Amusingly, when Stan Kroenke bought two Arsenal shares in May 2015, his only share purchase in the last eight months, taking his total number of shares from 41,696 to 41,698, the Mirror had an article that twice repeated the statement “it strengthens his grip on the Gunners” – as though going from 67.017 per cent to 67.020 per cent of the total shares made the slightest difference.
However, if there was one thing we learnt from the 2015 Arsenal AGM it was that his grip has tightened. Not as a result of purchasing two more shares, obviously, but because there is no one on the Board with any interest in challenging him over how the club is run. Kroenke is the only Board member who holds any shares, so the others sit there because he allows them to. In the past the Board was a collective, with no one person able to outvote the rest. Danny Fiszman, Lady Nina, the Carrs, Peter Hill-Wood – they consigned a long history of plurality to the bin by selling to Kroenke.
The most obvious signs of this strengthening grip are the repeat of the £3m fee KSE took from Arsenal last year, and the fact that Mr Kroenke no longer feels the need to even open his mouth at the AGM at all. For a couple of years he stood to introduce Arsène, ensuring that when he finished his 30 seconds there would be a round of applause for the manager rather than any booing or hissing for him. Now he’s given even that up. He lets the rest of the Board jump to his commands while he sits impassive to questions, comments and even open heckling. What was going through his mind? Perhaps the words of Poker Face by Lady Gaga, or a tune he’d made up himself along the lines of ‘Stan Kroenke, he speaks when he wants’. Late in the meeting, when it was obvious Stan was not going to speak, my AST colleague (and shareholder) Nigel Phillips called out: “Could we have a few words from Mr Kroenke?” “No,” replied Sir Chips, and moved on.
As last year, the question of the £3m fee for “strategic and advisory services” was the first item on the agenda. The reason it was first was not, as some reports have suggested, to get the tricky subject out of the way early and move on, but because it relates directly to the accounts which then have to be approved by a formal resolution. You can’t approve the accounts and THEN discuss them; it doesn’t work.
I submitted this question in writing in advance of the meeting:
For the second year running Arsenal was ‘charged a fee of £3m’ by KSE. When this was questioned last year the answer was light on detail, except to say that Sir Chips Keswick had proposed it. Ivan Gazidis has said Arsenal ‘run a tight ship’, and yet £3m can apparently be spent on the whim of the chairman, without competitive tender, without any report of what services were provided for it and without any evidence of tangible benefit. A neutral observer would find it difficult to believe that something costing £3m can’t be described in some detail. Given that the payment has been repeated, are we to assume the services were beneficial? If so, surely they can now be described so that all shareholders and supporters can see that value for money is being obtained?
Again as last year, the questions were put up on screens around the room so everyone could read them, but the answers weren’t. My question duly appeared, preceded by a shorter but similar one from a Geoffrey Lewis. (There’s not actually a Geoffrey Lewis on the shareholder register, but it’s possible he has shares held in a nominee company name.)
In answer to these two questions, Sir Chips Keswick read a statement that was very similar to last year’s answer, ie it was vague and non-committal. Tim Stillman, who was sitting three seats from me scribbling furiously for his Arseblog news summary, noted that Sir Chips’ words included that he and the board “felt it was right” to pay the fee pertaining to “a wide range of services,” adding that “it wouldn’t be good governance to get them for free.” KSE has “extensive experience in sports management” and they have “contributed to the evolution” of the club’s property, media, commercial and sporting management. So, as before, no specific examples of services or benefits were given.
By the end of this answer there was open heckling from the floor, and an annoyed Mr Lewis strode to the front of the room where a microphone had been set up for the open Q&A later. Sir Chips tried to wave him away, but he wasn’t put off and correctly told the Board that the question had not been answered.
For a few moments there was the danger of a shouting match breaking out, with Sir Chips, Mr Lewis and various other shareholders all trying to make themselves heard at once. Sir Chips said, “I’ve answered your question and ask that you listen”, further inflaming matters.
When things quietened slightly, the Chairman said we were moving on but promised to come back to Mr Lewis immediately the formal business of the meeting was concluded.
We went through the resolutions, with not surprisingly all being carried despite varying numbers of hands being raised in the hall to vote against. Stan Kroenke remained impassive during this process, not bothering to raise his hand – which he has done in previous meetings – but Sir Chips was either receiving telepathic messages or taking Stan’s 67 per cent support as read.
Resolutions passed, we went back to pre-submitted questions. Despite Sir Chips’ promise to Mr Lewis, we went through all the other questions before coming back to the subject of the £3m fee. I won’t go through the full list as it’s been done elsewhere, but overall I’d say there were probably clearer answers than in previous years to some topics. Perhaps Ivan is adjusting his style just enough to stop the mood becoming too restless. With one exception, obviously.
Sir Chips started to say something along the lines of “That concludes the submitted questions…” and was immediately interrupted by loud grumbling from a large number of those present, as it appeared he was conveniently forgetting he had a subject to come back to.
“I was just about to say we’d go back to that,” he said, and then addressed Mr Lewis again. “Mr Lewis you were clearly dissatisfied by the answer I gave and there was quite a large support for your dissatisfaction from the hall. I can elaborate a little. I don’t know how many of you here run your own businesses but those of you who do will know that the best advice you can get is the quick advice from people who are expert in their field. I am responsible, ultimately, for the money management of the club and making sure that it is well spent. So the answer to your question cannot be codified and I will make no attempt to do so except to say we get the best advice as quick as we possibly can, and if you want proof of what that is worth, you can look at this [pointing at the FA Cup], look at that [the Community Shield], and look at our accounts.”
