Tag Archives: stan kroenke

Stan Kroenke backs “games abroad” in $50 million deal

A source within the club have told us that Stan Kroenke has instructed Raul Sanllehi to vocally back the idea of playing games abroad during meetings of the Premier League.

The idea of playing games abroad has been floated for some time; with “Game 39” being backed by all American owners.

We have been informed that not only does Kroenke back Game 39, but he also wants “at least 10 games a season” to be played in America.

Kroenke’s investment company, Kroenke Sports & Entertainment , are currently overseeing the building of the  Los Angeles Stadium for his Los Angeles Rams side. At $4.963 billion and a 100,000+ capacity, it is one of the most expensive stadiums in history of sport.

According to our source, Kroenke believes that in the future Arsenal play at least 10 games a season in Los Angeles, with the remaining Premier League, cup and European games taking place in London.

The deal will be the reverse of the Tottenham deal with the NFL – where the NFL pay Tottenham to rent the stadium per game.

If Arsenal were to play games at the Los Angeles Stadium from 2021, Kroenke Sports & Entertainment could charge the club up to $5 million per game in rental fees – generating up to $50 million a season if Kroenke gets his 10 game wish. This would go a huge way to paying off the loan that KSE have taken out to finance the stadium.

Kroenke is reportedly backed by the Glazier family and the Fenway Sports Group, who own Manchester United and Liverpool respectively.

SheWore

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Dispelling a Stan Kroenke myth

I am not one to defend Stan Kroenke, although in recent days I have found myself doing so a bit on Twitter.

Personally I do not think he is a bad owner. The only thing he did was let Ivan Gazidis and Arsene Wenger sail along too long, earning themselves millions.

In terms of an owner, he buys into the self-sufficient model that ensures longevity of a football club.

It is a self-sufficient model that sees the likes of Juventus, real Madrid, Bayern Munich, Barcelona and Manchester United dominate over long periods – I am talking about 50-years plus.

The likes of PSG, Manchester City, Chelsea. These are boom and bust models.

The owners are pumping in billions and unless they can break the glass ceiling and turn their sides into self-sufficient clubs making hundreds of millions from commercial revenue, they will eventually fall off. Whether it be due to the money drying up, boredom or death.

If you want success over a long period, you need to be self sufficient.

Liverpool run a similar model to Arsenal.

The owners, FSG, do not put in any money. They do not use their own funds to buy players. Liverpool have financed a title winning team due to good recruitment and good coaching; not through their owners pumping in billions.

Stan Kroenke’s biggest criticisms seems to come from an Evening Standard article in 2016, where the headline was Stan Kroenke: I didn’t buy Arsenal stake to win trophies.

It was only this afternoon that I actually read the article. Before, that I had just followed what everyone had said on Twitter. That Kroenke was not in Arsenal to win trophies. This is what he actually said:

Speaking at the MIT Sloan Sports Analytics Conference in Boston he said: “For me, being an individual owner, I have to have some sort of reality involved.

“If you want to win championships then you would never get involved. I think the best owners in sports are the guys that sort of watch both sides a bit. If you don’t have a good business then you can’t really afford to go out and get the best players unless you just want to rely on other sources of income.

“Over there [in the Premier League] it was sort of like ‘well, we’ve got guys from the Middle East, the oil price is over $100, they can spend anything they want’.

“But the problem I saw with all of that; those people can lose interest. It doesn’t mean that they will, but I sort of threw that out there: ‘What happens when the Middle Eastern family, this thing’s costing a lot of money and they decide to go home?’ I said what really happens in those situations is the fans get hurt because the players get picked up and paid if they’re good, the front office gets other jobs.”

At no point did Kroenke say “I didn’t buy Arsenal stake to win trophies”.

So let’s delve down into what he actually said.

We’ve got guys from the Middle East, the oil price is over $100, they can spend anything they want’ – What he is clearly talking about is Manchester City. That the wealth they have is incredible.

If you want to win championships then you would never get involved – The closest quote to the “I do not want to win trophies” misconception.

