Arsenal: We Would Meet Red and White - 30/09/2007

Arsenal has indicated that it would be prepared to meet Red and White Holdings, the takeover vehicle of Russian billionaire Alisher Usmanov. This is in spite of the club's line that it is so successful that it does not need an external injection of capital. However, some small shareholders have found the offer of big money for their shares too tempting. Hence, Red and White's stake has gone up from 21 per cent to 23 per cent. If it went up to 25 per cent, it would hold what is called a 'blocking stake'. At 30 per cent, it would have to stage a takeover bid. Given that it is estimated that some 20 per cent of shares are still held by small shareholders, further acquistions are possible. Arsenal's line is that it would meet any major shareholders who requested a meeting, although it is putting a lot of faith in developing a friendly relationship with US billionaire sports franchise owner Stan Kroenke. While chairman Peter Hill-Wood has said that he hoped Kroenke was also 'wasting his time', managing director Keith Edelman has been more concilatory. He said, 'We have a clear dialogue with Stan Kroenke and we expect to see him in the near future. We expect to see Stan regularly.'

Arsenal's directors are likely to extend their pact not to sell their shares to external investors which expires in April. The club has had a successful financial first season at the Emirates stadium. The 60,000-seater stadium helped to increase turnover 46 per cent to £200.8m, although the stadium costs for the season were £20.2m. Pre-tax profits were £6m. Operating profit of £51m was hit by a £21m refinancing cost. Highbury Square, the redevelopment of Arsenal's old ground, has completed residential sales totalling more than £300m. The stadium debt is £255m and net debt, following a cash balance of £74m, is £272m. Arsenal has also signed a six-year deal with Setanta for a club channel to be screened on the satellite broadcaster, providing the club with a new incomes stream for delayed rights to its matches. Unlike club channels for Manchester United and Liverpool, which requires the clubs to pay satellite and subscriber management costs, Setanta is paying Arsenal (and Liverpool) a rights fee in order to drive subscriptions. The club hopes to make money out of advertising on the channel within two years, which it will manage in-house, and forms part of a strategy to develop its own broadcasting base.