Last week The Times published a long piece about Alisher Usmanov, including his PR firm’s failed attempt to change his Wikipedia page without anyone noticing, which I told you about here. Here is the rest of what The Times said. It’s quite long, but can be summarised as:
- He’s very rich
- He lives in Moscow and has close ties with the Russian Government, including Prime Minister Dmitry Medvedev
- He has in the past had links with various dodgy people and alleged dodgy dealings
- Lord Owen, former Labour Foreign Secretary and founder of the Social Democratic Party, has worked with him for years and thinks any dodginess is firmly in the past
Mr Usmanov is in the business pages at the moment because he is trying to float telecoms company Megafon on the London Stock Exchange for about $12bn. Mr Usmanov’s Wikipedia page was tampered with back in 2010. The Times have only broken the story now, despite having had plenty of opportunities over the last two years to tie it in to other Usmanov-related news. A suspicious person might think that The Times have broken it now because it coincides with his proposed flotation. Let me see now: The Times is owned by Rupert Murdoch; Rupert Murdoch has many telecoms interests; Usmanov is doing a telecoms flotation. Coincidence, I imagine.
Interestingly, if you go to The Times website to look for the Usmanov articles, you can see that they are “the subject of a legal complaint by Alisher Usmanov.” Mr U probably thinks they are being a little unfair on him.
Personally I don’t care much about Usmanov’s share flotation or any legal arguments with The Times, I am more concerned with his effect on Arsenal. What is his motivation? I believe his interest in Arsenal is a combination of factors that probably all have different weightings in his mind:
- he wants the prestige of owning a world famous football club
- he is trying to integrate himself and be accepted into Western European society
- linked to both the above, he wants to be seen as a great patron of the arts, and he may be including Arsenal in that general category
- he has an interest in football and supports Arsenal – this may not be a lifelong interest and it may not be as deep and passionate as many of us, but I believe he does have some interest; why else would he bother to turn up for matches on a fairly regular basis? I’m sure he’s got a lot to do, oligarching all over the place
- last but definitely not least, he won’t want to lose a battle with Stan Kroenke. Stan out-manoeuvred him to take control, but Stan is worth only a few billion dollars; AU won’t want to be beaten by anyone, never mind someone worth less money than he is. He won’t want to be remembered as a footnote in Arsenal’s history, the man who owned a third of the club but was never made welcome and never had any influence. He’ll want to be the one remembered for taking Arsenal to glory again. Perhaps he’s biding his time to see if the club goes further downhill before making a move, just so he can get more glory for raising it up.
You’ll notice the one motivation I’ve left off this list is making a profit. I don’t think Usmanov has any interest in making a profit out of Arsenal, for these reasons:
- he doesn’t need it – he’s got billions already; he could eat diamonds on toast for breakfast every day if he wanted
- any potential profit and even capital gain is almost certainly peanuts compared to his other business interests
- football clubs traditionally turn rich people into poor ones, not the other way round, and I’m pretty sure he must have noticed this
There is a chance that the clubs at the very top of the European game might start making profits more regularly in future years, due to better TV and digital marketing deals around the world, and to a lesser extent sponsorships, but this depends on controlling costs, which has proven extremely difficult to do. I don’t see that any sane investor would want to rely on it.
‘What about Stan, then?’ I hear you say. ‘Isn’t he in it for the money?’ Largely, yes, but he’s also into sports and he accumulates clubs of different kinds for fun. He probably also believes that he can sit on an increasingly valuable asset with little danger of the value going down, given the infrastructure that Arsenal had handily put in place just before he came on the scene. So although he was sold the idea of Arsenal ownership on the basis that he wouldn’t need to put money in, I don’t think he sees any need to take money out either. Stan may believe he’s going to take profits out of Arsenal on a regular basis, but I’d be surprised if he succeeds in any meaningful way. If he does it will mean that owners in general have won the long battle with players for control of the biggest slice of the pie – a battle that has been going on since at least the days of Herbert Chapman (who complained about having to pay young players their maximum wage of £5 a week). And if Stan gets to a position of taking money out, then others will be too.
