Arsenal as an investment

Burnwinter

When Stan Kroenke increased his stake in 2009, shares were valued at £8,500 apiece. Last year Arsenal shares had a mid-price value of £15,670.

(from Ronay's article on the decline of Wenger)

That's 85% over 8 years. Not bad, a steady return of about 8% pa. But also, being realistic, not exceptional.

We hear a fair bit about Arsenal being "bled" by an investment-minded owner, but there are definitely things other than football that Kroenke could've made more money on.

I've always felt the long term strategy might be to hold the club fortunes steady waiting on a disruptive event that increased its value (eg a super league or a new and lucrative platform for media rights).

I wonder if things get worse on the pitch might Stan decide to cash in?

Claudius

Burns, he's already had one massive bump with this senseless TV deal. Super League is the only other thing that will repeat that kind of bump. Of course, if he wasn't used to being spoon fed by American sports cartels, he would create his own value by heading to China to find a huge shirt sponsor. He and Gazidis have definitely left money on the table on the commercial side.

But I do wish Kroenke would fuck off. The combination of him and Wenger is a disaster

Anzac

Easier to replace a manager than players, let alone a rich owner.
Kroenke is an absentee owner but that doesn't mean that we can not be successful even under these current circumstances.
IMO we are actually very wasteful with our wages and transfer structure. AW talks of having the numbers and a large squad, but we have little genuine quality, and we take a caning re amortisation & how we allow it to impact our operating costs.

General

We are caught between a rock and a very hard place.

If you were a businesssman, having seen the value of your shares almost double in under a decade, why would you want Wenger out?

goon

Because it's not necessarily Wenger that has resulted in us doubling in value. If anything a large part of it is down to external factors such as TV money. As a business man I'd wonder how much more could be done with some serious success. It all comes down to your risk appetite.

Mirth

General wrote:
We are caught between a rock and a very hard place.

If you were a businesssman, having seen the value of your shares almost double in under a decade, why would you want Wenger out?

I think Burnsy's point is that an 85% increase in the value of shares isn't particularly impressive given how much the football landscape has grown - an average increase of 8% p.a. doesn't exactly induce nosebleed.

Burnwinter

Yeah that's the bit.

Ronay made a fuss about it as if "almost doubling" such a big holding over the period from 2009 is amazing, but actually a lot of investments would have outperformed those sorts of results, not that they're not commendable.

If you're a billionaire then what Kroenke is achieving with Arsenal money wise is snoozeworthy.

Mirth

A passive FTSE tracker would get you better returns.

Captain

Arsenal accounts for some 30% of his portfolio though.

Qwiss

Your theory on waiting for a major event to bump values makes even more sense when you consider his portfolio of clubs across numerous sports.

Mirth

If that's the case, it's no wonder he's not really stretched the commercial or operational arm of the club. He's just riding the wave.

evoh1

If he'd have out his money into an index tracking fund for the US market he'd have made more on just investment.

If you assume that TV money goes up at the same rate as it did in those previous years than perhaps you can see that 8% going on. Otherwise we would need to go into be far better than we have over the last 8 years.

Gurgen

I think TV money will continue to go up as long as exclusive territorial licensing - i.e. bleeding customers dry so that some Neanderthal can make 300k a week - exists.

jones

Sometimes I think he doesn't really know what he's doing himself. He doesn't look like he's ever played any sport in his life. What's the point of building a sports dynasty when everyone related to it hates your guts? Then again he's a billionaire, and billionaires rarely do stuff that makes sense to mere mortals

We should hire some investigative journalist to follow him for months and see if we can dig up some dirt on him

goon

Gurgen wrote:
I think TV money will continue to go up as long as exclusive territorial licensing - i.e. bleeding customers dry so that some Neanderthal can make 300k a week - exists.

I don't think it can be sustained, Sky struggled to justify paying so much last time around to their shareholders and it's not getting any easier with viewing figures down by nearly 20% and profits down by nearly 10%

I think we'll see it plateau.

General

Mirth wrote:
General wrote:
We are caught between a rock and a very hard place.

If you were a businesssman, having seen the value of your shares almost double in under a decade, why would you want Wenger out?

I think Burnsy's point is that an 85% increase in the value of shares isn't particularly impressive given how much the football landscape has grown - an average increase of 8% p.a. doesn't exactly induce nosebleed.

The context is very important when making these assessments.

Arsenal shares are not listed on the stock market. Imagine if they were?
No club has undergone the sort of transformation that we've undergone without hitting trouble. Southampton nearly had their existence threatened when they moved to St Mary's.
No other club in world football has seen almost a doubling of its value whiles carrying the sort of debts we were carrying from the outset of the move from Highbury. I doubt even United with their revenues have come close.
Kroenke has achieved all of this without investing a single penny into the club.

From a business perspective, no sane businessman would want to rock the boat. Wenger gives them the stability they need and more importantly allows them to be hands off. The owner would have to be a passionate football fan to want to alter this approach. As fans our interests are directly in conflict with the objectives of a businessman like Kroenke.

General

The other thing that's worth noting is that Usmanov was offering investors around £14k for their shares in 2011. Kroenke offered £12k. That's 6years ago. The increment in value hasn't been linear.

From the business side I can't complain too much considering the circumstances we had to navigate. It's the footballing side that we've failed to make the leap and this is why we have to target Wenger. He's quite simply not made the best of the resources at his disposal for the past 4-5years and this was the general feeling on Tuesday. Some even said that if you gave him Messi, Neymar and Suarez we still won't win zilch.

evoh1

Gurgen wrote:
I think TV money will continue to go up as long as exclusive territorial licensing - i.e. bleeding customers dry so that some Neanderthal can make 300k a week - exists.

TV rights go on until someone doesn't want to deal with the cost. The players will have to deal with that fact at some point the gravy train stops going up, but at least in this business most of the revenue goes to the employees.

Coombs

There could be another bump, a huge one really, if some kind of multinational, streaming-based batch licensing occurs. Cable/satellite sports packaging is stone-age in it's approach. Needs a revamp, which could happen if they can figure how to make more money off it.

General

Burnwinter wrote:
I've always felt the long term strategy might be to hold the club fortunes steady waiting on a disruptive event that increased its value (eg a super league or a new and lucrative platform for media rights).

I wonder if things get worse on the pitch might Stan decide to cash in?

Any scenario that forces him to start putting money into the club might force his hand to sell up.

I'm not sure I agree with this waiting for a disruptive event theory. History has shown that owners get edgy when they suddenly have to dip into their own pockets to prop up the business.

I think he will continue to retain an interest as long as we remain a sound financial model. He clearly sold a vision to our previous shareholders which is why they all sold up to him and not Usmanov. Nina Bracewell Smith later went on record to say she regretted selling to him after matters on the pitch started going sour.

Worst case scenario is Wenger goes, we fall out of the top 4 and struggle to get back in because of a lack of investment. Like Hicks and Gillette, he bows to pressure and sells up.