local markets. Likewise, if the game continues to hack away at its traditional, collectivist roots, a growing number of disaffected fans may seek solace in supporting (or even, following the laudable example of FC United, founding their own) local, lower-league clubs. We all have some degree of choice over what football in the future will mean for us. But when it comes to determining the evolution of the top-flight game, as custodian of one of the world's most profitable clubs, Silent Stan will surely have more say than most. Alan Macdonald