A lot of people say to me, ‘Phil, if Stan Kroenke sold his Arsenal shares now how much profit would he make?’ And I’d never worked it out so I’d say, ‘I don’t know, but off the top of my head maybe £300m.’
This was my standard guess for a while, so I thought it was about time I tried to work it out. It’s difficult to be exact because I don’t know how much Stan paid for every share he’s bought, as he spent quite a while buying relatively small numbers on the open market. I know where he started though: he paid ITV £65m for 9.99 per cent of Arsenal plus half of Arsenal Broadband. The split announced for this was £42.3m for the shares and £22.7m for half of Arsenal Broadband, which is slightly odd when you consider these facts:
- Arsenal Broadband had never (and still hasn’t) made a profit – so why was it apparently worth £45m?
- 9.99 per cent of Arsenal is about 6,220 shares; £42.3m for 6,220 shares is about £6,800 per share; the going market rate for an Arsenal share at the time was about £8,500.
Is that the smell of dodgy accounting? Can’t be, can it?
So officially that’s £42.3m spent so far, but on market rate it’s about £53m.
After that Stan bought many smallish blocks of shares, anything up to a couple of hundred at a time, at prices ranging from £6,750 to £9,000 each. I can’t account for all of these individually, but I know from various points what his total was at the time and I know the prevailing market price at any time, so I can make reasonable estimates of his expenditure. The ones I can’t easily trace come to only about five per cent of his total purchases.
On the big blocks, he bought 5,000 shares from Danny Fiszman at £8,500, then 2,720 from the Carr family at the same price and a further 2,119 from the Carrs at £10,500.
The biggest purchase was at the time of his general offer, when he bought Danny F’s remaining shares, Lady Nina’s shares and others from small shareholders. These totalled around 22,900 shares at £11,750 each, taking his shareholding from just under 30% to 66.8%. Since then he’s added a few more at prevailing market prices, say an average of £14,000 to make his total holding as at May 2016 41,698 shares, or 67.02 per cent.
Add all this together and my estimate of the Stan’s total expenditure on Arsenal shares is:
Or £435 million if you add in the extra ten or eleven that he would have paid for the shares he got when he got his 50% of Arsenal Broadband, if he’d bought them for market price. I’ll stick with the dodgy official valuation of Arsenal Broadband for the rest of this, though.
So how much would Stan make if he sold up? Well the multi-million dollar question is, how much is someone going to give him? (The other multi-million dollar question is would he sell at all?)
Alisher Usmanov has insisted he’s never paid more than £14,000 per share, so if he paid Stan Kroenke that much, then Stan gets £584m, or a profit of £160m.
Stan has 41,698 shares, so for every thousand pounds his selling price rises, he pockets another £41.7m. Thus his potential profit looks like this:
- Share price of £14k – Profit £160m
- £15k – £202m
- £16k – £243m
- £17k – £285m
- £18k – £327m
- £19k – £369m
- £20k – £410m
So my standard guess of £300m was actually pretty good in 2012 and 2013, but since then the share price has fallen back to between £15k and £16k. However, current market price is not necessarily a good indicator of what a serious buyer is prepared to pay. As an aside, Forbes have valued Arsenal at $2.017bn in May 2016, about £1.392bn, which would give a share price of £22,368. This is almost 25 per cent higher than it’s ever been and close to 50 per cent higher than the prevailing market price
There are two other factors to take into account when thinking about a potential Kroenke profit. No doubt there will be a few million of miscellaneous expenses, but that won’t affect things too much. Of a bit more concern to Stan will be the dollar/pound exchange rate. In the last seven or eight years it’s varied between $1.39 and $2.06 to the pound, As at May 2016 it’s about $1.45. It could have an effect, but the size is hard to gauge and probably not worth guessing.