I must say, if Stan is so determined to get regular profit out of Arsenal, you’d think he’d be putting every effort into replicating Man Utd and Bayern’s commercial deals, rather than the half-arsed attempts that seem to be going on at the moment. But he doesn’t appear to be that bothered, so either he’s intending selling up soon anyway, or he is in for the long haul capital appreciation route.
Stan does of course own half of Arsenal Broadband, which runs the website and handles overseas broadcasting rights in some way, but he’s not raking money out there at the moment. When I’ve got time I’ll come back to that subject. In the meantime, as far as off-field activities go I’m just waiting to see whether Usmanov’s Christmas present to Kroenke is an announcement that he’s reached his target of 30 per cent of Arsenal shares. Then we might see some cranking of pressure from the Red & White camp come the January transfer window.
Twitter: @AngryOfN5
angryofislington 
Interesting that Stan is allowing the “half-arsed attempts” at improving commercial deals. You would think that improving these would improve the value of his asset?
There are mega-bucks to be made from sport, telecom and satellite interests- especially if you own a major world brand. The banks own most of ManU – and that means the ‘banking elite families’ own ManU. I would not assume that Murdo, Abram or Usmo actually ‘own’ what they appear to own. You don’t become an oligarch without the help and blessing of the banking elite.
Strikes me there is a move to get silent control of the EPL via the top 4 or 5 clubs- and that is what these ‘games players’ are doing– under instruction from above. I see FFP as a move by real sport lovers as an attempt to stop the takeover from happening–or am I just a dewy-eyed romantic?
Not sure I see FFP as a move by real sports lovers. It’s avowed intention is to stop clubs overspending and going bust. That suits owners primarily not sports lovers. For Platini it’s an attempt to forestall the big clubs forming their own Pan-Europe leagues. He is a political animal: he wants Baltter’s job. One thing for sure: FFP rules will NOT be rigorously enforced.
Thanks for the article, so many different angles on this one not sure what to say, but
-The Times not liking you is a positive thing; we will have to see what Leveson comes up with to curb the Press/media
-If I was rich I would have someone to manage my reputation, and I would want to manage the Wikipedia page, ie its not a crime.
-Russia in the 80s wasn’t a pretty place, fortunes were won and lost in strange ways.
-He is also the President of the FIE (International Fencing Federation), so sport is important to him.
-The article doesn’t mention his partnership with Farhad Moshiri
My basic take is Arsenal are falling behind in the race to be a World Class Football team, this is basically because we can’t compete with Chelsea, Man City and to lesser extent Man United. The Arsenal Strategy relies on FFP, which I think is a mistake. Our commercial strategy compared to Man United and other sides is poor.
I don’t want Usmanov in or out. I just want us (Arsenal) to play really great football, for our defence to be hard and for us to compete and occasionally win the big prizes. We just have to be realistic (sorry) about the team and the club. We will have to judge Mr Usmanov and partners on his actions not words.
PS I wonder do other supporters worry so much about ownership, and balance sheets as Arsenal supporter.
I find it disgraceful that a man who has invested millions in Arsenal shares and owns nearly 30% of the club, has no say in it’s running, or any representation on the board. There is a general fantasy put around that Arsenal are run ‘honestly’ and other clubs do not have Arsenal’s moral nous. There is a constant slandering of Alisher Usmanov as a gangster who wanted a football club. Arsenal are no more honest or moral than any other club. All the waiting for FFP to arrive, “when Arsenal will become a big club again”, hides the inadequacies of the present board and even manager. Stan Kroenke is a collector of clubs and not a ‘lover’ of Arsenal. I would rather a man who wants to invest in Arsenal like Alisher Usmanov than a “suit” like Kroenke. The image and untrue fantasy of the American, Kroenke, as a goodie, and the Russian Usmanov as a baddie, is nothing more than a prejudice, and one that is coming back to haunt the club. Nothing can be won with this present owner or Board.
