Who is Stan Kroenke Anyway?By: Lachlan | September 3rd, 2011
I’m not really sure I have a firm answer to that question, and this blog will be based on a lot of speculation on my part. To be honest, I don’t know what exactly happens behind the scenes, in terms of who’s controlling the purse strings and making major decisions about financial issues. But what’s interesting to me is the fact that when people complain about what’s going on at Arsenal (especially during the transfer window), almost all of the comments pertain to either the board or to Wenger. Hardly anyone ever mentions the guy who actually owns a majority share of the club. And since he’s nicknamed “Silent Stan,” it’s hard to dig very deep and find about more about his role in what’s going on. But for me, if we want to talk about who’s ultimately responsible for the business side of the club, we have to talk about Kroenke first and foremost. So I’ll do my best to sort out what we can learn about him.
Relying heavily on his Wiki page, we know that he was born in Columbia, Missouri, USA, and he resides there today. His money comes from both his personal real estate dealings, and the fact that he married Ann Walton, daughter of the founder of Wal-Mart. Forbes estimates his worth at $2.6 billion, which is quite a lot of money, but nowhere close to what some of the mega-rich Premier League owners have. Also according to Forbes, Arsenal is worth $1.2 billion, so if Kroenke ever bought up 100% ownership, then nearly half his net worth would be invested in Arsenal.
But of course Arsenal is not his only sports investment – far from it. He also owns the NBA Denver Nuggets, MLS Colorado Rapids, NHL Colorado Avalanche, National Lacrosse League Colorado Mammoth, and NFL St. Louis Rams. It’s the Rams who are by far the most valuable of all of these American clubs – valued at $929 million in 2008. When you consider that the Nuggets are valued at about $321 million, you begin to see that nearly all of Kroenke’s net worth seems to be tied up in his many sports franchises. So I think it’s safe to say that he doesn’t have a few hundred million dollars lying around, waiting to be spent on a soccer superstar. Furthermore, I don’t really have any evidence that he yearns for success at Arsenal more than his other clubs in the United States.
While we’re on the topic of Kroenke’s other sports teams, there’s the obvious question of how well they’re all doing. I would say that overall, they’re in the middle of the road. His hockey team was among the best in the league a decade ago when he bought the team. Since those glory years, the team has generally declined. The American football team is also in the middle of the road, or just below it. However, he only recently purchased a majority share there. His American soccer team won the last MLS title, but besides that, they haven’t been a consistent force. And his basketball team has been a little above average for the last several years.
Before we draw too many conclusions from all of that, I’ll say a word in his defense. His teams are either in St. Louis or Denver, which are medium-sized cities with medium revenues. I won’t bore you all with the complexities of salary caps and revenue sharing in various different American professional sports, and I would rather not research that either. But overall, I think it’s fair to say that none of his American teams are real giants in terms of what they should be expected to do. If we had to make a comparison, it would maybe be as if he owned Aston Villa or Everton.
Let’s now turn our attentions back to what he’s doing at Arsenal, and how he plans to operate the club. It’s pretty obvious already that he’s not the sugar-daddy type owner – the type that Usmanov might be. And I think the evidence shows that he couldn’t be that type of owner even if he wanted to be, because he simply doesn’t have that type of wealth. Or at least not enough liquid wealth to pump into player investment.
The next question is how much involvement he has in day-to-day operations. Obviously, with living in the U.S. and running other sports teams, he’s not ever going to be a real hands-on owner. But how much he’s going to leave to Wenger and the board, and how much he’s going to take upon himself is still pretty much a complete unknown to me. During the transfer window, about the only real story we got on Kroenke was when he reportedly flew in to London to insist that Wenger sell Nasri, rather than risk losing him for nothing next summer. Assuming this story is true, it’s both encouraging and frustrating. Most of us were hoping that if Nasri didn’t sign a new contract, we should get what we could for him this summer. And there was growing fear that Wenger would hold on to him and lose him for nothing anyway. So if that story is true, it’s definitely a good sign of fiscal responsibility. But at the same time, I find it frustrating that we didn’t hear stories of Kroenke flying in to insist that Wenger invest heavily in a superstar player or two.
