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Kroenke bides his time as Lady Nina puts Arsenal stake on the market


By Nick Harris

13 April 2009

Lady Nina Bracewell-Smith is believed to be seeking around £100m for her 15.9 per cent stake in Arsenal, for which she is seeking buyers via Blackstone, the New York-headquartered global investment and advisory firm.

That would value each of her 9,893 shares at just more than the market rate yesterday (Monday 12 April) of £10,000 each on the PLUS Market, and appears already to have deterred one of the two current biggest shareholders, Alisher Usmanov.

A spokesperson for Usmanov told the Financial Times last night that he is not interested in bidding for Arsenal as a whole at the moment. The representative told the FT: “Unless [Lady Nina] is prepared to break up her stake, Mr Usmanov would be not interested.”

The deduction from that is the Usmanov will not, for now, be buying any block of shares that would take his current 26 per cent holding to the 30 per stake that would trigger a mandatory bid for the whole club.

The position of the club’s largest single shareholder, Stan Kroenke, is less clear. The American billionaire owns 18,656 of Arsenal’s 62,217 shares, or 29.985 per cent of the club.

Kroenke has a track record of being a long-term sports investor, owning a variety of interests in US sports. He owns the Denver Nuggets NBA basketball team, the Colorado Avalanche NHL ice hockey team and the Colorado Rapids MLS soccer team, as well as a 40 per cent stake in the NFL franchise, the St Louis Rams (at least he does at the time of writing, in the early hours of Tuesday, UK time).

Kroenke has been faced with a deadline of midnight Monday, US time, to decide whether to accept a $300m (£195m) offer for that Rams stake, or not.

Speculation has been rife that if Kroenke sells his share of the Rams, he will be positioning himself for a full takeover at Arsenal. That is not necessarily the case.

For a start, Kroenke won’t want to trigger a full bid for Arsenal until at least 1 May, because to do so would lock him into offering £10,500 per share under takeover rules. (That’s the highest price he paid for shares in the past year, and the rules say he must offer the same again if he launches a full bid before the year expires on 1 May).

Kroenke may not want to trigger a bid even after 1 May if Lady Nina does indeed want more than £10,000 per share. He can reasonably assume that he is best placed to raise his stake above 50 per cent (and therefore effective control) at a time of his choosing, and not at such high a price. Usmanov can make no such assumptions.

Why? Because even if Usmanov bought Lady Nina’s stake, he would hold around 42 per cent and would struggle to attract another eight per cent of fan-shareholders (of 12 per cent) to sell to him to get him to a controlling interest.

It is estimated that around one per cent of Arsenal’s shareholders, dating back generations, are dead and untraceable, so the ownership battle actually focuses on 99 per cent. Again, that favours Kroenke.

Kroenke has also had the support thus far of fellow Arsenal director and 16.11 per cent shareholder Danny Fiszman and the board, including chairman Peter Hill-Wood.

He also has the qualified support of the influential Arsenal Supporters’ Trust. Of the AST’s 750 members, around 300 of them own shares, and they control about 1,860 shares (three per cent) between them.

The upshot is Kroenke can get over the 50 per cent line much more easily than Usmanov – or anyone else – at a time of his choosing. He has no need to rush, and in the meantime Lady Nina can wait for a high-paying buyer (possible in Asia), or try again to tempt Usmanov, but knowing Usmanov would be short of any real power, even with her stake.

The intrigue lies in what Kroenke wants to do, long-term (own profitable Arsenal, quite possibly), and at what price he is comfortable doing it (less than Lady Nina’s desired £10,000 per share, probably).

Common sense suggests that if Lady Nina wanted simply to cash in her stake, the easiest option would have been a sale to Kroenke at a mutually agreed price and time. Either that was tried and it failed, or the Blackstone publicity has been timed to coincide with the Rams decision, with the aim of trying to force a decision by Kroenke, who for the moment is living up to his nickname “Silent Stanley” on this matter.

His Kroenke Sports Enterprises organisation has issued only a “no comment” on his intentions.


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