I see quite a few comments around various websites questioning why a 30% shareholder does not have representation on the board, and insinuating that this is odd or strange.
Whether any of us do or don’t want AU on the board is immaterial, this is by no means unusual in any listed company, in fact, it’s the norm.
In a private company, any shareholder is likely to be a partner, investor, family member, friend, etc., and so is likely to have some involvement.
In a publicly listed company, anyone can buy shares and the shareholders get to vote, usually by way of a simple majority, for the board.
As such, whoever has the majority gets to put the board in place, and are very unlikely to invite some outsider with no ties to them onto it, especially if they are perceived as a rival.
In short, whether anyone likes it or not, Kroenke doesn’t have to, and from his perspective would probably be certifiable, to give Usmanov a seat on the board.
Furthermore, there is absolutely nothing strange or underhand about it, it’s typical in any listed business.
You are of course correct, but the difference here to most companies is that in pretty much all other cases investors are buying shares purely for profit. They may want to take over and run the company their way, or they may be happy to sit in the background, but their motive is still money and only money. I don’t believe that Usmanov is buying Arsenal shares for the same reason – do you?
The point with the 30% share rule really focuses around what happened last summer than the principal of the rules itself.The rule has existed in relation to ‘fit and proper’ approval , access to accounts, sign off of main transactions etc in the PL for a number of years and then overnight Arsenal propose the 30% is increased to 50% at the summer meeting and the other clubs all approve it and implement with immediate effect.On what basis and why ?
Just as its immaterial whether any of us do or don’t want UA involvement (personally, I go along with the sentiment expressed earlier and elsewhere that plurality of ownership is the best model for us), its also immaterial what any of the shareholder’s motives are.
The simple fact is that it’s not unusual, and to expect otherwise is a bit bizarre.
To the best of my knowledge the 30% rule specific to football and a clubs’ accounts was to prevent a significant shareholder in a club absolving themselves of responsibility for decisions made. That would be relevant for a club where the or a large shareholder owned a controlling stake based on the spread of shares but could absolve themselves of responsibility for decisions.
The sort of situation being targeted was for example when Enic first bought into sp*rs. They had enough of a shareholding compared to others to influence operations, but not enough to be legally responsible.
A similar situation would have occurred when ecclestone, briatorri and others bought into QPR in that individually they all owned less than 30%, but between themselves controlled and ran the club.
The Arsenal situation is different. UA does not have any direct influence on the running of the club, and therefore cannot be held liable for the decisions of the board.
He would like access to use as leverage, which is not what the original purpose of the rule was for, hence it was changed.
The gist of your piece (forgive me if I’m wrong) seems to be that, on balance and bearing in mind all the grey areas, AU is preferable as an owner to SK. It is certainly my view. Stanley has been around as director and owner four years, four years of decline. His motives are opaque but it’s reasonable to assume that his prime one is profit. He is NOT a fan, he has several other sports franchises. All negatives in comparison to AU, I think. Furthermore, AU was not so much defeated as cheated in the battle for AFC; the sale of shares to Stanley was a carve-up engineered by Danny because (okay, I’m surmising) of his feud with David Dein. If I am right, then it is truly disgraceful that AFC ended in the hands of the current owner through the pettiness of the old owner. The sale was recommended by the then and present Chairman Hill-Wood and again it’s a pretty safe bet what he received as a quid pro quo. Time for a U-turn, without a doubt. But will an obstinate guy like SK sell out to Mr U? Reaching 30% won’t make a scrap of difference. A huge offer might work – but somehow I can’t see Usmanov allowing Stanley to walk off with a massive profit, not after the contemptuous way he has been treated. So how? The BSM march might give us a clue. And AST coming out openly in favour of AU might help. Otherwise I guess we are stuck with Stan for the forseeable future.
I don’t want a single owner, whoever it is. Maybe it would be better if SK and AU’s percentages were swapped, that might see more dynamism through the whole club. But I’d rather any two owners than a single one, because once you have one it’s likely that the only way back to plurality is a Portsmouth-style collapse.