At this point, I’m still desperately trying to figure out exactly what the board does anymore. In the old days, when there was no majority owner, I can certainly see the centrality of the board in making major decisions. But now, Kroenke can essentially do what he pleases. A while back, I asked Tim Payton just what the board does, and here was his answer:
Now that Stan Kroenke has majority ownership (more than 50%) of Arsenal, he has complete operational control over issues such as hiring the executive team and day to day financial decisions. He also appoints the Board, and as part of his takeover statement he promised to retain the existing Board for at least one year. Some major company decisions require more than 75% of the shareholders to vote in favour of them at an Extraordinary General Meeting (EGM). These decisions might include paying a management fee, changing the name of the club or issuing new equity.
My guess is that while Kroenke can still control just about everything going on at Arsenal, he defers to the board and to Wenger for most decisions. This is likely due to the fact that he’s much newer to all things Arsenal than the board members, and the fact that he’s busy with other things in the U.S. Still, when people say things like, “Wenger is unable to give out the kind of player contracts that he wants, because the board doesn’t let him,” I think they’re looking in the wrong place. I don’t completely agree with this theory in the first place, but if indeed Wenger is operating under extreme financial restrictions, I think we need to look no further than Kroenke on that issue. Surely he’s the one who sets broad policy guidelines on major budgetary issues, and then the board and Wenger operate under those guidelines.
The next question we have to ask about Kroenke should be fairly simple to answer. And that is, which one of two general categories of sports owners does he fall under? One category is the one that treats the club as a business. And while it may be a fun and exciting business, it’s still a business. The other category is the one that treats the club as a hobby. If that’s the case, then making money doesn’t really matter. Money can be made elsewhere, but the club is where the owner has his fun. So just as a mega-rich person wouldn’t expect to make money on his yacht or island resort mansion, neither should he expect to make money on his sports team. Well, I think it’s pretty clear that so far, Kroenke falls under the first category. If there’s a silver lining in this from an Arsenal perspective, it’s that the club still makes massive profits, and can compete at a high level while still earning a profit. And then, of course, if Financial Fair Play ever comes riding into town on a white horse, we might be dominating affairs while everyone else crumbles. (More on that topic within the next week, Lord willing.)
Finally, I don’t think a blog about Arsenal ownership would be complete without a mention of Usmanov, who still owns around 29% of the club. He’s listed as the world’s 35th richest man, with an estimated net worth of $17.7 billion. Whoa. The downside with Usmanov is of course that he’s basically a crook. Or at least that’s the pretty well-founded belief among people who study his background. So the question is whether we’d rather be owned by a man who runs Arsenal strictly as a business, but seems to be rather upstanding, or whether we’d rather be owned by a crook who wants to pump his personal billions into winning major titles. I’m not really sure how to answer that one, and the answer surely varies depending on whom you ask. I would simply submit to you a theory of mine, based on quite a bit of reading in this area, that very few multi-billionaires are as pure as the driven snow. You think Abramovich and Sheikh Mansour don’t have any skeletons in their closets? I can’t say for sure, but I think careful research mind find a few suspect dealings along the way. But do Chelsea and Man City fans care? I tend to think not.
Anyway, what’s interesting is that the longer Arsenal goes on with a trophy drought, and the longer we have to watch other clubs winning a nuclear arms race, the more open fans are to inviting Usmanov to the board at the very least. According to the most recent Arsenal Supporters’ Trust survey, 70% wanted to invite Usmanov to the board, whereas only 40% wanted him on the board a year ago. Taking it a step further, I would imagine that a lot of fans are starting to hope that Usmanov not only joins the board, but purchases a majority share from Kroenke. And while Kroenke seems to genuinely enjoy being an owner of multiple sports clubs, he also doesn’t seem to be the type who would reject a windfall profit in a short span of time. So we’ll have to wait and see how all that turns out.
Well that’s about all I can think of on the topic of who owns Arsenal. Darren will be along very soon with his first blog in a while. I think we’re back to full-strength at the Arsenal Offside.
Enjoy your weekend.
If it is possible, as much as depends on you, live peaceably with all men. Romans 12:18.