MayDay: preparing for the Kroenke take over of Arsenal

I’m just acting as if last weekend didn’t even happen. So lets not talk about it. Instead, lets focus on Kroenke again for a minute because the money machine was moving last week. More shares were purchased and new questions about Kroenke’s ownership of the Rams has come up.  So the May countdown is on. I wish we could put a counter on the website: May Day is about to take on a whole new significance for Arsenal fans.

Here’s a recap:

  • Kroenke owns 29.9% of Arsenal. If he takes his percentage up to 30% (something like 6 more shares) he has to submit an offer for the remaining shares -basically a takeover.
  • English financial regulations and smart business slowed down Kroenke’s purchase of Arsenal because he would have to pay over £200m more if he attempted to take over Arsenal before May, 2010.
  • Kroenke owns 40% of the St. Louis Rams; his percentage is valued around $360m (£240m). The Rams are about to have a new majority owner and by April 12th, Kroenke must decide if he is going to sell, stay on as a minority owner or put in a matching offer.

This means that Kroenke has to make a decision not just about Arsenal, but about the Rams as well. To be sure, he might just stand pat. But there are a lot of reasons that he might sell now. For one, he’s likely to get a good price for his shares in the Rams. Since he’s not selling out of desperation and a new purchasing group is moving in. For another, if he sells now, he can divert the capital gain taxes for his investment in the Rams by buying shares in Arsenal. Finally, $360m (£240m) is a good way to purchase shares in Arsenal without taking on much debt. And lets face it, Arsenal has a higher short-term growth value than the Rams. Location (London) combined with significant marketing development (EPL can be marketed better) means great value growth.

Granted, the money Kroenke makes off the Ram purchase isn’t sufficient to pay for all of the remaining Arsenal shares. Kroenke needs to pay something on the order of £530m. But assuming Kroenke used all of the money and borrowed the rest, that’s only £170m plus whatever debt Arsenal has remaining at that point -about £200m and falling.

All in all, this means that at minimum, a Kroenke purchase is not likely to significantly increase our purchasing power. But we would still be stable, unlike pool or manu. Basically, everything would remain the same, except we would have real sports management team in place. More positively, we might see a massive investment in the Club.

– the student


1 Comment

  1. […] made her announcement today on purpose: to coincide with Kroenke’s deadline to make a decisions about his ownership stake of the Rams. Kroenke has to decide by today whether […]

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