The Arsenal Fanshare: Supporter Ownership or Pipe Dream?

In a league of Abramoviches and Glazers, and mid-ranking clubs dreaming of oligarchs and oil barons to bail them out, Arsenal’s owners have always stood out as somewhat of a curiosity.

Yes, they may have both a Russian tycoon in Alisher Usmanov and an American billionaire investor in Stan Kroenke, but the club has been run by the Hill-Wood family since 1929 and takes pride in their plurality of ownership. What’s more, unlike several of England’s bigger clubs, the relationship between the board and the fans has always been generally good.

Arsenal FanshareIt’s not really a surprise, then, that Arsenal have become the first Premier League club to give their backing to a scheme from the Arsenal Supporters’ Trust (AST) that will see fans pooling their money in order to purchase shares in the club in an attempt to increase the voice of the fans inside the marble halls.

But while this is a first in the English top flight, it’s too early to say just how effective the Fanshare scheme will be. Some bloggers, notably Ahmed Bilal from Soccerlens, have criticised the scheme for promising more than he believes it can deliver

Arsenal fans who aren’t Trust members have initially appeared to give a cautious yet optimistic welcome to the plans. The main question, though, is will this really make a difference to the Gunners?

A fan-filled future at the Emirates

The scheme itself is reasonably simple. The current going rate for one Arsenal share is £10,250, which makes it somewhat expensive for ordinary fans to invest in their club. The Arsenal Fanshare scheme offers fans a chance to contribute to the cost of a share with monthly payments of between £10 and £1,000.

Any fan who puts in the equivalent of one hundredth of the share’s value – currently £102.50 – becomes a Fanshare member. This enables them to vote on club policy that requires shareholder approval, receive detailed financial information about the club, and be able to put themselves forward to attend Arsenal’s annual general meeting, although this will be chosen by ballot.

This Trust-run initiative also comes with the backing of the Gunners’ two biggest individual shareholders, Usmanov and Kroenke, while the club’s chief executive, Ivan Gazidis, has talked about the importance of valuing and nurturing fans. It’s a rare piece of Premier League unity between boardroom and supporters, with the latter potentially able to have their voice heard within the club without any hostilities.

And in this age of austerity, and with noises and aspirations of supporter takeovers at the likes of Manchester United, Liverpool and Newcastle United, it also scores a nice piece of PR for the North London club, although AST member Vic Crescit is adamant this is just a fortunate by-product.

“Arsenal Fanshare is NOT about public relations for the club,” he emails when I put this question to him. “It’s about ensuring OUR club remains OUR club.

“The people involved in Arsenal Supporters’ Trust, an independent not-for-profit mutual organisation, wouldn’t have launched this scheme if they didn’t think it was to the benefit of Arsenal supporters. The fact that the club listened carefully to the presentations made to them about Arenal Fanshare and decided to actively back it speaks well of the board and chief executive Ivan Gazidis.”

Significantly, it’s worth emphasising that this is a project of the Supporters’ Trust and not Arsenal Football Club. Had Gazidis and the board not given their approval, it’s likely the scheme would have gone ahead anyway. That they have the backing from the powers-that-be is an added bonus.

The practicalities: What’s in it for me?

Perhaps, though, the decline of the MyFC project at Ebbsfleet United, as well as the failure of many football clubs to float on the stock market, has made fans slightly more wary of investing their money into football, even if it involves their own team. Nonetheless, Arsenal fans are well entitled to ask what Fanshare will actually do for them and why they should invest.

When supporters sign up, AST asks for a long-term commitment to Fanshare, which includes a £20 admin fee to join and a £50 leaving fee, as well as a 2% management fee from all contributions, to discourage fans dipping in and out of the scheme. Monthly contributions can be anything from £10 to £1000 from this point onwards.

This level of cost may put off some supporters (even if a tenner a month hardly a huge commitment, financially) although, joining fee and leaving fee aside, it’s no different from the model of supporters’ trusts the length and breadth of the country. Many of these operate subscriptions on a monthly direct debit or standing order from £2 a month minimum.

