Kroenke Unchained

With Hill-Woods public championing of Kroenke today there appears to be a chain of events in progress that might now lead to Stan Kroenke joining the board and perhaps setting a path for shareholder succession.

After a year long courtship which began with Kroenkes contentious acquisition of the 9.9% of shares held by ITV swiftly followed by another rapid purchase to take his holding up to 12.19% he seems to have wooed the Arsenal board very successfully. It wasn`t exactly love at first sight with Hill-Wood asserting that ‘we don`t want his sort` in amongst the acrimony of Deins sudden departure. With that Kroenke put the brakes on very quickly stalling on his planned purchase of the ITV share of the Arsenal Broadband that was tied up with the original share deal.

With the intemperate climate of Usmanovs share purchases, lock down agreements and controversy Kroenke has kept his head down and waited patiently and quietly. Almost a year later in April of this year he signalled the end of any doubts as to what he should do with the completion of the deal that makes him a 50% owner of the Arsenal Broadband and Media business. Co-operation between his US football franchises and Arsenal had been hardened and re confirmed earlier this year. This makes Kroenke not just an investor but a business partner participating in the development of the business as opposed to merely an interest in investment returns. There is a significant distinction in such a role.

The chain develops with the departure of Edelman announced at the beginning of May a month after Kroenke completed the broadband purchase. Despite some more lurid stories surrounding his departure this was executed and planned with some thought. Both Arsenal and Edelman issued the PR releases at the same time on the 1st May carefully co-ordinated with Edelmans severance package agreed and accepted amicably between both parties. This wasn`t an agreement made in haste but most probably part of an agreed process of acquiring other skill sets designed to build the clubs commercial revenue. Very much a feature of the success of Kroenke Sports Enterprises in the USA and an aspect in which we lag behind clubs of a similar size. I suspect we can expect the commercial side to build very much on these American lines in future.

Hill-Wood is widely quoted today as believing that Kroenke would make a good contribution to the board but being unsure whether he would want to do it. Is it likely that the subject has never previously been broached given the undertakings and shared objectives that would have encouraged Kroenke to complete the broadband purchase? Is it more likely that Hill-Woods carefully placed interview is another link of the chain being constructed preparing the ground for just such an appointment?

The present board is ageing so within the next 5 to 10 years some plan of shareholder succession has to be in place. The lockdown agreement ends in 2012. Hill-Woods says in his interview in the Daily Star today “I think he [Kroenke] would be quite happy to buy more shares but I think he has absolutely no intention of buying the whole thing.” So effective control as the major shareholder is enough then. The current seems to be flowing firmly in one direction for the time being.