This post has been superseded by an updated version. I have left this here for completeness, but please refer to the ‘Take 2’ version posted on February 20.

Alisher Usmanov is very close to owning 30% of Arsenal Holdings shares. By the time you read this he may even have got there. Does it matter? Here’s a bullet point summary.

How many shares has Alisher Usmanov got now?

• It is impossible to give an exact figure because there is no obligation for a purchaser of shares to announce every time he buys one. Announcements have to be made at certain thresholds; the last one for Usmanov was when he reached 29% in June 2011.
• Tracking his purchases as far as possible since then gives him a figure of just over 29.9% now, leaving him perhaps 50 shares short of 30%.

Why does Alisher Usmanov want 30% of Arsenal shares?

• There is a Premier League rule that when a shareholder in a club reaches a stake of 30% he is allowed full access to the club’s books. That means he gets all the details of who is paid what, where all the income comes from and where the expenditure goes.
• This knowledge will allow any shareholder to judge whether the business is being run well much better than they can by reading the published accounts that are available to anyone. There is a wealth of detail that can be hidden in ‘overall wages’ and ‘miscellaneous expenses’.
• But the Premier League didn’t put this rule in place to help minor shareholders like Mr Usmanov, they put it in place so that if ownership of a club was split between several parties, those with relatively big holdings could not duck out of the responsibilities of ownership, they would be forced to take an interest.
• What the PL didn’t envisage was the situation at Arsenal, where there is a majority shareholder (over 50%) plus another shareholder at 30% who is not welcome on the Board.
• So Usmanov wants to get to 30% to allow him full access to the accounts.
• Stan Kroenke may or may not care whether Usmanov reaches 30%; he doesn’t care enough to buy up remaining small shareholdings in order to stop Usmanov getting them.
• However, Kroenke still may resist opening the books on the basis that the rule was implemented to stop people avoiding liability, and Mr Kroenke is very happy to take full liability at Arsenal, thank you very much.

What else does a 30% shareholding mean?

• Short answer: nothing – anymore. Not at Arsenal, anyway. When there are a bunch of small shareholders and no single person has majority control, 30% is the magic figure at which a shareholder has to make a bid for all other shares in a company.
• Again this is designed to stop shareholders avoiding responsibility. It stops them building a big stake in a company without taking on any of the duties of ownership.
• You will recall that Kroenke bought enough shares to take him to just below the 30% threshold, then stuck on that level until it suited him and the rest of the Board to make his move. At that point he agreed a price with Danny Fiszman and the other Board members, and was obliged to make an offer for all the other shares.
• But now that that there is a majority shareholder, there is no rule that says Usmanov getting to 30% obliges him to do anything. He does not have to make an offer to Kroenke if and when he reaches 30%, and this is not his reason for wanting to get there.
• Some people mistakenly think that 30% entitles Usmanov to a seat on the Board. It doesn’t. The Board is voted for by the shareholders and votes require a majority, 50% plus one share. As Kroenke has about 67% his vote wins. Usmanov is not joining the Board.

So 30% confers no other privileges. What percentage shareholdings are important?

• The most important is 50%, because most votes in limited companies in the UK require a simple majority. As stated, Kroenke owns about 67%, so no one can outvote him on anything to do with the day to day running of the club. He can appoint the Board, sack people and interfere in Arsène’s team talks if he likes.
• When the other shares are split into smaller blocks and you have a few mates on the Board with you, it is possible to maintain day to day control of a company with a stake of around 30% – as Danny Fiszman was doing – but you need 50% to be absolutely sure you don’t need to answer to the riff raff.
• 75% is also important, as you need support from holders of 75% of shares to make some changes to the company constitution.
• This is why Usmanov’s initial push was to get to 25% before Kroenke launched his full bid. Although Usmanov knew he could not easily get a majority (with Kroenke already cosied up to Danny Fiszman), with 25% he could block anyone restructuring the company and trying to keep him out for good.
• The last important number is 90%. If a single shareholder reaches 90% then he can, if he desires, force the remaining shareholders to sell up and then take the company private. Kroenke had no chance of reaching 90% as long as Usmanov opposed his takeover, so the remaining small shareholders can be grateful to Usmanov for that.
• We may never know whether Kroenke would have taken Arsenal private, but as supporter feelings do not appear to be high on his list of priorities it’s a possibility. It appears that he views supporters as a necessary evil and small shareholders as an unnecessary irritant. I would love to be proved wrong.
• If Kroenke does decide to sell to Usmanov at some point, Usmanov will immediately have over 90%. We’ll then find out his real attitude to supporters and small shareholders very quickly.

Does it matter if the club is taken private?

• Depends on your outlook. If you have no interest in how your football club is run and think that is for other people to deal with (even though it affects every aspect of what happens on the pitch), then no, it doesn’t matter.
• But public companies have to publish accounts and have a certain level of openness, which I prefer to believe is important when the company is a football club that people invest in emotionally as well as financially.
• Ask yourself this: Do you prefer to have a club where supporters can scrutinise to a large extent how it is run, or do you prefer everything behind closed doors and the Board not answerable to anyone but themselves?

When can Usmanov make an offer?

• Anytime he wants to. Tomorrow, next year, never.

So why doesn’t he make Kroenke an offer now?

• Probably because there is no indication that Kroenke wants to sell.
• When he made a counter offer right after Kroenke had made his, Usmanov specifically said he would buy anyone’s shares except Kroenke’s; that was to stop Kroenke immediately making a quick few million by buying shares from others at one price and then selling straight on to Usmanov.
• Usmanov now gives the impression that he would quite happily buy all Kroenke’s shares, but probably not for the same amount he is paying for the few odd shares he is still picking up from small shareholders.
• The scarcity of shares in the market and Usmanov’s determination to reach 30% means that the price he’s paying has pushed up from under £14k to £16k a share. If you took this as a true reflection of value and extrapolated it to apply to all Arsenal shares, then the club is suddenly worth over £1bn, compared to the £760m that Kroenke’s offer valued it at. Clearly this is a hypothetical figure, at a time when the on-field performance is flagging.
• An unfortunate consequence of Usmanov’s push for 30% is the shortage of shares for the Arsenal Fanshare scheme, in which supporters club together to buy shares and maintain an independent stake in the club for the benefit of all.

What we don’t know is what either Kroenke or Usmanov intend doing in the long term, or which would ultimately be better for Arsenal. Many supporters are disappointed that Kroenke has failed to engage and are concerned about his intentions; Usmanov is a totally unknown quantity as an owner, and if he gained control he may not stick to any promises made beforehand. Meanwhile the apparent stagnation in the boardroom does not appear to be helping the manager or the team.

The Arsenal Supporters’ Trust will shortly be issuing an expert analysis of Arsenal’s current financial position.

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