Arsenal’s profit will be halved if Stan takes over (2/5)
-
gooner.ed
- Site Admin
- Posts: 3458
- Joined: Fri May 12, 2006 3:05 pm
- Location: Scotland Yard's 10 Most Wanted List
Arsenal’s profit will be halved if Stan takes over (2/5)
usual thread starter... the maths don't add up if stan does not have some money we don't know about (Mrs Kroenke?). apologies to anyone offended by the pic of Miss Pamela Anderson, but I've seen enough of Stan's moustache to last me a lifetime. Tempted to instigate a policy of having eye candy photos instead of shareholders/directors whenever we have these kind of stories. Lady Nina's ok, but even she's the wrong side of 49
Mrs Kronke is apparently worth $6.5 bn but who knows what their financial arrangements are. She inherited her money from her father sam walton the co-founder of wal-mart. Their combined wealth then is approx $8.5bn.
Together they're worth alot more than the Glazers and you couldnt blame any gooners who want to assume Stan has full access to such substantial amounts of capital but in reality he probably doesnt and our exisisting board are right to be cautious.
Together they're worth alot more than the Glazers and you couldnt blame any gooners who want to assume Stan has full access to such substantial amounts of capital but in reality he probably doesnt and our exisisting board are right to be cautious.
-
Arsenal Analysis
- Posts: 16
- Joined: Fri Apr 13, 2007 7:48 am
- Contact:
-
Cus Geezer
- Posts: 1869
- Joined: Sun Feb 18, 2007 6:09 pm
Stan Kroenke can't be a bad businessman either if he has emassed such a fortune from humble beginnings and got his feet under the table at the home of one of the worlds richest families.
I think the takeover will happen eventually so im just hoping he can buy us out right and stick to the boards existing business plan and continue our policy of organic growth but.... also provide abit of financial muscle to our cause if a top top player becomes available and Arsene really wants him.
We already know Koenke, with out his wifes backing, is richer than the Glazers in terms of personal wealth, so one up on the Mancs already in that respect. With the amount of potential we currently have plus the ability to compete at the very top level in the transfer market we would really be a force to be reckoned with.
If he did buy Arsenal would we be the little jem in his business portfolio? If the answer is yes then we'd only have to look at Kroenkes investment in the Colorado Rapids and the construction of Dicks sporting goods park, the largest football complex in the world to date with no less than 14 full size pitches.
Im also a believer that DD has always done his best for Arsenal football club and maybe Kroenke gave DD some idication of his true financial muscle and maybe even showed him his business model for Arsenal football club.
I'll still be on the fence until we know what Kroenkes really up to but in the mean time im going to retain my optimism and hope that the new white shirt will sell better in the vast amount of Wal-mart stores than it will in England.
I think the takeover will happen eventually so im just hoping he can buy us out right and stick to the boards existing business plan and continue our policy of organic growth but.... also provide abit of financial muscle to our cause if a top top player becomes available and Arsene really wants him.
We already know Koenke, with out his wifes backing, is richer than the Glazers in terms of personal wealth, so one up on the Mancs already in that respect. With the amount of potential we currently have plus the ability to compete at the very top level in the transfer market we would really be a force to be reckoned with.
If he did buy Arsenal would we be the little jem in his business portfolio? If the answer is yes then we'd only have to look at Kroenkes investment in the Colorado Rapids and the construction of Dicks sporting goods park, the largest football complex in the world to date with no less than 14 full size pitches.
Im also a believer that DD has always done his best for Arsenal football club and maybe Kroenke gave DD some idication of his true financial muscle and maybe even showed him his business model for Arsenal football club.
I'll still be on the fence until we know what Kroenkes really up to but in the mean time im going to retain my optimism and hope that the new white shirt will sell better in the vast amount of Wal-mart stores than it will in England.
Some very reasonable comments, above.
My primary objection to the CEO piece on Kroenke needing to take money out of the club was that it did not take into account the fact that the #1 way that investors make money is by investing in what you see as an undervalued asset and then selling later it on after the price has increased. Dividends are all well and good, but serious billionaire investors make their real money by buying low and selling high down the road.
Let's assume that Kroenke only holds the shares for 10 years before selling (either to another ultra-rich individual, or more likely to a group of investors). Like the CEO piece, let’s assume a £500m purchase price now, and an interest rate of 6% on the funds used to buy the shares.
The key question is ‘How fast will the value of the Arsenal shares grow?’ Obviously we don’t know, so we’ll have to just try to make a reasonable estimate. The shares were at about £1000 in 2004 and are now at around £7000. But some of that increase is surely due to speculation about the takeover itself, so let’s choose a lower rate of growth than that. All signs indicate that the growth of the Premiership’s popularity in China and elsewhere opens the door for truly spectacular growth in the next 10 years or so, and the top few Premiership clubs are likely to benefit disproportionately from this.