When you put these two together, it is clear what he is saying.

He is not involved in football just to win titles. That if you came in to football as an owner just to win titles, you are buying the club for the wrong reason. That with the financial wealth of Manchester City owners, even as a billionaire you can not bankroll your club to success.

Whilst Kroenke has a net worth of around $8billion, he does not have billions available to pump into Arsenal. Any fan that thinks he does is unrealistic.

The Manchester City owners are only in football to win championships. Sheikh Mansour, has an estimated individual net worth of at least £17 billion and a family fortune of at least $1 trillion.

As Stan Kroenke says, they can spend anything they want.

Their is a fabulous story around Simon Jordan and how buying a football club is the quickest way for a rich man to become poor. If you attempt to bankroll your club into winning trophies, there will always be someone richer, who can outspend you. And eventually you run out of money.

This is exactly what Kroenke was talking about in 2016.

The Evening Standard were so concerned with the sensationalist headlines that they ignored two key aspects of the interview:

“I think the best owners in sports are the guys that sort of watch both sides a bit. If you don’t have a good business then you can’t really afford to go out and get the best players unless you just want to rely on other sources of income.”

He is talking about running the club like a business. That once you have the business side sorted (ie commercial revenue) you can then go out and get the best players. That then leads to success. You do not have to rely on other sources of income.

‘What happens when the Middle Eastern family, this thing’s costing a lot of money and they decide to go home?’ I said what really happens in those situations is the fans get hurt because the players get picked up and paid if they’re good, the front office gets other jobs.”

Did we not all say similar about Roman Abramovich? What happens when he gets bored? Deported? Or worse? you end up with a club billions in debt, no way to function. And ultimatel it is the fans that lose out.

What Kroenke was clearly talking about is that you do not buy a football club to just win trophies. You buy it to be part of something. To build something.

Just like as a fan you do not support the club you love due to trophies.

If fans only supported their club to win championships, no one would go to the hundreds of games up and down the football pyramid. They would change the club they “support” depending on who is the successful side of the day.

Kroenke is saying ownership is the same. You do not get into football – or any sport – just to win trophies. You need to have “some reality involved”. you can not expect to compete when your opposing owners can spend 1/3 of your net worth bank rolling your opponents.

It is not defeatist.

Look at Leicester. Vichai Srivaddhanaprabha did not buy Leicester to win the league title. He knew that he did not have the financial strength to bank roll them to the league. But they won it. Through good recruitment, coaching and togetherness.

And I bet the Leicester City title success was sweeter than any bankrolled success at Manchester City.

Kroenke did not buy Arsenal with the goal of bankrolling us to success. He bought the club to build something, to grow the side. And we are now growing.

It is perhaps time to put the “Kroenke did not buy Arsenal to win trophies” to bed.

He did buy us to win trophies, but win trophies the right way. Through running a successful business, being self-sufficient.

Kroenke can not bankroll us to success, nor should he have to.

Is the sole reason you follow Arsenal to win trophies?

Keenos

Arsenal fans unrealistic to expect Stan Kroenke to pump in billions

Last week Stoke City announced £30.1m pre-tax losses for the 2017/18 season. When you consider that they received £98.8m in TV money for that season, to lose £30.1m is huge mismanagement.

Due to the huge TV deals, football (in the top flight at least) is in an era where clubs no longer make huge losses. That they tend to spend within their needs, and turn over a profit.

In 2016/17, Stoke City made a £5m profit, to then turn that into a £30m loss shows how much they overspent in an attempt to remain in the Premier League.

Why clubs are still willing to get themselves hugely into debt, chasing what they deem to be success, it beyond me.

Whether that success is winning the Premier League or remaining in the Premier League, surely clubs have learnt their lessons from the likes of Portsmouth and Leeds?

That whilst getting yourself into debt might help you to be a success in the short term, it is detrimental to the long term stability of the club.

The fact that in 2016/17, 19 of the 20 clubs made a profit showed that every club was spending within their means, and not getting into huge debt chasing the golden egg. Stoke City getting into huge debt in 2017/18 is just silly.

