Arsènal

by Alex Fynn

  Kroenke and Fiszman had cleverly managed the situation whereby they could ensure the board retained control without either man being forced to make a mandatory takeover bid that a 30 per cent stake would entail. The takeover panel at the Stock Exchange were asked to investigate the notion that the pair were acting in concert to the detriment of other shareholders and should be forced to bid for the entire company, with the payoff that both Usmanov and Lady Nina would then be able to cash in their chips at £10,500 a share (the highest price paid for a share in the previous 12 months, which any takeover buyer would be obliged to pay under Stock Exchange rules). By reason of acquiring the Carrs’ shares, Kroenke became the main man at the club and there was speculation amongst knowledgeable outsiders that this was the intended outcome ever since talks began about inviting him onto the board. Although no one would confess to such Machiavellian planning, the pieces of the jigsaw fell into place and completed a picture (with the happy co-incidence of Ivan Gazidis as the new CEO) that left two very substantial shareholders – Alisher Usmanov and Lady Nina Bracewell-Smith – on the outside looking in.

  Having originally been welcomed to the inner sanctum so that the powers that be could keep an eye on her, if the intention all along was for Kroenke to control a dominant stake, Lady Nina had become expendable, as long as the cooperation of the Carr family was maintained. Richard Carr’s departure from the board when Lady Nina was forced out may have led her to believe he was unhappy with events and would remain loyal to her. Anything but. On learning the Carrs had sold out, she felt betrayed. “I had no idea they were going to do this,” she revealed. “And they’ve still got all their seats in the directors’ box, whilst I have nothing.” The Carrs played the game and played it well, both cashing in and retaining their matchday privileges. If Lady Nina had accepted that she was fighting a battle she could not win, then she too could have remained a luminary.

  The bottom line is that she was never taken credibly as a director but was endured as long as it suited. She was justified though in her acrimonious feelings. She had remained faithful to the Carrs and the board by refusing to sell to both Kroenke and Usmanov. Two years after rejecting the American, the tables were turned and no loyalty had been shown in return. Once her stake was the key to who held power. Now it only had a cash value. She felt she had been “deserted” by her husband’s family, who sold out to make Stan Kroenke the key man at Arsenal.

  Danny Fiszman’s own position remained unbreachable. The 16 per cent he retained ensured he would remain as influential as he needed to be. He had replaced Lady Nina in holding the key to power, as his alliance with Kroenke determined the club’s future. The only way Kroenke could act without Fiszman’s blessing was to make a takeover bid himself. Why bother if the two men were comfortable with each other? The irony was that Fiszman was effectively handing the reins over to a man who had been brought into the fold by David Dein. So much had changed in two years.

  Kroenke may have been encouraged in his actions by the interim accounts for the six months to 30th November 2008 that the club had released a few weeks before the transfer of a third of Fiszman’s shares. They demonstrated a sustained growth in a difficult climate even though most of the revenue had been attained before the recession really began to bite. Turnover increased by 10 per cent to over £98 million as a result of more matchdays and higher ticket prices for season 2008/09 and higher broadcast fees including a beneficial €/£ exchange rate on Champions League income. Football operating profits (before debt service costs) also rose as Arsène Wenger’s expertise in player trading again proved very profitable. Sales of Alex Hleb to Barcelona and Justin Hoyte to Middlesbrough as well as sell-on fees for players who had previously left the club and been subsequently transferred again, such as David Bentley who moved from Blackburn to Tottenham, netted Arsenal several million pounds.

  Football costs – primarily the players’ salaries – are exorbitant, perhaps surprisingly so considering the ages of so many in the first team squad, although with a wages-to-turnover ratio of around 50 per cent (way below the Premier League average of 62 per cent) are perfectly manageable as long as Arsenal continue to play before a sell-out crowd and qualify for the Champions League (the penalty for failing to do so could amount to as much as £40 million from lost broadcast and matchday revenue) as they have done for the past 11 years. The demand for season tickets and premium seats (boxes, Diamond Club and Club Level) will be severely tested prior to the 2009/10 season, despite renewal prices being the same as 12 months ago, after another year without a trophy. Any fall-off from the premium sector (box holders and Club Level season ticket holders) will be particularly painful as it rivals the Champions League as a revenue stream. Now the veracity of the waiting lists – over 40,000 for ordinary season tickets according to the club in 2008 – will be exposed.

  Rather than loan out a quarter of the playing staff with a short-term cost saving as a result, perhaps it should be trimmed permanently. Certainly UEFA feels it is unreasonable to have over 50 players on the books, when 25 can cope with a season-long Champions League campaign. Because of the squad size and with player wages rising faster than club income (wages in the Premier League exceeded £1 billion for the first time in 2007/08), it is revealing that the bill is now 50 per cent higher than the last time Arsenal won a trophy. And then Arsenal had the quality of the likes of Henry, Vieira, Pires, Campbell, Bergkamp and Ljungberg in the ranks.

