No change in Arsenal stock stalemate
When news of Lady Nina Bracewell-Smith's decision to appoint a leading US investment firm to sell her stake in Arsenal reached BBC Towers on Monday afternoon, it prompted a chin-stroking debate amongst those hunched over the sports news benches: is this a twist or a development?
In the twist corner were those who claimed we were not expecting the news so it must be a bit twisty and that twists always sound more interesting than developments.
Arguing for development, on the other hand, were those who pointed out that these shares were already "for sale" and it is just how that sale is being advertised that has changed (she tried a postcard in the post office window and was now going for an advert in the local paper).
My view, a minority one, was that this is basically a development, with some twist-like attributes, that actually changes nothing. Probably. Let me explain my thinking (so even if I'm wrong, you'll give me some credit for the working-out).
Bracewell-Smith, who with 15.9% of Arsenal's 62,217 shares is the fourth largest shareholder, has been a seller ever since she was dumped from the board of directors in December 2008.
This ruthless example of corporate argy-bargy was orchestrated by the club's third largest shareholder, Danny Fiszman, and rubberstamped by its largest, Stan Kroenke. The logic being that Bracewell-Smith's shares were no longer needed as a bulwark against the unwelcome advances of Arsenal's second largest shareholder, Alisher Usmanov.
As Fiszman, Kroenke and the rest of the club's directors were now in cahoots, this was almost certainly true. It just wasn't very gentlemanly.
This left Bracewell-Smith, whose shares were basically a family heirloom given to her by her husband Sir Charles, in the position of holding a reasonably large stake in a company she knew little about and which wanted little to do with her.
What will Alisher Usmanov's next move be? Photo: Getty
This tricky situation was compounded by the fact that there were only two realistic buyers for her shares, the American tycoon Kroenke and the Uzbek oligarch Usmanov, and neither was in a hurry to take them off her hands.
She could, of course, have tried selling them piecemeal on the semi-open market on which Arsenal's shares are traded but that would have meant breaking up what she believes is a strategically significant stake in a highly desirable concern.
Of the latter, she may well be right but it's the former that is no longer true, and that is why her latest move is unlikely to bring her any more joy than the last 15 months have.
Kroenke holds all the aces here. He has been steadily building his stake in the club since 2007 and is now just 10 shares short of the 30% mark that would oblige him to make an offer for the rest.
That offer may come but it will not come until next month when, under Takeover Panel rules, that offer price drops from £10,500 a share to £8,500, the typical price Kroenke has been paying for his pieces of Arsenal paper. The difference between these prices is £87m to Kroenke in potential savings and £20m to Bracewell-Smith in missed opportunities.
To make matters worse for Bracewell-Smith, Kroenke already, in effect, calls the shots at the Emirates. His relationship with Fiszman has deepened over the last year or so, to the point the Denver-based sports and property billionaire is clearly the diamond dealer's chosen successor as club custodian.
Kroenke does not need Bracewell-Smith's shares - not yet, anyway - because he has first refusal on Fiszman's 16.1% and could possibly scrape together another 4% if he felt he really had to be the majority shareholder.
Usmanov, the much-delayed second front in this assault on Arsenal's marble halls, is also unlikely to write Bracewell-Smith a big cheque anytime soon.
Having been blocked by the board's collective refusal to sell him stock - the infamous "lockdown agreement" - and stymied by the global recession, the metals mogul has got bogged down on 26% of the shares and is months away from being in a position to launch an aggressive move beyond 30% (or a position that makes financial sense, anyway).
There is, of course, a chance Bracewell-Smith's "remember me" appointment of Blackstone as her new sales team will do the trick with Usmanov and remind him that he could beat Kroenke to the prize of the last English footballing giant in old-fashioned ownership.
There is also a possibility Blackstone will pull a rabbit out of the hat in somewhere like, oh, I don't know, say China, and give Bracewell-Smith the £100m exit she craves without triggering a whole-club bid from one of the two front-runners.
But it is not a very likely outcome. Buying her stake on its own would be a bit like buying one wheel and a bit of the backseat of a Ferrari. You've got yourself a slice of a very nice car but it's no good without the other more important bits.
Which is why I believe Bracewell-Smith's frustration is set to continue. There are no new rabbits out there. The most likely buyer for her shares is still Kroenke or Usmanov. And she could make that sale without Blackstone, saving herself a considerable sum in bankers' fees.
So this isn't really a twist or a development. But it is something. Perhaps just a signpost that bigger twists and developments are coming.
The next of those will be Kroenke's decision on what he wants to do with his 40% stake in the NFL's St Louis Rams. The deadline for that was also Monday but there were no smoke signals from the Pepsi Center at the time of finishing this so I'll update later.
1100, 13 April:
It was predictable, really, wasn't it? The minute after I press return on the blog above "Silent Stanley" declares his hand in St Louis. And this time there is no debate whatsoever about it being a "twist" or not. Nobody saw this corkscrew coming.
As I managed to tweet before nodding off last night, Kroenke has shocked US observers by deciding to match Shahid Khan's $750m bid for the NFL's St Louis Rams.
The Pakistan-born car-parts magnate had negotiated this price with the majority shareholders of the Rams, Chip Rosenbloom and Lucia Rodriguez. But he had not reached agreement with local-boy Kroenke for his minority holding in the struggling franchise. That stake, 40%, would cost Khan $300m under the terms of his offer.
Kroenke, however, had three options. He could take Khan's money and walk away, he could do nothing and remain in the background at the Rams (quietly collecting the cheques that come the way of an NFL owner), or he could exercise his right to meet Khan's valuation and buy Rosenbloom and Rodriguez's shares himself.
I outlined these choices a couple of weeks ago and at the time (in fact right up until the moment he did otherwise) nobody thought Kroenke would opt to match Khan and buy the Rams outright.
The reason for this was that NFL commissioner Roger Goodell had just restated the league's strict rules on cross-ownership of major sports franchises: you cannot hold a controlling stake in an NFL team if you already own a baseball, basketball or ice hockey team in a rival NFL market. Kroenke, as owner of the NBA's Denver Nuggets and NHL's Colorado Avalanche, fails this test spectacularly. He also owns indoor gridiron, lacrosse and "our" football teams in Denver.
So what's Stan playing at?
Well, it seems, and people far closer to this than me aren't sure yet either, he is going to challenge the NFL's cross-ownership rule. A better lawyer than me could probably point out that it does look like a fairly arbitrary restraint of trade. There is also the precedent set by former Kansas City Chiefs owner Lamar Hunt. He successfully got the restriction waived on owning NFL and Major League Soccer franchises in different markets. Is MLS really so different to the NHL these days?
The other option for Kroenke is to sell his NBA and NHL franchises in Denver. But this seems unlikely as they are a well-consolidated pair that help fill his Pepsi Center arena most nights of the year. He also owns the broadcasting and ticketing operations for these teams so they appear to be too good a fit to break up. A legal challenge of the NFL's rules appears to be the way to go.
What all this means for Kroenke's intentions towards Arsenal is anybody's guess. Is he rich enough to buy the Rams and the Gunners? Probably. Can he pull both deals off at the same time? Hmmm. Hard to say. Let's leave that for another blog.
One quick postscript before I head for the exits. London's PLUS market has just closed after a relatively lively day's trading for shares in Arsenal Holdings PLC - 40 shares swapped hands in all. Thirty-seven of those were bought by one man. At £10,500 a pop.
And it wasn't Kroenke.
Say what you like about Usmanov but he's no quitter. Only 1,900 shares short of 29.9999%, a snip at £20m.