Arsenal doing well but having trouble selling property

From The Political Economy of Football:

ARSENAL BOOST THEIR DEFENCES – 21/9/08

Arsenal's board members have reinforced their position against a possible takeover bid from leading shareholder Allsher Usmanov by making US sports franchise owner Stan Kroenke a fellow director. Arsenal wants Mr Kroenke, who owns a 12.4 per cent stake, to sign up to the lockdown agreement drawn up last year by board members that stops any of them trading shares without each other's consent. The agreement was intended to counter the predatory instincts of Mr Usmanov, the Uzbekistan-born billoonaire and Russian citizen who, with business partner, Farhad Moshiri, owns slightly less than 25 per cent of the club. Arsenal's relations with Mr Kroenke, owner of the Colorado Rapids US Major League Soccer team, who is said to be sympathetic to the need for the agreement, have improved since he bought an initial 9.9 per cent stake - a move that drew a hostile reaction from Gunners chairman Peter Hill-Wood. Mr Kroenke has cemented commercial and marketing links between Arsenal and his US sports interests and completed the purchase of ITV's half-share in the club's broadband business.

The property slump has hit Arsenal's hopes of a windfall from the development of their old Highbury stadium, prompting the North London club to say that any profit from the sale of the flats would now be regarded as a 'bonus'. Arsenal had earlier this year confidently predicted that it would generate turnover of more than £350m from its development projects, which would have provided a surplus of up to £100m. However, Peter Hill-Wood has now admitted that the sale of 680 apartments 'may be affected' by the state of the property market. Arsenal's earlier confidence was built upon the sales of 95 per cent of the Highbury Square development and advanced negotiations for the sale of another development site. But the club is braced for a wave of cancellations from investors who put down deposits but are now unable or unwilling to raise a mortgage. Property sales are intended to repay the club's loans and reduce net debt of £318.1m. It has so far banked sales of £18.7m from the initial 65 completed units.

Brad Evans