*** There is an updated version of this post here following Kroenke gaining 100% control in summer 2018***

Stan Kroenke is the first ever majority owner in Arsenal’s history, currently holding just over two-thirds of the shares. Specifically, as at May 2018, he holds 41,743 shares of the total of 62,219, which is 67.09 per cent.

If he decides to sell up, how much profit will he make? I can’t be completely precise about this because I don’t know exactly how much Kroenke paid for every Arsenal share he’s bought. For a couple of years he bought small numbers on the open market in numerous transactions at a variety of prices.

His first purchase though was to pay 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, 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.

He then made a deal with his fellow Board members to take majority ownership of the club, which resulted in the largest amount purchased at one time. In April 2011 he bought Danny Fiszman’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%. After that the price rose further and he added a few more at prevailing prices, probably an average of £14,000 per share.

Add all this together and my estimate of Stan Kroenke’s total expenditure on Arsenal shares is:

£424 million.

Or £435 million if you add in the extra roughly eleven million 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?)

Following the KSE takeover the price of Arsenal shares continued to rise, hitting a high of £17,500 in late 2012. It then dropped for a while when both Kroenke and Alisher Usmanov stopped actively buying. The volume of shares traded since 2014 has generally been very low, which might normally lead to stagnation of the price, but the increased income of Premier League football clubs from TV deals has pushed the value of all clubs higher, and the scarcity of Arsenal shares means individual transactions can be negotiated between buyer and seller. Because of these factors, and perhaps also because of speculation that Kroenke might sell at some point, the price had been pushed to a new high of £18,250 by April 2017. There was much more speculation during the summer, with both Kroenke and Usmanov rumoured to be bidding for each other’s shares. Although none of these rumours were substantiated, the share price was pushed to £28,000. Any price for individual shares is only an indication of what might happen in a deal between the two major shareholders, though.

Stan has 41,743 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
• £17k – £285m
• £20k – £410m
• £23k – £535m
• £26k – £660m
• £28k – £743m
• £30k – £827m
• £32k – £910m
• £34k – £994m
• £36k – £1,079m
• £37k – £1,120m

So a price of ‘only’ £20.5k per share would give Kroenke a 100 per cent return on his investment, give or take miscellaneous expenses – though they can be offset by the total of £6m in fees he took out in 2014 and 2015.

£20.5k looks a long time ago now. More likely it would be well over £30k per share, and £34k would give Kroenke a billion pound profit. The prevailing price at time of writing is £37k per share, which means a profit of £1,120,000,000.

Valuing football clubs accurately is not easy as it’s an extremely volatile business, with success dependent on a huge number of factors that are hard to control. In the end clubs are worth what someone will pay. Forbes valued Arsenal at $2.017bn in May 2016, about £1.392bn at the exchange rate then, which would give a share price of £22,368. In 2017 they raised this to about £1.6bn, which would be a share price of close to £27k. For the first time, the actual share price has gone above the Forbes valuation.

What I’ve talked about here is Kroenke’s profit in pounds sterling. What will also concern him is the dollar/pound exchange rate. From when he started buying Arsenal shares to mid-2016 it had varied from about $1.39 and $2.06 to the pound. It’s since fallen to around $1.25 to the pound. This will certainly affect the price Kroenke would be prepared to accept to sell his stake in Arsenal, if indeed he was considering such a move.

Twitter: @AngryOfN5