So it’s still just undefined advice, impossible to ‘codify’. I don’t remember any previous Arsenal director taking fees for advice. Did three generations of Hill-Woods take fees for advice? Did the Bracewell-Smiths or the Carrs? Did Danny Fiszman take fees for advice when spending years planning a new stadium and executing the project? (Ok, he ultimately sold to Kroenke and helped cause the current situation, but that’s another matter.)
A shout from the floor asked if “there was a written contract, or is it like Platini and Blatter’s verbal agreement?” Sir Chips was getting rattled by this point and replied crossly, “I am not Mr Platini, I am not Mr Blatter, and there is not a written whatever-you-wanted. If you don’t get the right advice, then you fail. You cannot codify how many times we have taken advice or how we have taken them. Because of the continuity of the fees, the value is so important.”
The lack of clarity and admission that there wasn’t even a contract was still annoying a large number of those present. Sir Chips had had enough and said, “Please, no more or I shall have to close the meeting.”
Rebellion quashed for the moment, we moved to the open Q&A, and a small line formed at the microphone to ask questions. I joined the line. Two in front of me was a tall, grey-haired, casually dressed, American-accented gentleman who introduced himself by saying he had been in business many years, was a respected academic before that, then started to talk at some length about how lucky we were to have the Kroenkes in charge, how great the whole Board were and that this was the best-run AGM he’d ever attended. Was he being paid to say this? Was he Stan’s uncle? I don’t know, but he showed no sign of coming to the end of his monologue, so Sir Chips, to his credit, interrupted to tell him to get on with it. “I’ve stopped the ones who were being rude, it would be remiss of me not to also stop you saying nice things.”
It got to my turn. I said, “I’m sorry to bore you with this again Mr Chairman, but I’m going to return to the subject of the £3m fee to Mr Kroenke. We all know that as the major shareholder Mr Kroenke can vote himself this fee, but if there are services given for it can we just have a list of them? If there aren’t, then just tell us and we’ll know where we stand.”
Sir Chips refused to be drawn into further discussion. “I’ve already answered the question… wide range… can’t be codified.” He then allowed only a couple more questions before saying we’d have to stop and the rest of those in the queue would have to go and sit back down. Coincidentally, or not, this was immediately after AST Spokesman Tim Payton joined the queue.
After the formal close of the meeting most of the Board quickly disappear behind the scenes, but Ivan and Arsène traditionally stay out front to take further one-to-one questions (Ivan) or sign autographs and pose for selfies (Arsène). I lined up with Gooner editor Kev Whitcher to speak to Ivan. (Kev’s own review of the AGM is here.)
Kev asked Ivan why it was necessary to stop the meeting when there were still people who wanted to ask questions. Well it could go on forever otherwise, said Ivan. Another ten minutes wouldn’t hurt, said Kev – why not at least let those already in the queue have their say? Ivan didn’t have an answer of course. There’s no reason at all not to continue, so he promised to consider it, but said when the same questions started being repeated perhaps it was time to stop.
“But,” I said, “The reason that the same questions get repeated is that sometimes the Board members don’t answer them. In the specific case of the £3m fee, why not provide a clear answer then we can move on?”
Ivan insisted the question had been fully answered and that the problem was that I and others simply didn’t like the answer.
Kev repeated that Sir Chips had said there was no written contract for the services or fee. Ivan replied, “I heard him say that but I can’t confirm that.” Interesting. So there clearly isn’t a contract, as Chips would know if there was, but Ivan won’t say that because it’s obviously bad governance.
Kev: “Will the fees continue to be charged?”
Ivan: “I can’t confirm that.”
Me: “We’re already four months into the current financial year, so you must know if the services have continued and therefore if there’s going to be another fee in next year’s accounts.”
Ivan: “I can’t confirm that.”
Me: “Is it true you’re wearing a charcoal-coloured suit and a red tie?”
Ivan: “I can’t confirm that.”
All right, I made the last one up, but you can see where the conversation was going. There will be fees every year but Ivan is an expert in not confirming things and far too smart to be easily caught out. Far smarter and better at PR than some other Board members, too. This makes it all the more surprising that he has let this subject drag relationships between the Board and other shareholders down at a time when trophies are back and everything else off the field is up.
I’m realistic: I know Kroenke’s in charge, and I and all the other 630-odd small shareholders can like it or lump it. But really, if Kroenke is going to take ‘fees’ every year can’t Ivan see that he needs a better story, and a better storyteller than Sir Chips? Several times during the meeting Ivan interrupted the Chairman to take over answering questions when it was obvious Sir Chips was getting into deep water and about to embarrass himself or slander someone. Not doing it at any time over the £3m fee has two effects: it makes the story much bigger because it becomes the focus of every newspaper report on the AGM, and it makes it look as though even Ivan believes it can’t be justified, even if it’s legally acceptable.
But at least we still get the chance to ask questions, thanks to Alisher Usmanov’s shareholding preventing Arsenal being taken private. As long as R&W have 30 per cent the Board have to interact with other shareholders once a year, while Stan Kroenke does his best Easter Island statue impersonation.
We don’t learn much at these events – as Kev Whitcher says you’re better off going for entertainment rather than enlightenment. But this year was certainly entertaining.
ps – “American sports owners all take money out”, “Kroenke has a majority he can do what he wants”, “it’s only £3m just let it go”, I’m boring and you don’t care about accounts you care about football, etc etc. Heard it all, thanks. Don’t waste your time.