Silverware is a bonus, of course, and financial success is often wrapped up in achievements on the pitch. Progress in the Champions League, where Arsenal won 7-1 against PSV last night, is particularly lucrative.
But ultimately, if the choice is a few more trophies in the cabinet or an extra billion, Stan Kroenke’s mind is already made up. You don’t get on the Bloomberg Billionaires Index by making sentimental decisions.
Since the Denver-headquartered investment group took majority control of Arsenal in 2011, they have banked a few million in payments for services, plus a token sum in directors fees.
But for an enterprise with revenue of £617m per their recently released accounts, that is chump change.
The real worth of Arsenal to the Kroenkes is the club’s value as a business which they will one day sell. That is the capital appreciation model – buy low, sell high.
KSE have injected £324m into the club via interest-free loans which are repayable with two years’ notice. It may well be that they are never repaid, in which case the sum will likely be factored into the sale price.
Unlike Kroenke’s franchises in US sport, Arsenal are not consistently profitable. In fact, they haven’t had a financial year in the green since 2017-18, with total losses in that time approaching £330m.
The Gunners are also the odd one out in the KSE network in that they are yet to win either of their sport’s two biggest prizes – the Premier League and Champions League – under Kroenke ownership.
The LA Rams, Denver Nuggets, Colorado Avalanche, Colorado Rapids, and Colorado Mammoth have all won their respective leagues on the other side of the Atlantic.
All major honours won by Stan Kroenke-owned franchises
Under Mikel Arteta, whose FA Cup victory behind closed doors in 2020 is his only honour in North London so far, the league title was just out of reach in 2022-23 and 2023-24.
This season, the gap is bigger. Unless there is a monumental, historic swing between now and the end of the campaign, it will be title number 20 for Liverpool.
But despite the relative lack of success on the pitch, Kroenke will be content as long as Arsenal’s enterprise value keeps on rising at a healthy clip.
And news from the football finance sphere this week shows that is exactly what is happening – and KSE have achieved a remarkable feat in the process.
KSE empire valued at over £12.5bn – Arsenal at bottom of pile
When it comes to the value of sports investments, football is nowhere near the biggest show in town.
The NFL, NBA and MLB all have bigger TV deals and their franchises are more commercially successful.
Last week Sportico published their list of the top 100 most valuable sports teams in the world. There were only six football clubs, and the same is true of almost every ranking out there.
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Arsenal are 65th in the list, valued at just over £3bn. That’s roughly three times what Kroenke has invested at the Emirates Stadium to date.
Kroenke’s most valuable franchise is the Los Angeles Rams, who are number six in the list at over £6bn. The Denver Nuggets of the NBA meanwhile are slightly higher than Arsenal at about £3.2bn.
Those three teams alone means Silent Stan’s sports empire is worth in excess of £12bn, and he is the only individual with more than two franchises in the top 100.
If the Kroenkes are so rich, why didn’t the Gunners sign anyone in January?
Arsenal were linked with the likes of Alexander Isak in January, who would have given them at least a fighting chance of closing the gap with league leaders Liverpool.
There was a bid for Aston Villa’s Ollie Watkins too, as well as reported interest in a number of other centre forwards. In the end, however, Mikel Arteta didn’t get the goalscorer he needed.
Things have got worse with season-ending injuries Gabriel Jesus and Kai Havertz, although neither was in prolific form beforehand.
In truth, the reason for their lack of ambition and decisiveness in the transfer market is likely because the risk-benefit financial analysis didn’t meet the threshold.
A first Premier League title since 2003-04 was unlikely anyway and Champions League success is a long shot and often requires some good fortune along the way.
Spending £100m-plus in a window where teams historically have overpaid was, in their view, probably not worth it. They believe they will get much better value for money in the summer.
It’s a completely alien concept to real football fans, but the cost-expense ratio a club generally needs to get into the top four is sometimes more favourable than going for broke to win silverware.
‘Exit value’: When will Stan Kroenke decide to sell Arsenal?
There are many in the industry who believe that the value of Premier League clubs could be a bubble – and a bubble bursts when the price of an asset surpasses its inherent value.
Ask someone working in the investment sector where the value is in owning a club like Arsenal and you will invariably get a long-winded, often esoteric answer.
Photo by Julian Finney/Getty Images
Photo by Julian Finney/Getty Images
The North Londoners’ biggest asset is their intellectual property, the brand which allows them to sell tickets, merchandise and bolsters the value of the media rights from which they benefit.
But football has a monetisation problem. Arsenal are one of the most followed clubs in the world, but their earnings on a per-fan basis, like any club with a global pulse, are tiny.
Technology is seen as the way to rectify that situation. Kroenke has invested in shared reality firm Cosm, for example, who he thinks can be a route for overseas fans to spend more money on football.
Besides technology, the value of broadcast rights is thought to have more upside. That could be in the form of one, global TV deal or Arsenal being allowed to sell their own media rights.
Piracy, such as that carried out through so-called ‘dodgy firesticks’, is issue for clubs too.
At the Financial Times recent Business of Football Summit, the bosses of Sky, DAZN and the Premier League all said it was harming the value of the media rights.
Previously, Kroenke has looked to breakaway projects, such as the European Super League, to guarantee profits and increase value.
But the independent regulator for English football, which will be introduced later this year or in 2026, will block any attempts to join up to the recently revived competition.
Kroenke has shown in his ventures elsewhere that sport can be a beachhead for enormously lucrative real estate projects. In expanding the Emirates Stadium, he could be looking in a similar direction in N5.
Infographic sowing the matchday incomes plus stadium capacities and planned upgrades in the Premier League, featuring Newcastle United, Chelsea, Liverpool, Manchester City, Aston Villa, Leeds United, Tottenham, Arsenal and Everton
Premier League stadium capacities and income. Credit: Adam Williams, GRV Media
But whatever Kroenke’s exit value and his plan to get there at Arsenal, we are a long way from it.
While his asset is worth 200 per cent more than the circa £1bn he has invested to take 100 per cent control of the club, he’ll want to push the markup much further in the coming years.
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