Crucially, there’s no fixed renewal date, unlike MyFC and, combined with the AST’s leaving fee, means the Trust will have a better idea of projected future incomes from the scheme and adds an extra layer of protection against casual dropouts, although it is limited to fans over the age of 16 and with a UK bank account.

For Crescit, the Fanshare scheme is about looking and learning from other supporter ownership models both good and bad. “The launch of Arsenal Fanshare – by supporters for supporters – is the second step on long journey towards putting a key stake and a real say in football clubs in Britain,” he says.

“We want to learn from the best models in football elsewhere (and from other sports too), also learning what doesn’t work and why, and adapt the best to the circumstances of our club. I’m sure we’ll be successful. I’m sure others will learn from our successes, and the inevitable errors we’ll make along the way.”

For the fans themselves, the immediate benefits are less tangible, although getting copies of shareholder reports and the change to attend the AGM (even if only by ballot) will appeal to many and give them an opportunity to get closer to their club.

The Fanshare is very much a long-game scheme and once shares start to be purchased, fans will be afforded more of a voice within the club than they currently have, which is none, and the right to vote at the Arsenal AGM. Realistically, this is unlikely to be until 2011, and the results of votes from Arsenal fans will be pooled together.

It might not exactly be total control, but it does allow for more of a voice than the fans previously have had. It also makes the supporters’ intentions clear to the board.

For Vic Crescit “every club share bought is one further step towards increased supporter influence at the club and the right to a real voice in the club’s affairs.

“Working as a group with a regular flow of money invested in the club’s current 62,217 voting shares is far more influential than thousands of small shareholders who don’t work together. Every share bought with member’s contributions is a step closer to avoiding the club falling into the hands of owners whose principle concern is what they can take out rather than what they put in.”

Arsenal Fanshare

The numbers game

Fanshare hasn’t been without its critics, though. At Online Gooner, Charles Brooker views the whole concept as unrealistic, both in terms of obtaining shares and taking over the club, and in some respects, with regard to the former, he may have a point – Arsenal shares aren’t exactly easy to come by and there has been no new share issue.

But with regard to any potential takeover, everybody I’ve spoken to, from fans to AST members to Supporters’ Direct, are at pains to point out that this has not been created to launch a fans takeover at the Emirates. As Crescit says: “The primary objective of Arsenal Fanshare is to build up a serious collective supporter ownership stake in Arsenal. The more successful Arsenal Fanshare is the more influential supporters will become.

“There’s no plan for a takeover, least of all a hostile takeover. It’s about a real partnership between the board as custodians of our great history and traditions, one of which is of constant cutting edge innovation on and off the pitch.”

Share-wise, 88% of Arsenal’s shares are currently held by four individuals. Stan Kroenke is the largest individual shareholder at just less than the 30% he would need to trigger a full bid for the club. Uzbek oligarch Alisher Usmanov’s shares are just over 27%, while Danny Fiszman and Lady Nina Bracewell-Smith own around 16%.

Since she was forced off the Gunners’ board, Lady Bracewell-Smith has been looking dispose of her shares, which have been in the family for three generations and are currently valued at just over £101m.

Let’s do some quick back-of-a-fag-packet calculations here. One Arsenal share is currently worth £10,250. Lets take the capacity of the Emirates, currently 60,355 as the number of potential fans who’ll be investing in Fanshare (we recognise this isn’t going to be the exact or finite number but it’s as good a benchmark as any, and not unreasonable as Arsenal generally fill their stadium).

Assuming every one of those 60,355 puts in £100 as a contribution then the AST Fanshare will have £6,035,500 to play with. Under current share prices, this would enable them to purchase 588.83 Arsenal shares, a tidy amount but a fraction of the 62,000 shares in circulation.

Now, if we carry on assuming each fan will put in £100, then it would take 16.85 contributions from every one of the 60,355 fans from the Emirates to purchase Lady Bracewell-Smith’s 9,920 shares (which is roughly what we think she holds). That’s less than a year and a half. If all the 60,355 fans put in the maximum contribution of £1,000, it would take just 1.68 contributions from each fan for AST to purchase Lady Bracewell-Smith’s stake.

