Rule 1: Whoever Owns Arsenal Should Be Accountable To Supporters

This is largely an amalgamation of a couple of my blog posts from last summer. On the day of the North London Derby it seems unfortunate to have to discuss all this, but the supposed £1.5 billion bid is the big news of the day. So it seems timely to think about why supporter involvement in ownership of football clubs is universally a good thing.

I’m on the Board of the Arsenal Supporters’ Trust. The AST gets some flak from certain other Arsenal fans. I realise that these days every viewpoint of every Arsenal fan will get flak from some other Arsenal supporter somewhere, so in that sense I’m not surprised by it, but I think there are misconceptions about why the AST exists.

Accountability. That’s the biggest reason for having small shareholders, and the biggest reason for having the AST. Accountability is needed in any business, especially football. Everything else flows from the business being run well and being run for the benefit of supporters.

I don’t understand people who say, “I’m not interested in what happens off the pitch, I just support the team.” How blind can you be? The point of having a business behind the team is to make the money that is needed to build and pay for the team. The team does not exist in isolation. Therefore it makes sense to have the best business you can behind the team, making the most money and acting in the most professional way. But there’s a caveat here: football clubs exist only because they have fans. The ‘product’ is intangible. What you get from football is emotion and then memories. Sure you can buy as much merchandise as you want, but that is also in a sense entirely worthless without the emotion and memories.

So the ‘business’ of the club needs to make money, but not at the expense of alienating its fans and supporters. It needs a sense of fair play and decency, so that supporters are treated as part of the club, not just consumers. Football clubs should be making a lot more from commercial activities than from ticket sales, and it’s laziness that prevents it: for successful clubs the captive market is there, so the captive market gets exploited with higher and higher ticket prices.

People who are ‘only interested in what happens on the pitch’ are also quite often the ones who overreact to a single defeat instead of looking at the bigger picture and longer term.

I also don’t understand people who say, “What right have you (as an individual or the AST or anything else) to tell the professionals how to run the business? Leave them alone, they know best.” That kind of statement is naïve beyond belief. ‘Professionals’ run every football club, and yet football clubs go bankrupt or into administration quite often. The economic crisis we’re all enduring was caused largely by the stupidity of professional investment bankers and professionals like Fred Goodwin who didn’t understand what was going on. The professionals at Arsenal presided over the transfer window debacle last year; they also paid £3m for advice on selling their shares to Stan Kroenke, which was demonstrably not in the best interests of the company or all shareholders; last summer they changed the total number of shares Stan owns according to Arsenal.com, because it took them about eight months to do some paperwork that should have taken two weeks. Is Peter Hill-Wood’s performance at recent AGMs professional? I haven’t even started on all the decisions about ticket prices, where away fans are seated in the stadium, what the kit looks like, how badly some contracts and negotiations are handled, etc, etc. And people really think there’s no need for accountability? Unbelievable.

For people who say “Stop concentrating on finances, concentrate on the team” – one is the flipside of the other! No finances, no team.

For people who say “Who cares about shares, what about the fans?” – the person with the shares decides what happens to the fans! How much they pay, what they can do, whether they have a team worth watching.

For people who say “So what, if there’s a single owner, I want some trophies” – that ownership model is a one way street. Now there is a majority owner we’re already on a slippery slope. I would welcome Usmanov to the Board for several reasons: I don’t want Arsenal to be Stan’s toy or money-making machine; I want him to be challenged and forced to do things for the benefit of supporters. And I want to see what Usmanov is going to bring to the party. But saying you want Usmanov or anyone else to take over 100% of our club because we haven’t won a trophy for X years is ridiculously short-termist. It will be very hard to change back from a single owner to plural ownership. Not impossible; stranger things have happened and nothing lasts forever, but it will be a dark day for me if one person owns all of Arsenal.

Of course things have changed since the AST was formed over a decade ago. Arsenal’s Board at that time professed to be – and to be fair largely was – all about custodianship, with the emphasis on the fact that three generations of Hill-Woods had been chairmen and three generations of the Bracewell-Smith family were Board members. There were some large shareholders who were on the Board and a couple of thousand smaller shareholders who held around 10% of the shares. No one wanted to take Arsenal over and turn it into a personal money-making machine, the Board largely worked together to do what was right for the club. Already it seems like a simpler happier time.

