While the era of the ‘vanity project’ owner isn’t over just yet, big business is increasingly interested in Premier League football as a serious, high-yield investment.
In simpler terms: buy low, sell high. The situation is no different at Arsenal, where Stan Kroenke has spent almost £1.3bn to take 100 per cent control of the club and fund it over time.
One day, the 77-year-old Missouri-born billionaire will want to sell the Gunners at a huge profit.
‘Silent Stan’ is something of an absentee landlord in North London, with son Josh Kroenke a much more conspicuous presence at the Emirates Stadium these days.
But the patriarch of the Kroenke family remains the ultimate authority with the final say on budgets and strategy, although he has scant involvement in day-to-day affairs.
Budgets are a perennial talking point in N5, but Mikel Arteta’s side’s recent slump in form and the plain need for a world-class centre-forward means the chatter is particularly pronounced at present.
That was the case even before the FA Cup penalty shootout defeat to Man United yesterday, wherein Arsenal scored once from an xG of just under 4.0.
One long-term target, Alexander Isak, has seemingly been deemed to expensive for the current season’s budget, with Newcastle United having appraised the Swede at north of £100m.
It’s true that Kroenke has bankrolled losses of over £300m in the last five financial years as a direct result of a more free-spending transfer strategy designed to get Arsenal back into the game’s elite.
Update chart showing Arsenal's revenue over the last decade and the breakdown between commercial, media and matchday income
But, with unfavourable macroeconomic conditions such as high interest rates a factor at present, it has been suggested that the owner’s altruism is approaching its upper limit.
That doesn’t mean that funding will dry up any time soon. KSE are, for example, exploring spending north of £500m on expanding the Emirates.
But as the owners attempt to demonstrate that Arsenal can be profitable in the long-term, any expenditure will be more clinically evaluated with clear return on investment in mind.
So how can Kroenke build value at Arsenal while also feathering his own, personal nest? One strategy, as hinted at by Arteta, is the multi-club model.
Arsenal could take over European club, predicts football finance expert
Man City have arguably the world’s biggest and best multi-club network in the City Football Group, which has a foothold in five continents with stakes in 12 different teams.
Map of City Football Group, the multi-club ownership group including Manchester City
Following Ineos and Sir Jim Ratcliffe’s part-takeover of Man United meanwhile, the Red Devils now have sister clubs in French outfit Nice and Swiss side Lausanne-Sport.
Chelsea are similar, with Todd Boehly and Clearlake’s BlueCo holding company the sole owner of Vitesse and other potential takeover targets in the crosshairs.
Liverpool don’t yet have a multi-club model but will launch one in the medium term having brought Richard Hughes back to the club to manage the process.
Multi-club holdouts Tottenham are the odd ones out, but over half of the Premier League’s clubs now operate under some form of multi-club umbrella.
Infographic explaining the concept of multi-club networks and ownership in football
Arteta has said he wants Arsenal to take over a new club and, although there has been no official word from the club, it is said this is something they have explored.
But what profile of club might Kroenke Sports & Entertainment target?
Speaking exclusively to TBR Football, Liverpool University football finance lecturer Kieran Maguire forecasted that the owners would likely look close to home.
“If Arsenal go down the MCO route, the logical choice is Europe,” said Maguire, host of the Price of Football podcast.
“The benefits of being able to transfer players slightly more easily and address some of the complications and disadvantages that have come from Brexit would be key
“You can hijack young talent and park it at the MCO before those players turn 18 and are eligible to come to the UK.
“Also, from a geographical perspective, it is easier for the loans manager. From a knowledge sharing perspective, it is also easier to pool new ideas and techniques.
“That can be across tech, sports science, diet, training and so on. It is far more convenient to go down the European route.
“The main downside would be two clubs ending up in the same UEFA competition, although it now appears as though there are workarounds here.
“We have seen Manchester United and City get around those rules this season. If that is the strategy UEFA are taking, Arsenal don’t have anything major to worry about.”
What is Stan Kroenke’s long-term plan and when will he sell Arsenal?
There’s no indication that Kroenke is taking his cash cow in North London to market just yet, but everything he does at the Emirates is geared towards an eventual sale.
KSE are ruthless and, although it seems like Josh Kroenke is invested in the project at Arsenal and will even oversee the search for a new sporting director, are not particularly interested in fan sentiment.
Just look at the £15bn-valued sports empire’s activity across the Atlantic.
Franchise League Location
Arsenal Premier League London
Los Angeles Rams NFL California
Denver Nuggets NBA Colorado
Colorado Avalanche NHL Colorado
Colorado Rapids MLS Colorado
Colorado Mammoth National Lacrosse League Colorado
Los Angeles Gladiators Esports (Overwatch League) California
Los Angeles Guerrillas Esports (Call of Duty League) California
Kroenke relocated the Rams NFL franchise from his hometown of Missouri to Los Angeles in 2015.
What’s more, the city of Denver are in a perpetual appeasement battle to keep the Kroenke-owned Nuggets (NBA), Avalanche (NHL) and Rapids (MLS) in the area.
Right now, conditions for a sale aren’t particularly favourable. Interest rates are high and football’s regulatory sands are constantly shifting, creating an unstable investment environment.
Setting aside that financial context, Arsenal probably aren’t valued anywhere close to what Kroenke wants to bank at present in any case.
Owner Stan Kroenke of the Los Angeles Rams waves to fans in the tunnel prior to an NFL football game against the Tampa Bay Buccaneers at Raymond Ja...
Photo by Kevin Sabitus/Getty Images
The big brains in the football business world think that technology and further innovation in the media space are key to unlocking growth, and KSE will plough this furrow until they reach exit value.
The multi-club model is seen in some quarters as a means of tapping into overseas markets, spreading the Arsenal ‘brand’ and potentially creating new fans to monetise globally.
0 Comments