Great article and interesting to see the general movement towards support for Red & White, a far more positive stance than say 12-18 months ago.
AU, as summarised, has a deep pocket.He is 58, has no children and just wants AFC to be one of his beneficiaries before he goes,its that simple.
Although the 30% rule was changed by the PL in the summer, don’t rule out it being challenged at some stage once R & W gets the few shares needed. The PL railroaded the rule change through with a nod and a wink from the rest and UEFA not impressed but irrelevant at moment.
If they got to 30% and said not buying anymore shares ( except KKE !)
then share price will go down as artificially high and we are not a £1bn company.
AST need to back him and Red Action need to officially announce they were wrong with their banner, which they have still not done and wait to see if BSM back their manifesto by expressing support for R & W on their march
Then he should buy talented grown up players & also pay some reasonable wages to the players to motivate them like other players in the other clubs .
Personally I think the board has a lot to answer for, the manager as well.
I just think people are looking in the wrong places when pointing fingers.
Complaining about UA’s stake being sidelined, his access to accounts, etc. etc. etc. is missing the boat completely IMO. These are standard business practice, and even the access to accounts was specific to football and instituted for a completely different scenario.
To my mind, the board and manager have to please explain how a company with the turnover that the club has, is reliant on selling players to make a profit. Effectively we are selling the family silver to stay afloat, and THAT is the real scandal.
The whole point – the business model – of buying a boatload of promising young players every year is precisely to sell many of them off. Because their value generally goes up if they are any good, but you cant keep and play them all. So your profit comes from selling them
Conversely if you tend to buy players of mature age at high prices, their transfer value will NOT go up, so your business model has to be that either a) commerical deals or b) non-football income (read: grants or loans from owner) is required to make the books balance.
Anyone questioning this does not understand football economics. In fact they dont understand basic accounting, because if you did you’d understand that accounts are abstract numbers but they generally can be interpreted to reflect specific and identifiable business strategies.
No surprise here, most football fans are still stuck somewhere not much past the Downton Abbey era.
That would be a valid answer if our player trading to make profit was on the premise that we would keep say the top 1 or 2 of each cycle and sell the rest for profit.
However, that isn’t the case at all.
What is happening is that we are selling our stars (the family silver), and end up keeping a number of the players we should be selling but can’t because they aren’t salable.
As I said earlier, THAT is the disgrace.
Mate, have you ever traded in anything at all? Have you farmed or grown anything?
Some of your produce isnt going to be marketable as premium product. That’s the way of life. You get rid of (eg Senderos) or find some way to use them best you can (eg Bendtner on loan).
No scratch the question – you clearly have never traded anything….because if so you’d understand that the “best product” is what you sell. it fetches the highest price. Duh…
Thats said, sometimes this works out fine, as the product that looks good may not the the most valuable (best tasting). Thus you woudl sell a Song as he looked impressive but was actually easily replaceable – laughably easily for such a supposedly “core” player. Even Van Persie, who was good, was clearly not intererested in staying. What would you do? Pay him the 250K or 300K per week he is getting at Man U? Honestly I’d sell him too.
Last but not least I detect that you, like far too many Britsh football fans, Arsenal fan have the wrong perspective. The “club” (it is actually a stock market listed company, not a local cooperative or works team) isnt exactly a democracy. In fact you own nothing of it. This puts you roughly in the same position as a regular visitor to a neighbourhood pub. You might not like it if the owner decides to redecorate the place and go for the gastropub, food-based business model. But at the end of the day, you have nothing invested, nothing on the line. Its interesting what you say, but really you have no say.
The accounting statement speaks very clearly as to what the club’s business strategy has been . IN fact the strategy has been around for a full decade or so by no, so it’s not secret. If you dont like it, you can of course buy the club – well, no you cant afford it – or you can face up to reality that this is a very expensive business asset that doesnt belong to you and your personal opinion will not matter, unless there was a shortage of fans AND TV companies AND sponsors. In which case the club would be on its deathbed anyway.