The smaller shareholders didn’t always like what the big ones were doing, and they had a chance every year to go to the AGM and say so – not that it usually did any good. Nonetheless, with Arsenal as a public company the Board did (and do) have to answer to the smaller shareholders up to a point, and thus they have to answer to supporters. If there are no small shareholders then there is no answerability. None. If there are fewer smaller shareholders than there were before, there is less answerability. If there is one majority shareholder rather than a number of large shareholders who own no more than 10-20% each, there is still less answerability. You can see where this is going: if there is only one owner holding all the shares then not only is there no answerability to supporters, but there are no checks and balances within the Board itself.

There were also some disagreements between the larger shareholders, though these got markedly worse in the years since the AST’s formation, with a variety of Arsenal Board members being ousted for various reasons (usually talking to someone Danny Fiszman didn’t like).

So the AST wanted to maintain the good things about the set up, and represent the smaller shareholders. Now, although there are fewer small shareholders in their own right, there are 2,000 Fanshare members who own parts of shares, so in total the number of people with an ownership interest in Arsenal has been maintained.

Unfortunately the Board make-up has also changed for the worse, with one majority shareholder who can pretty much do what he wants. So personally I think it’s important that supporters still have some kind of voice, and the best way to do that is by being shareholders, because that’s the only way the club actually has to listen. They don’t have to do anything else, but they do have to listen.

This isn’t an AST manifesto, and obviously if you’re interested then just look at the AST website for more, but a few things the AST believes are:

  • The best ownership model will always include supporters as shareholders
  • The AST would ideally like to see a minimum of 25% of shares in the hands of small shareholders and/or supporters’ groups, so that supporters have an appropriate voice.
  • The AST accepts the reality that any stake in Arsenal is available at any time should someone make an acceptable bid, but we oppose any bid to buy the club outright and take it into single ownership
  • Arsenal is too important to be owned by any one person.
  • The AST would fight any plans by a purchaser of Arsenal to charge the acquisition debt against Arsenal and use the club’s income to service this debt, as has happened at Manchester United (and Liverpool under Hicks and Gillett)
  • The AST always wants to see profits reinvested into the club and we do not support dividend payments
  • The AST intends to always remain in dialogue with the current Board and Chief Executive on ownership subjects, as well as with any major shareholder outside the Board
  • A long term view needs to be taken; reacting to individual events such as losing any single match is not the best way.

The AST instigated an annual CEO/supporter Q&A with Keith Edelman when he was in charge. Edelman had agreed to a second annual event with AST members when he suddenly left, and Ken Friar stepped in at short notice. When Ivan arrived he was persuaded that it would be a good idea to continue, and he got a couple of good grillings in the first two years. In 2012 though, someone decided that other supporter groups should also be represented and the format should be changed to give Ivan a chance to prepare answers to questions. It’s easy for the club to justify this on the grounds that they want to engage with all supporters, and Ivan wants to give the fullest answers possible so it helps to know the questions, but that’s what I’d call a politician’s defence. Because it’s also more convenient for the club to marginalise small shareholders and therefore also reduce the influence of the AST by including others in this event (not that I have anything against other supporter groups, but it’s a fact that this was instigated by the AST for its own members), and it helps reduce the chance of antagonism if the supposedly tricky subjects are tackled in Ivan’s way rather than leaving it to chance with audience members jumping up and giving their views.

After all, who can forget the horror of someone at the shareholders Q&A with Arsène daring to question him on the subject of buying a past-it Man Utd defender? Unbelievable. The cheek of it. And so there aren’t any shareholders Q&A sessions anymore and supporters don’t see Arsène face to face from one AGM to the next. Instead we have ever more sanitised sessions which are inclusive for all, and everyone loves everyone and no one can be offended. Especially not the manager, because he doesn’t have to appear or answer to anyone.

See how I’ve effortlessly segued back onto my main subject of the importance of accountability? See also how I use the words ‘small shareholders’ and ‘supporters’ almost interchangeably? That’s because the small shareholders who are left pretty much are all also supporters. They’re not interested in getting dividends, they’re not interested in the value of their one or two shares going up; no, they’re interested in Arsenal being successful and well run, without people at the top being out of touch and siphoning off profits. The small shareholders are much bigger fans than the big shareholders, and deserve a say. And that includes all the 2,000-odd who have joined the AST’s Fanshare scheme in the last two years precisely because they have an emotional attachment to Arsenal. The FSA judge Fanshare as a financial investment (which is why it can’t be offered outside the UK; sorry overseas fans), but for those paying into it it’s not being done as a financial investment.

