Kroenke's Arsenal: A New Dawn Or False Hope?

Arsenal fans have long been frustrated by owner Stan Kroenke's reluctance to invest his own money in the club. Since taking over the club in 2018, Kroenke has not put a penny into the team, instead relying on Arsenal's cash flows from match days, broadcasting, and commercial activities. This is in stark contrast to other Premier League owners, such as Manchester City's Sheikh Mansour, who has injected billions of pounds into his club. While Kroenke is one of the richest owners in the Premier League, with a net worth of around £7.71 billion, he has been unwilling to use his personal fortune to strengthen Arsenal's squad. This has led to a sense of resentment among fans, who feel that Kroenke is more interested in profit than sporting success. However, in recent years, there have been signs that Kroenke is becoming more engaged with the club, and the appointment of his son, Josh Kroenke, to the Arsenal board has raised hopes that the club will receive greater investment in the future.

Stan Kroenke's ownership of Arsenal

Stan Kroenke is the owner of Arsenal Holdings plc, the parent company of Arsenal F.C. and Arsenal W.F.C. He is also the chairman of Kroenke Sports & Entertainment (KSE), which became the majority shareholder of Arsenal in April 2011 and acquired 100% ownership of the club in 2018.

Kroenke first began to buy shares in Arsenal in 2007, and by 2008, he was appointed a non-executive director of the club. In 2011, he extended his ownership by purchasing the shareholdings of Nina Bracewell-Smith and Danny Fiszman, taking his shareholding to 66.64%. As the majority shareholder, he was then obliged to make an offer for the remaining shares in the club. In August 2018, Kroenke bought out the remaining shares from Alisher Usmanov to become the club's sole shareholder, acquiring 100% ownership of Arsenal.

Kroenke is one of the richest owners in the Premier League, with a net worth of around £7.71 billion. However, he has been criticised for his lack of investment in the club, with reports suggesting that between 2010 and 2020, KSE invested only £15 million of their own money into the club. In comparison, Manchester City received around £1 billion in owner loans and equity injections from their owners. Arsenal fans have expressed frustration over Kroenke's reluctance to invest in the team and even protested, calling for the Kroenke family to sell the club.

Despite the criticism, Kroenke has achieved success with Arsenal, guiding them to third place in the 2011 Deloitte Football Money League, a ranking of football clubs in terms of revenue. Arsenal made an operating profit (excluding player transfers) of £72 million in the year ending May 31, 2010, from a turnover of £379.9 million. Forbes also ranked Arsenal as the third most valuable football team in the world in 2009, excluding debt.

In addition to Arsenal, Kroenke owns several other sports franchises, including the Los Angeles Rams of the NFL, the Colorado Avalanche of the NHL, the Denver Nuggets of the NBA, and the Colorado Rapids of Major League Soccer. He has also invested in esports, developing teams such as the Los Angeles Gladiators and the Los Angeles Guerrillas.

Kroenke's investment in other sports teams

Stan Kroenke is the owner of Kroenke Sports & Entertainment (KSE), which owns several sports teams and franchises. KSE has control of over five professional sports franchises, two esports franchises, four stadiums, four television channels, an internet TV channel, 19 magazines, and four radio stations.

Kroenke's first foray into sports team ownership came in 1995 when he bought a 30% stake in the National Football League's St. Louis Rams. In 2000, KSE became the full owner of the National Basketball Association's Denver Nuggets and the National Hockey League's Colorado Avalanche. The following year, the Nuggets and Avalanche franchises were transferred to his wife, Ann Walton Kroenke, to avoid NFL rules prohibiting a team owner from having teams in other markets. In 2002, KSE became part-owners of the Arena Football League's Colorado Crush and also acquired the National Lacrosse League's Colorado Mammoth. In 2003, KSE added another team to its portfolio by purchasing Major League Soccer's Colorado Rapids.

Kroenke has also shown an interest in esports, founding the Los Angeles Gladiators in the Overwatch League in 2017 and the Los Angeles Guerrillas in the Call of Duty League in 2019. Both teams are based out of Hollywood Park, next door to the Rams' stadium in Inglewood, California.

In addition to his American sports franchises, Kroenke has also invested in European football. In 2007, KSE UK Inc., a subsidiary of KSE, acquired a 9.9% stake in Arsenal Holdings plc, the parent company of Arsenal F.C. and Arsenal W.F.C. Over the years, KSE gradually increased its stake in Arsenal, and in 2018, Kroenke bought the remaining shares to become the sole owner of the club.

Kroenke's teams have achieved success in their respective leagues, with a total of five championships won across the four major American sports leagues. Additionally, his MLS team, the Colorado Rapids, won the MLS Cup in 2010, and his National Lacrosse League team, the Colorado Mammoth, has won two NLL championships. In 2022, Kroenke experienced a unique feat with three of his teams winning championships in the same calendar year: the Rams winning the Super Bowl, the Avalanche winning the Stanley Cup, and the Mammoth winning the NLL title.

Arsenal's self-sustaining model

Arsenal's "self-sustaining business model" is capable of financing major success, according to the club's managing director, Vinai Venkatesham. In an interview with BBC Sport, Venkatesham said:

> We have a self-sustaining business model at this club. That means all the investments we make on the pitch are funded by the revenues we generate off the pitch. And we're really confident we can be successful with this model. The ambition we have for this club is completely possible to be achieved in the business model that we've got.

This model was not introduced by Stan Kroenke, but it is one that the club has and wants to continue with. Arsenal's revenues are generated through three main streams: match days, broadcasting, and commercial activities.

