Football fans vent dismay at the habitual myopia of referees towards the pitch. English Premier League shareholders have traditionally directed their outbursts at boards, angry at how they run clubs. Arsenal supporters who hold a few shares quoted on the small-cap NEX Exchange may not have that opportunity much longer.
On Tuesday, the club’s American majority shareholder Stan Kroenke finally managed to wrest the largest minority stake from Russian billionaire Alisher Usmanov for £550m. Mr Kroenke should soon control 97 per cent of The Gunners.
Whatever tensions this settles in the boardroom — Mr Usmanov has angled for more control for a while — fans see the move as a disappointment. They worry Mr Kroenke will squeeze out small shareholders then freight the company with debt to pay himself handsome dividends. The Glazer family did just this with Manchester United last decade.
Debt is certainly involved in this deal. Mr Kroenke has used a bridge loan from Deutsche Bank to cover the payment to Mr Usmanov. That alone pushes up last year’s net debt amount by 10 times. Judging from his previous share purchases, Mr Usmanov has roughly doubled his investment, at a steepish price. Using an implied market value of £1.8bn, the deal is valued at 16 times last year’s ebitda, a cash earnings measure. That is more than a quarter above Manchester United’s valuation, and double that of Italy’s Juventus.
Mr Kroenke’s leveraged bet will pay off only if the value of Premiership media rights go up. In fact these fell slightly in the most recent round. At nearly half of its total 2017 revenues, broadcast rights matter more to Arsenal than to other top Premiership clubs such as Chelsea and Liverpool.
Fans, known as “gooners”, will wonder where money for new players will come from. There are unlikely to be any more annual meetings at which to ask.
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