I’m sure everyone in Fanshare would happily buy new shares if the club would issue them, so that the money went directly to the club rather than to an existing shareholder, but the club are refusing to play ball – despite Ivan reiterating his (apparently) wholehearted support for Fanshare at the Q&A.

So now we have a billionaire in charge, who won’t spend any of his own money on Arsenal because he sees it purely as a business; a billionaire as minority owner, whose background is shady at best and whose motives are at least questionable; and apparently a third group of millionaires or billionaires who won’t identify themselves but are promising the earth. All this doesn’t honestly look the best way to run a club (not that I believe the third group actually exist until I see some evidence).

The FA and Premier League really should be looking to Germany as a model and forcing owners to be accountable to fans. They won’t. They’re too shortsighted and the English mentality is to allow market forces to rule everything, to the obvious detriment of consumers – in this case supporters. I repeat: it will be a dark day for me if Arsenal ends up in the hands of one person.

Follow me on Twitter: @AngryOfN5   

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9 thoughts on “Rule 1: Whoever Owns Arsenal Should Be Accountable To Supporters

  1. If only we in fanshare could get to 10% ownership, at least that would give us some protection. 51% is always the dream.

  2. I should point out that there is a misleading strawman planted in this article: “…I also don’t understand people who say, “What right have you (as an individual or the AST or anything else) to tell the professionals how to run the business? Leave them alone, they know best….”

    Personally I havent seen any Arsenal fans say any such thing. But many have pointed out that the majority owner put up the better part of a half billion pounds that was demanded by the previous owners as the price of tranferring control. (note that Arsenal fans did not object to or block the previous owners monetizing the club to this degree and thereby implicitly determining its future direction) But in any case, the guy put up the money, so its his perogative to install his staff. Good or bad, they are the ones with skin in the game here. Fans taking pot-shorts from the side are merely backseat drivers.

    If fans want a say, then they need to take one of the following strategies
    a) start mustering large sums of money to take significant ownership stakes ie at least 20% and thus have a claim to a seat at the table (high chance of success)
    b) go the political route and collectively demand that the league force clubs to give fans a seat at the table a la Germany (zero chance of success in the money-grubbing, libertatian England)
    c) Use their own spending power as a tool ie organize and effective boycott eg all season ticket holders collectively agree not to renew and not to attend games (would be succesfull but unikely as fans actually not got the backbone to do it)

    Noe that whinging randomly from the sidelines randomly is not a strategy – it takes no direction and leads to nowhere.

    As a side note: I’m with Wenger on not accepting anyone questioning him on the purchase of a specific player. Fans are customers, but it’s not the customers’ role to micro-manage the staffing of an establishment. I dont care how many times you go in a pub every week – its not up to you to demand that the proprietor clear his hires with you. That’s ridiculous. I have customers in my line of work, I respect and dependon them highly and will go to the earth to serve them, but they are never going to even remotely get any acceptance from me, if they tried to micro-manage my job. Backseat drivers are one of the few customer groups that any company should actively seek to get rid of.

      • Whatever the case, anyone who put up half a billion pounds is well within rights to run the business as they see fit. We as customers need to be more active in using spending power and or investment in the business to gain a voice. But sitting around telling other people what to do with their hard earned money is just polllyanaish.

        Once Dein and Fisman sold out for big money, the next owner was destined to have to be focused on first and foremost generating a return for their investment and you cannot blame them for that. There was no surplus left on the table by Dein, Fisman and co and not even a trinket of any shares handed over or sold to fans, even for symbolic value!

      • Yes, by having a majority of the shares Stan Kroenke has the legal right to run Arsenal as he sees fit. But if he chooses to employ idiots I have every right to point out their deficiencies, rather than let people think they are doing a great job when they’re not.

      • If you just want to whinge, sure. But if you want to effect change you’re still going to have to either buy a controlling stake in the club (note that Usmanov’s 30% does f-all for him) or withhold your trade. The latter is cheapest option and a highly effective one, if done collectively.

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