But let us be very conservative, and just assume that Arsenal’s value grows no faster than that of an average mid-table club, and that the Premiership as a whole does not see an increase in its rate of revenue growth over the next ten years. Let’s just use an increase of 12% per year, which is approximately what it has been for the last ten years. So under this assumption, in ten years the club’s shares will be worth only 3 times what they are now. (Again, this is a very pessimistic estimate; I suspect Kroenke sees *far* greater financial upside than this).
What would these numbers give us?
Kroenke’s costs between now and 2017:
- £330m or so in interest over the 10 years
- £500m to pay back the principal of the loan in 2017
- £50m cash injection for extra transfer funds for players
____________________________
Total costs including interest: £880m
Kroenke’s payout when he sells in 2017:
+£1500m (reflecting our modest estimate for the increased value of the shares)
So you take the £1500m sale price of the shares in 2017, and subtract his total costs over the 10 years and you get...
Total profit of the investment: £620m pure profit
Amount of money ‘taken out’ of Arsenal in order to achieve this profit: £0
Don’t get me wrong, I think that there are a number of legitimate reasons to oppose the takeover, reasons having to do with the culture of the club, maintaining tradition, maintaining stability etc. To me, these concerns are real, and I am not convinced that they are outweighed by the potential of gaining access to additional transfer funds.
But the idea that ‘He can’t make a profit without taking money out of the club’ is simply not a logical argument, because it leaves out the most important feature of any investment: appreciation of the value of the asset itself.
Cheers,
Tony
My primary objection to the CEO piece on Kroenke needing to take money out of the club was that it did not take into account the fact that the #1 way that investors make money is by investing in what you see as an undervalued asset and then selling later it on after the price has increased. Dividends are all well and good, but serious billionaire investors make their real money by buying low and selling high down the road.
Let's assume that Kroenke only holds the shares for 10 years before selling (either to another ultra-rich individual, or more likely to a group of investors). Like the CEO piece, let’s assume a £500m purchase price now, and an interest rate of 6% on the funds used to buy the shares.
The key question is ‘How fast will the value of the Arsenal shares grow?’ Obviously we don’t know, so we’ll have to just try to make a reasonable estimate. The shares were at about £1000 in 2004 and are now at around £7000. But some of that increase is surely due to speculation about the takeover itself, so let’s choose a lower rate of growth than that. All signs indicate that the growth of the Premiership’s popularity in China and elsewhere opens the door for truly spectacular growth in the next 10 years or so, and the top few Premiership clubs are likely to benefit disproportionately from this.
But let us be very conservative, and just assume that Arsenal’s value grows no faster than that of an average mid-table club, and that the Premiership as a whole does not see an increase in its rate of revenue growth over the next ten years. Let’s just use an increase of 12% per year, which is approximately what it has been for the last ten years. So under this assumption, in ten years the club’s shares will be worth only 3 times what they are now. (Again, this is a very pessimistic estimate; I suspect Kroenke sees *far* greater financial upside than this).
What would these numbers give us?
Kroenke’s costs between now and 2017:
- £330m or so in interest over the 10 years
- £500m to pay back the principal of the loan in 2017
- £50m cash injection for extra transfer funds for players
____________________________
Total costs including interest: £880m
Kroenke’s payout when he sells in 2017:
+£1500m (reflecting our modest estimate for the increased value of the shares)
So you take the £1500m sale price of the shares in 2017, and subtract his total costs over the 10 years and you get...
Total profit of the investment: £620m pure profit
Amount of money ‘taken out’ of Arsenal in order to achieve this profit: £0
Don’t get me wrong, I think that there are a number of legitimate reasons to oppose the takeover, reasons having to do with the culture of the club, maintaining tradition, maintaining stability etc. To me, these concerns are real, and I am not convinced that they are outweighed by the potential of gaining access to additional transfer funds.
But the idea that ‘He can’t make a profit without taking money out of the club’ is simply not a logical argument, because it leaves out the most important feature of any investment: appreciation of the value of the asset itself.
Cheers,
Tony
-
Cus Geezer
- Posts: 1869
- Joined: Sun Feb 18, 2007 6:09 pm
And ask any bondholder if they regret buying oneWere you suspicious of David Dein when he brought Arsene Wenger to the club?
Well everyone does something good once in their life, even Hitler made the trains run on time.
I don't care a fuck what bond holders think. Ask one of the many fans who in 1991 (not a time of great economic prosperity if you recall) thought £1500 for the right to buy an Arsenal season ticket was unreasonable, if they really appreciate David Dein's idea.
Many people who's association with the Arsenal goes back decades can barely get in there nowadays. [/quote]
