May 20, 2017
There seems to be as much interest in Alisha Usmanov and his activities by Everton fans as there are by Arsenal fans these days. Perhaps given the link between Moshiri and Usmanov, and the USM sponsorship of Finch Farm that is understandable.
The late breaking news of yesterday (Friday 19th May) that Usmanov had tabled a bid for Kroenke’s shares at Arsenal has of course, re-ignited interest. Therefore (for what they are worth) I’ve penned my latest thoughts on the matter.
I don’t believe for a second that this changes the prospects of Usmanov divesting himself of his Arsenal shares and pitching up on the banks of the Royal Blue Mersey. Let me explain why.
His bid can be viewed in several different lights.
It can be considered as warning shot across the bows of Kroenke and the board in the sense that it highlights the difference of approach between himself and Kroenke, it puts pressure on Kroenke to respond, and perhaps to act following the FA Cup Final. The act may well be to remove Wenger from the manager’s position, either by moving him to a director of football role, or by leaving the club altogether.
Given the lack of influence Usmanov has, a bid, subsequently leaked to the press, may be his only way of applying pressure on Kroenke.
The bid itself is interesting in terms of where it is pitched. On the face of it, and as reported by most of the press it shows a healthy premium to the current share price. Based on the closing price last night, the market values Arsenal at £1.13bn, Usmanov’s bid values Arsenal at £1.54bn. Usmanov is offering a 36% premium on the quoted price (very close to the premium he paid Moshiri for his shares).
However, the market undervalues Arsenal. Using the Markham multivariate model, Arsenal on 2016 figures is worth £1.37bn. However, on estimated figures for 2016/17 Arsenal is worth more than £1.67bn, reflected by increased broadcasting revenues and higher profitability. Of course, the accounts next year may take a hit through the absence of Champions League football, but that would be viewed as temporary and partially offset by the large increases in Europa League payments.
Thus, it’s a fair argument to suggest that the “bid” is nothing more than an exercise in putting Kroenke in a more difficult position, and forcing change at the end of a disappointing season (for them).
Alternatively, it may be a low ball bid to gauge the response of Kroenke, a means of testing the waters. Whatever the response is from the Kroenke camp privately would indicate one of two things – “no, we’re not selling at all”, or “no, not at this valuation”. If it’s the latter, then the onus is on Usmanov to up his bid significantly.
There’s talk of two other potential bidders, unnamed currently although I suspect one may be the Nigerian billionaire Dangote. Other bidders entering the fray would be interesting, but until such time as there is concrete evidence of such, in my opinion they’re not hugely relevant.
The reason there’s such interest in the goings on at Arsenal of course, stem from the idea that actually Usmanov’s real interests lay in getting out of Arsenal and joining his business partner Moshiri.
Many are speculating that this bid news, when it fails, will be the last straw and result in Usmanov selling up. As I’ve spoken about at length, this is not easily achieved even if he wished to do so (which I obviously don’t believe to be the case).
Selling after a failed bid (even if the bid was not necessarily a serious one) is a strange tactic. Most very successful investors only ever sell voluntarily from a position of strength, not perceived weakness. I would stress again if it was Usmanov’s intention to sell his holding I doubt he would attempt a bid most likely destined to fail before selling his holdings. He would be doing his utmost to extol the virtues of an Arsenal holding, not demonstrating his dissatisfaction with the majority owner.
Thus, to conclude, from my own perspective, whilst the news is interesting and what follows in terms of changes at Arsenal (if any) by Kroenke will be carefully watched, it only further confirms that Usmanov’s interests remain at Arsenal, either as a 30% shareholder in an improved company (by result of changes in Wenger’s position) forced by the pressure of a bid, or he becomes the outright owner as the result of finding a valuation acceptable to Kroenke.
The latter I find highly unlikely, the best Usmanov can hope for is management change, and the gratitude of those Arsenal fans no longer supporting Wenger.
For Everton, we’re entering the most important summer perhaps of our existence, were we either prove ourselves to be an attractive sought after side by those players we wish to recruit or not, plus continued advances off the pitch with further stadium related news.
It should also be considered there’s nothing in the proposed Bramley Moore stadium funding structure that demonstrates the expected arrival of another multi-billionaire into the club any time soon in fact quite the reverse.
That’s what is going to maintain our interest through the summer, not the impending arrival of Usmanov, which in my opinion has never been on the cards, and is further evidenced by yesterday’s news.