Of course, these are rough calculations and don’t take into account other factors. The economic downturn may see many fans disinclined to invest in Fanshare. And the total number of Arsenal fans is, of course, larger than the total number of those who can fit into the Emirates. Nonetheless, the calculations show what could be achieved in North London should large number of Gooners decide to join the scheme.

Arsenal AGM

Taking over

Of course, all this would be somewhat irrelevant should somebody decide to launch a takeover bid for Arsenal, which is probably why AST have chosen this time to launch the Fanshare scheme.

Under current law, anybody who buys up 30% of the shares is obliged to launch a bid for the company. If they have 75% of shares, they can take the company private, and if they buy up 90%, the remaining 10% can be obtained through a compulsory purchase.

But that appears unlikely at this point in time. Kroenke has shown no inclination to take his holding to 30% and is largely distracted with his attempts to buy the St Louis Rams NFL franchise, while Usmanov, unpopular with the board and large sections of the fanbase, is devoting more time to companies he has other interests and investments in.

Of the other two shareholders, Fiszman has been decreasing his stake and is allied to Kroenke, giving the pair de facto control, while Lady Bracewell-Smith has been looking to sell for some period of time and has had no takers. Even if a new investor was looking to take control of Arsenal, they would struggle to raise the 30% required to launch a bid for the club.

Significantly, Fanshare has the backing of the main players on the board, according to Vic Crescit. “Both Stan Kroenke and Alisher Usmanov have backed Arsenal Fanshare. They’ve looked at what’s happened at Liverpool, Manchester United and other clubs and realised buying a club over the heads of the fans is no way to do business in the second decade of the 21st century.

“It’s not likely that either Stan Kroenke or Alisher Usmanov would back Arsenal Fanshare then launch a hostile bid for the club. Arsenal Fanshare will make a difference. Just how big a difference will be up to us, the supporters.”

With the political situation poised as it is, and unlikely to change in the near future, it makes sense for the AST to make a grab for shares and, given the stated ideals of the Trust, the division of shares is also one that makes a degree of sense.

Owning the future

In a wider sense, the Fanshare scheme could be seen to buy into proposals made by Labour before the general election for all clubs to move towards giving over a chunk of their shares to supporter ownership, while the current sports minister, Hugh Robertson, is supportive of AST’s initiative.

The gradual increment of shares is most definitely not the failed MyFC method – “an aberration,” says Crescit – nor Barcelona and Real Madrid’s mutual one member one vote civil association. It isn’t even the Bundesliga’s 50+1 per cent ruling.

Yet, what it provides is a chance for supporters at a Premier League club, however slowly, to build a base and voice for themselves at board level. If they can reach 11%, that would be enough to prevent a complete buyout of the club.

It’s worth noting that supporter involvement at boardroom level is no uncommon lower down the leagues. Shares in both Swansea and Lincoln are owned by their respective Trusts.

Brentford have a hybrid fan ownership model with a wealthy investor, while Exeter City Supporters’ Trust is the majority shareholder in the Devon club. Lower down the pyramid, AFCs Wimbledon and Telford, FC United of Manchester, and, most recently, Hendon FC are all wholly fan-owned.

Yet, despite very active supporters trusts at some of the bigger clubs in the Premier League, this is still a first for the English top flight. Even if the AST only scoops a small handful of shares, it’s still a powerful piece of symbolic pride for Gunners fans to say they own part of their football club and, compared to the state of ownership at a large number of Premier League teams, positive symbolism at that.

If Fanshare works – and this is still an if – it could be the first significant move towards a supporter voice at boardroom level in the Premier League. Crescit, though, is in no doubt AST have a success on their hands. “I firmly believe that in ten years time we’ll all look back and say two things. Firstly, ‘why did we take so long?’ and secondly ‘Yet again, Arsenal led the way.’”

Additional reporting by Sarah Child.

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