  Whilst not reflecting what David Dein termed “the black hole that is Highbury Square”, Dein’s assertion that the club ‘should have stuck to what they know’ (ie football matters), whilst made with the benefit of hindsight, rings true. The construction of the Highbury Square apartments continued apace and in the autumn of 2008 over 90 per cent were ready for completion to buyers who had already parted with deposits of 10 per cent. However, the mortgage market had collapsed. Many were unable to find a lender in order to complete their purchase and some were actually pulling out and forfeiting their deposits rather than completing, so dramatically had the housing market changed. By the end of November 2008, 595 of the 680 units had been sold, but only 186 were fully paid up. Arsenal had a £140 million loan taken out to construct the flats, due for repayment by April 2010. At least any future building costs were covered so each completed sale went towards reducing the outstanding debt. Unfortunately, they just weren’t happening quickly enough.

  So naturally the club sought to extend their credit facility. However, the cost of buying some breathing space and time for the property market to recover would be further interest charges, putting extra pressure on the manager and players to achieve success. The bottom line was that around a further 340 of the 409 pre-sold units would need to be completed before any profit would be seen. And there wasn’t much interest in the 85 that were still unreserved at the asking prices. Anyone who could actually manage to find a mortgage might be better off buying one of the myriad other properties in the area that appeared to offer better value.

  Peter Hill-Wood could not foresee a prosperous outcome to the situation, admitting, “I said a year ago if we made a profit from the property side it would be a bonus. Many people I suspect will find that some of their financial projections have not quite worked out in the way they thought they would and we’re certainly one of those.” He continued, “The property side would be much more fun if it was working well. It’s annoying. It’s a wonderful development and it’ll sell like crazy one day, but we’re in 2009. It’s tough and we’re selling a few flats. It would have been very nice to have extra profit there but we’re not going to have that. It’s not something that impacts on the running of the football club at all which we’ve stressed many times.” But generating extra cash for the football club now appears a distant proposition. Certainly the chairman’s statement of 2008 that a revenue of circa £350 million (and a profit of perhaps £100 million) could be expected now appears wildly optimistic. “Sitting here today if we had sold the whole bloody thing three or four year
s ago and taken a one-off payment of X million that would look very clever. When we decided not to do that we looked at all the downsides other than the current downside – which has taken not only us but everybody else by surprise.”

  The conversion of the club’s old home into funding a nest egg had been eagerly anticipated by Arsène Wenger. Talking about the debts Arsenal were facing in 2007, he said, “I believe that we will see the difference after the end of the 2008/09 season. We will have much greater resources at our disposal.’ As the economy suffered, David Dein fervently believed Highbury Square was having a more adverse effect than Wenger himself would ever admit and believed money was being taken out of the football budget for property. “Arsène had £18 million to spend on players in the summer of 2008. By January, that had dwindled to £12 million, due to the property,” he confided to a friend. “We need quality reinforcements, but where is the money going to come from? The cupboard is bare and Arsène is running out of hats and rabbits.”

  Having deleted any mention of Ashburton Grove from all of the club’s communications, how ironic that the property development company (Ashburton Properties) should be named after the street where their new stadium was constructed, although it had been wiped off the face of the earth. Further, at the same time it was airbrushed out of Arsenal’s recent history, in much the same way as a certain David Dein. Dein remained in constant contact with Wenger, even after his departure from Red and White effectively made him just another Arsenal fan, albeit a very wealthy one. But he had no right to feelings of resentment as his own role in bringing about the dilemmas the club now had to face up to (which ultimately affected his friend Arsène Wenger) could not be denied.

  CHAPTER SIXTEEN

  WINTER OF DISCONTENT

  May 1999. John Sienkiewicz, a charismatic civil servant who established the London Development Unit, part of the newly created Government Office for London, leaned across the table in the Highbury boardroom and in front of Danny Fiszman and Ken Friar thumped it to make his point to the representatives of Islington Borough Council. The council, and the football club, had become obsessed with the idea of Finsbury Park as a site for the new stadium. Sienkiewicz told the club that “they were being taken for a walk in the park” and that the only way forward was Ashburton Grove. All the same, it took the Arsenal board months to come to the same conclusion – they flirted with other sites including the Millennium Dome – that regeneration in the form of social housing and a new waste transfer station would be the sacrifice they would have to make if they wanted a new home.

  In 1998, Antony Spencer had first brought his scheme for Ashburton Grove to David Dein’s attention through their mutual friend, Geoffrey Klass. As Arsenal belatedly signed on a year later and Spencer was given the green light, Dein became an obstacle with his insistence that Arsenal consider other options, by which he meant Wembley. In so doing, Dein took his eye off the ball and as the Ashburton Grove project proceeded, Danny Fiszman became the main man. So much so that Spencer was instructed not to keep Dein in the loop.

  It was a monumental achievement to be up and running within six years. Yet if David Dein had introduced Spencer to Fiszman at the time the land agent requested and the directors had realised sooner that their best home from home was on their doorstep, then the stadium might have been completed a year earlier (before the economic downturn with all its implications for Highbury Square) and far more money could have been available to strengthen the playing staff.