While some have criticised this model as antiquated, especially as transfer prices increase, others have defended it, pointing to the hundreds of clubs in Europe that successfully maximise their funds and only spend what they have.

The impact of COVID-19 on Arsenal's finances

The COVID-19 pandemic had a significant impact on Arsenal's finances, exacerbating the club's existing financial woes and leading to increased debt and losses. Here's a breakdown of the key effects:

Revenue Decline: Arsenal's revenue took a significant hit due to the pandemic, with a 13% drop to £340 million in 2020. This was primarily driven by declines in matchday and broadcast revenue as games were played behind closed doors. The club estimated a loss of over £70 million in revenue for the 2020/21 season due to the absence of fans.

Matchday Revenue: With stadiums closed to fans during the pandemic, matchday revenue was significantly impacted. Arsenal's matchday revenue fell from £96 million to £79 million, with £14 million of this decline attributed to COVID-19. The club had to refund ticket holders for the final four Premier League games of the 2019/20 season, reducing matchday revenue to £77 million. The absence of fans also affected commercial income, with a loss of £6 million in this area.

Broadcast Revenue: Arsenal's broadcast revenue was also affected by COVID-19, falling by £183 million to £119 million (a 35% decrease). This was due to the deferral of £34 million in revenue into 2021 and broadcast rebates of between £10-15 million. The club's Europa League revenues were also impacted, with a reduction from £35 million to £19 million due to an early exit in the competition.

Commercial Revenue: On a positive note, Arsenal's commercial revenue rose by 28% to £142 million, largely due to the new Adidas kit deal worth around £50 million per season. However, the pandemic still caused a loss of £6 million in commercial revenue, which the club hoped to recoup in 2021.

Wages and Costs: Arsenal's wage bill remained high, with wages due to rise despite the financial challenges. The club did achieve some cost savings through temporary wage cuts agreed with players and staff, resulting in savings of £19 million in 2020. However, with new signings and contract extensions, the overall wage bill was projected to increase.

Profitability and Losses: COVID-19 severely impacted Arsenal's profitability, with the club recording losses before tax for the second consecutive season. Losses increased from £32 million to £54 million, and operating losses after player trading doubled. The pandemic, combined with the absence of UEFA Champions League football, put a strain on the club's finances.

Debt and Loans: Arsenal took on additional debt to manage the financial impact of the pandemic. The club refinanced its stadium debt with the help of a loan from owner Kroenke Sports & Entertainment, and also accessed a £120 million short-term loan from the Bank of England's COVID Corporate Financing Facility. Despite these measures, net debt levels more than doubled from £42 million to £108 million.

Player Trading: Arsenal's transfer spending and net transfer spend of £96 million in 2020 did not lead to significant sporting improvements. The club incurred £113 million in player amortisation charges, and while player sales of £60 million in 2020 helped offset some losses, this was primarily driven by a few key sales.

In summary, the COVID-19 pandemic exacerbated Arsenal's financial challenges, leading to revenue declines, increased debt, and widening losses. The club relied on debt refinancing, loans, and cost-cutting measures to navigate the financial impact of the pandemic.

The perception of the Kroenke family among Arsenal fans

Dissatisfaction and Anger

The Kroenke family, led by Stan Kroenke, has faced significant criticism and anger from Arsenal fans in the past. One of the main points of contention was the family's acceptance of the proposed European Super League, which sparked mass protests at the Emirates Stadium in 2021. The idea of a closed league without prospects for meritocratic relegation and promotion was strongly opposed by Arsenal fans, who felt that the club's hierarchy was prioritizing financial gain over sporting merit. This led to protests with banners and slogans such as "Kroenke Out!" and "We Wouldn't Wish Kroenke On Spurs". The Super League idea was quickly abandoned, and Josh Kroenke, Stan's son and a co-chairman of Arsenal, apologized and vowed to rebuild bridges with supporters.

Another source of frustration for Arsenal fans has been the perception that the Kroenke family is uninterested and remote, with Stan Kroenke earning the nickname "Silent Stan" due to his infrequent public statements and interviews. Fans have also criticized the family for not investing enough of their own money into the club, instead subsisting entirely off the club's own cash flows. This is in contrast to other Premier League clubs, such as Manchester City, which have received significant owner loans and equity injections. The Kroenke family's decision to join the breakaway European Super League, their handling of redundancies at the start of the pandemic, and the perception of Arsenal as a "cash cow" have also contributed to a negative perception among some fans.

Recent Improvements and Success

However, in recent years, there has been a shift in sentiment among some Arsenal fans, who have recognized the Kroenke family's increased investment in the club and their support for manager Mikel Arteta. The family has begun to taste success across their other sporting franchises, including the LA Rams' Super Bowl victory and the Colorado Avalanche's Stanley Cup win, and they now seem more focused on bringing similar success to Arsenal. While their decision to spend more may be driven by business strategy rather than pure passion, fans and manager Mikel Arteta have acknowledged the positive impact on the club. Arteta has praised the Kroenke family's commitment, closeness, and engagement, stating that he has "never seen ownership at that level so committed" to bringing the club to the top. The family has also been credited for backing Arteta and for signing off on his recruitment decisions, even during difficult periods.

In summary, the perception of the Kroenke family among Arsenal fans has evolved over time, with some fans still holding negative views due to past controversies, while others have recognized and appreciated the family's recent investments and support for the club's success.

Frequently asked questions