Only really Manchester City in the Premier League are racking up huge debts – but these are being covered by the owners who have recently been exposed for flouting FFP rules and pumping in £2.7bn.

I bring up the situation with Stoke City as some Arsenal fans have consistently called for Stan Kroenke to put his hand into his own pocket, and finance Arsenal to success.

The truth is that Kroenke is not rich enough to finance us to success, and the only way he could do it is to take out loans against the club to free up cash.

Reality is, Manchester City and PSG are the only two top level clubs who are being bankrolled by owners. Every other club – from Real Madrid to Bayern Munich, Manchester United to Juventus, Borussia Dortmund to Barcelona – operate a self sufficient model. They spend what they bring in.

Now some of these clubs might have some dodgy account, be in huge debt, and have flouted EU state funding rules, but for long term success and stability of your club, the aim is to generate and spend your own money.

Arsenal have ran a self sufficient model for as long as I can remember.

The move to the Emirates was part of this. To increase income from gate receipts to close the gap on those clubs at the top who had 60,000+ stadiums.

By promoting Sven Mislintat to Technical Director shows that we plan to continue this self sufficient model.

Intelligent recruitment, exceptional coaching and solid commercial deals are the key to success for almost every club across Europe. Not just sling a load of money at something and hope it works.

Expecting an owner to bankroll you to success is unrealistic. It is a rarity.

Some have pointed to Liverpool recently, but their owners are no different to what Stan Kroenke is doing at Arsenal. Liverpool spend what they bring in, the owners put in nothing.

Overt he last 5 years, Liverpool have spent nearly £200m more than Arsenal in the transfer market. But this additional income has not come from the owners, it also has not come from better commercial deals – both clubs have similar revenue prior to player transactions.

The extra £200m comes from better recruitment over a period of time.

In recent years, Liverpool have bought better than Arsenal. they have also sold better. Think Coutinho. signed for less than £10million, sold for over £100million.

By buying low and selling high, you can continue spending big to improve the squad. And it is the selling that is important.

Over that last 5 years, Arsenal have sold very poor.

A mixture of having some average players on high wages has resulted in us having to accept low transfer deals from other sides just to get the wages off the book. Overpaying some poor players was a huge part of Arsene Wenger’s downfall.

Liverpool have generated nearly £250m more in player sales than Arsenal in the last 5 years. This means that whilst they have spent nearly £200m more gross than Arsenal, their net spend is over £40m less.

Improving recruitment and pay structure are two key reasons why Mislintat and Huss Fahmy were appointed and, more recently, promoted.

But Stan Kroenke is worth $8.5bn, he has enough money to bankroll us to success i have seen some claim.

This shows a lack of awareness of people between net worth and available income.

Net worth is the total value of all your assets. Cash, property, shares, businesses, and more, minus what you owe. Theoretically, your net worth is what you would have in cash if you sold every significant possession and paid off all of your debts. You can have a high net worth but have no cash in the bank.

Think of things on a smaller level.

You can have an ordinary man living in London, owning a house and a car, have a pension and own a few shares. Lets say his house is worth £450,000, he owes £150,000 on his mortgage. He recently bought a 2nd hand car for £6,000 and has £25,000 in savings. He has no other debts, credit cards or finance. He would have a net worth of £331,000.

But in his current account, for his day to day spending, he has just £178 – he does not get paid until month end.

What this means is today, if he decides to pay for a holiday, lets say Antigua in the new year, he does not have the cash to pay for it. If he wishes to pay for that holiday, he needs to get into debt. whether it is pay on a credit card or take out a loan.

Say he also wants to get his kitchen done. It will cost around £10,000. For that he might need to go to the bank, release some equity in his house, increase his mortgage.

He might have a net worth of £331,000, but he would need loans and mortgages to pay for holidays and his kitchen.

Kroenke is no different to the ordinary man, he just has a bigger net worth.

He does not have £2.7bn sitting in a bank account, ready to splash on Arsenal.