  Dein baulked at the whopping costs of the club building their own new home. His attempts to save money and thereby increase the playing budget (in line with his ‘get a winning team’ maxim) were undoubtedly laudable taking the short-term view but Danny Fiszman reasoned differently, and wanted to set the club up for a century of prosperity rather than just the remainder of his own days. To Fiszman it was worth the heartache and immediate financial pain. And with Arsène Wenger at the helm, the club had the ideal man to ensure that the effects of the lack of ready cash could be minimised.

  Keith Edelman arrived in May 2000 and David Dein was now well and truly sidelined, his mandate purely playing matters. He was forced to take a back seat on the new stadium project. Although by late 2001 he had hopped on the bandwagon and excitedly relayed the news that Islington Council had granted planning permission to Arsène Wenger from outside Upper Street’s Union Chapel where the decision had been taken. “Arsène? We’ve got it!” he exclaimed into his mobile phone.

  Summer 2008. David Dein had passed into history, but his gripe lingered on. The club continued to receive more money for outgoing transfers than they spent on acquisitions, at a time when pivotal players had departed and there were palpable faults that cried out for attention – weakness in the air at the back, lack of combativeness in midfield, an absence of leaders à la Tony Adams or Patrick Vieira, an international class goalkeeper and real depth in the squad.

  Mathieu Flamini, out of contract, took advantage of his status to join AC Milan in the summer of 2008. “I really thought he was going to stay,” Wenger later admitted, but his faith was misplaced. The French international, understandably, sought to improve his pay but if Arsenal had agreed to his financial demands, it would have set a precedent that would have had unfortunate financial repercussions. Peter Hill-Wood describes the situation as “slightly annoying. If you look back he had one good year for us, his last season. Prior to that, he wasn’t that great. So when he decided he wanted to go (on the basis of one excellent season), we didn’t cede to his requests, but we regret it all the same.” Certainly Flamini ended up materially better off, but as he spent the majority of his debut season in Italy on the bench, his career stagnated. “I don’t think he’s been a great star,” reflects the chairman.

  As early as September 2007, Wenger had stated, “My priority will be to keep the players I already have. If the club only becomes a place to go to and a place to leave, then the club won’t go very far.” By the end of the season, his view had not wavered, despite the failure, albeit a narrow one, to capture a trophy. And yet, he could not hang on to Flamini nor Alexander Hleb. Despite their different backgrounds, the two were good friends along with fellow midfielders Cesc Fabregas and Tomas Rosicky. This foursome’s camaraderie was one element in the team’s rise to the top of the Premier League, as they seemed as compatible on the field as they did off it. Perhaps it was an omen that Rosicky’s last appearance that season was in late January, after which results took a turn for the worse. Certainly the three remaining players seemed to run out of steam at the same time, and it soon became apparent that Alex Hleb had his heart elsewhere, having reportedly met with Internazionale officials on the eve of Arsenal’s Champions League second leg knockout match against Milan. Ultimately, Wenger decided to accept the inevitable and the £11.8 million Barcelona offered that went with it and reinvested the funds in a similar ball-player – Marseille’s Samir Nasri. Like Flamini, Hleb went from a leading light at Arsenal to the reserves at his new club.

  But the manager’s notion of keeping his group together was being severely tested. He believed that everyone – even those he imported – would be loyal if they embraced the culture of the club. “Above all I believe in the virtues of a collective ethos,” he explained, “and I believe that you can only maintain and develop that if you have a culture to impart; a culture that you can pass from generation to generation.” Worthy words but the club’s balance sheets painted a bleaker picture – the wage bill indicated that the manager was having to buy his treasured loyalty. Perhaps Wenger’s rose-tinted glasses make him short-sighted whenever he looks at his boys. He hoped that he might be presiding over a golden generation which would bond, gather experience together and create a dynasty much as Giggs, Beckham, Scholes, the Nevilles and Butt had produced for Manchester United. But yesterday has gone and the time has passed when genuine world class stars – Vieira, Henry, Pires and Bergkamp – stay around for years and don’t want to leave until Wenger shows them the door. Tony Adams feel
s that times have changed for the worse. “This Arsenal has lost just a little bit of being the top in some people’s eyes,” he said. “When you bring a player from abroad they don’t have the same feeling for the club. They look at it as a stepping stone to the Real Madrids and Bayern Munichs.”

  If kids of 16 are prepared to leave their hometown club – even such institutions as Barcelona – and move abroad, how can Wenger reasonably expect them to show loyalty to him, to the club or indeed to anyone? As a football administrator, who has a lot of respect and affection for Wenger, ruefully observed, “Arsène Wenger thinks that their love of football will bind them together as they grow up but he forgets that there are very few people who genuinely love football with the intensity that he does. Only someone so completely in love with football could think that it would override culture, language, wealth and all the other differences between young players.”