Chelsea and Arsenal billionaires to use the credit crunch to their advantage
The news is full of how the financial crisis / credit crunch / economic recession / clusterfuck is putting pressure on football clubs with debts and / or billionaire owners.
But there are positives to be found for a few (prospective) owners, provided they play the situation to their advantage.
If one accepts that Roman is at Chelsea for the long run then Chelsea are best placed to ride out the current financial crisis and even come out at the other end as a profitable club. They have the resources and commitment to be leaders in football in the long run even if it means taking a hit in the short term. The financial crisis means that Chelsea’s future earnings will fall short of projections which in turn will lead Chelsea to cut costs while remaining competitive so that they meet their footballing and financial targets. It might even mean compromising on results in some ways, with Champions League qualification being the minimum requirement instead of a top-2 finish every season.
However, unless Roman loses everything he has, I don’t see why he would sell Chelsea. If anything, he would be more committed to ensuring that Chelsea start earning a profit. Trust a young billionaire to have the insight and determination to make that happen.
Arsenal and Usmanov
Usmanov isn’t as rich as Roman and more vulnerable to the financial crisis, but he is still better off than Arsenal or Arsenal’s primary shareholders. The board is squarely against him but the credit crunch will do two things - one, it will put pressure on Arsenal via the debt (Arsenal fans should thank Wenger for his prudence - if that 40m overdraft had been used, Arsenal would be under more pressure now…then again they might also be champions) and two, it will provide more incentive for shareholders to sell.
The board don’t have to sell, don’t need to sell, but the board don’t own all the shares and have so far failed to make moves to secure enough shares as a group to prevent Usmanov from launching a proper takeover bid or taking 51% control of the club. Usmanov’s target is 25%, he has 24% already, the current climate just makes it more likely for him to get a minor shareholder to sell and pick up the shares he desires.
Usmanov will be looking at the coming recession as a opportunity for him to gain leverage at Arsenal while trying to ensure that fans accept him, even if they don’t love him.
Who said it was tough on the billionaires?
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Ahmed, you need to check your facts before you commit pen to paper. Arsenal has over 90 Million pounds in a reserve account which is not earmarked for any expenditures and would not need to touch their OD account in order to purchase players.
Arsenal is the 3rd largest football club in terms of revenue and has the highest Net Operating Income of all clubs. This means that after all operating expenditures they have more money than every other club in the world.
Because of this, their credit is still classified as A-1 and they can borrow money if it was needed, which it is not.
Arsenal will not be under more pressure to sell. The stadium loan is at fixed interest rates and repayments are made comfortably. Deposits at Highbury are non-refundable, but no buyers are backing out. If the directors chose to sell the club, for personal reasons, they would do so when the club’s value was highest and multiple would-be buyers had cash to invest. In other words not a time of economic uncertainty like now…
Ahmed you must have missed that Kroenke have joind the Arsenal board, meaning they control more than 50% of the club. And the lock down agreement prevents any of them of selling to Usmanov.
Your comments about Abramovich suggest you have no idea how he made his money. I recommend you read ‘the billionaire from nowhere’ before writing more about him.
@Hans: Not missed it at all. Kroenke is not a part of the lockdown agreement.
@CaribKid: Fair enough. Fact remains that Usmanov will find it easier to get more shares now even if he doesn’t get the board’s shares.
And I’ve already said in the article that Arsenal’s situation is stable enough that they’re not too bothered by the loans, although like Chelsea they too will not see their revenues rise as expected.
Would you really want Usmanov on your board though? That guy is not the type of person I would want anywhere near a street traders stall let alone a football club.
Ahmed I do not understand. How will Arsenal be affected more than Usmanov? If anything I would expect the Russian to be not affected by the financial crisis. I do not see how it will help him and trouble the Arsenal board(although they are already in deep shit because of the shares distribution)……
And dont tell me to read the article again…………..
chances are the economy goes into world wide recession and it lasts for ten years therefore end of the world, only chelsea and man city survive, probably not arsenal, etc, etc.
on the other hand chances are by next major transfer window, the summer of 09, the whole credit crunch is in the past, banks are stable (the ones that survived), etc, etc.
chances are the whole above discussion is irrelavant as by the same summer of 09 the banks are happy to land more to clubs and then it is either survive or not but it is more of common sense vs Leeds type situation, which is not related to economy but to good business or luck of such
We’re all doomed!