To buy out Alisher Usmanov, he took out a £550m loan. He was able to get a loan of that size due to his net worth, basically leveraging the debt against his current assets.

Remember the theory above? if he sold all his assets, he would be able to pay off all his debts.

Kroenke has another well known loan also outstanding.

Earlier this year, he and his wife, Ann Walton Kroenke (heiress to the Walmart fortune) took out a $2.25 billion loan for the construction of the LA Rams new new Inglewood stadium.

He still has a net worth of $8.5bn, and his wife $6.8bn, so the eye watering loan is easily manageable. The loan is 14.70% of their net worth. The equivalent of the ordinary man we described above (who has a £310,00 net worth) taking out an additional £45,500 mortgage on his house.

This highlights the cash flow of billionaires.

Kroenke did not have $2.25bn to finance the stadium just sitting around. Nor did he have the £500m+ for the rest of the Arsenal buy out. His finances were tied up in other business. Arsenal, the LA Rams, other sporting interests, working ranches and a huge property portfolio.

Do people really expect him to liquidate a billion pounds worth of assets to free up cash to spend on Arsenal?

The other option could be that he could take out another huge loan, and this brings us back round to Stoke City.

Kroenke’s loan to buy Arsenal was taken out by his English subsidiary KSE UK inc. The only tangible asset is Arsenal Football Club Holdings. The loan was not directly taken against Arsenal, it is against the company that owns the club.

The £600m Kroenke spent buying the whole of the club valued the Gunners at £1.8bn. It is safe to say then that KSE UK inc is also worth around the £1.8bn mark.

However KSE UK inc owes the £550m loan. This would leave the company with a net worth of £1.25bn.

If Kroenke was to do what fans want, and spend £1bn spread over an extended period, he would basically have to take out further loans through KSE UK inc. With Arsenal being the main asset of the group, it would be a loan against Arsenal in everything by name.

So what fans want is for Kroenke to take a £1bn loan against Arsenal to chase success.

This is terrifying.

The loan would be used to cover huge outgoings by the club. Transfer fees, wages. Basically Arsenal would run at huge losses chasing the title, using the money from the loan to cover those loses.

But at some point the KSE UK inc and therefore the club will need to start paying back that loan.

In 2003 Arsenal secured a £260 million loan to finance the stadium. This was due to be paid back over 25 years.

What some fans are calling for is a nearly 4 times that amount. What they do not seem to be concerned about is how the club will pay back that loan, and how long it will take,

If a £1bn loan was taken out, and the money spent over a 10 year period, it could take 50 years to pay back. So we are sacrificing our long term future for short term success. Adults demanding that Kroenke finance Arsenal to the title now, at the risk of the club not winning league titles for their children and grand children’s time. How selfish is that?

And what happens if the TV bubble bursts, or Arsenal struggle for a few years in mid table, or good forbid get relegated. Arsenal would be stuck with a £1bn loan, a business model making huge losses every year, and no way to pay it back.

And £1bn over 10 years old not guarantee any success. Manchester City owners have spent £2.7bn over that period!

Anyone that thinks Stan Kroenke has the means to finance Arsenal the way Sheikh Mansoor finances Manchester City is clearly uneducated and do not understand business and net worth.

And anyone that is happy with the club taking out a £1bn loan to chase success is selfish.

Arsenal need to concentrate on replicating what Manchester United have done. Increase spending by increasing revenue.

During the stadium build, it was often said we were look towards Bayern Munich as how to run a club. That still stands.

A strong academy, good recruitment, quality coaching, solid commercial revenue.

This is how Arsenal not only return to title challengers, but ensure we are up their for future generations.

High spending over a short period is boom and bust. It leads to Stoke City, to Leeds United, to Portsmouth.

Back the club, back the new management team, and understand how finances work.

The club are moving forward. They are in a good place. There are improvements that can be made, and these are happening.

We might not be buying our way to success, but only Manchester City and PSG are currently doing that.

For long term stability, long term success, we need to do it the right way, not the easy way.

Keenos