“.. he sees you when you’re sleeping, he knows when you’re awake, he knows if you’ve been bad or good, so be good for goodness sake!”
Alisher Usmanov gave his time to CNBC to talk about the controversy surrounding the IPO for his cell phone company MEGAFON, the controversy surrounding the IPO and his subsequent billion dollar sale of shares in Facebook, the controversy surrounding Arsenal and the Arsenal board, and why controversy dogs everything he does (hint: jealousy). It’s an extensive set of interviews with Russia’s richest man and minority owner of Arsenal football club. If you have a chance, I suggest watching everything above and reading all of the articles on CNBC about the man and his massive investment portfolio.
Few things were clear from the CNBC pieces but it looked like Usmanov was doing some PR damage control as shares of his cell phone company MEGAFON have taken a dive after the IPO. A similar plight to what happened with the Facebook share prices after their IPO though not on quite the same scale.
What is clear from the interviews is that Usmanov is a very successful investor who buys stocks via private vehicles, floats them on the market, and sells to make huge profits. Stating that he got a taste for investing in 1997 when Goldman Sachs “gave me my training as a financial investor, and I’m actually very grateful for what they did.” That training must have been something special as he has since been very prescient and fortunate in most of his business dealings. The Facebook IPO is a great example, as Usmanov made over $1bn by buying into the private sale and then selling off a significant number of those shares in the IPO.
Part of the reason that controversy dogs everything Usmanov does is that strange things keep happening, such as the sale of Facebook shares which earned him a cool billion. That Facebook IPO has led to fines for the banks connected to the offer, like Morgan Stanley, for certain irregularities.
Usmanov’s Arsenal comments were almost an aside in this interview but he was very clear that he feels the board didn’t do enough to give Arsene Wenger the resources he needs to compete over the last five years and that selling Robin van Persie was a mistake:
I openly want to tell he have many, many difficulties. Of course today less [so], but before in the last five years he not have enough support to provide his conceptions of his game in Arsenal from board; his resources for transfer and for keeping players etc. This is my view.
This decision [by] Mr Wenger also a mistake. If I’m in his place I [make him] stay to the finish. But he explains this [by saying] Robin wants to go to win trophies.
Arsene Wenger was asked this question at his press conference today and refuted Usmanov’s notion that the board didn’t support him, “I believe I have always had the support from the board, and am very grateful for that.” But Arsene did admit that money drove many of the decisions saying:
We have worked over the years in respecting in what we did, which is to always work within our financial resources. Therefore we made decisions which, from outside, looked not based on purely football reasons, but it was based as well on financial reasons.
Arsenal’s self-sustaining model came up in the interview and Usmanov was asked if he would put his own money into the club and his answer was simply, no – not unless Stan Kroenke is willing to sell him control of the club:
I want to take this opportunity to just reaffirm that in order to help the team, we would be ready to buy more shares, to buy control, to buy all shares,
This is simply a repeat of the “rights issue” offer that Usmanov has been making since 2009. The rights issue deal is simply that Arsenal print shares out of nothing and offer them at a discount to anyone who wants to buy them. An inflationary tactic that companies often use when they are on the verge of bankruptcy and cannot borrow money. Another way of looking at this is as a sort of an IPO of shares that already exist: initial public offerings are used to generate capital and in much the same way a rights issue would generate capital.
A rights issue is highly unlikely as it would simply devalue (much like printing money devalues currency via inflation) the shares already owned by Arsenal’s current owner. But Usmanov does “dream” of one day owning Arsenal outright so that he can fix certain things, like… improving effectiveness of the commercial earnings:
We are ready to do all that we can in order to help the company, in order to consider any form of co-operation or ownership with the team. If I have a big stake in Arsenal of course I have my opinion what we must do, for example in the commercial side there are many questions over the effectiveness of the commercial side of Arsenal today, but we will see, we will wait and maybe when I wake up some day I have this Arsenal club.
The timing of this “commercial side” statement is a bit odd. I was contacted today by a member of the Arsenal Supporter’s Trust (not Tim Payton) who was talking to Tom Fox, Arsenal’s Chief Commercial Officer, at the last meeting between the AST and the Board. What my source revealed is that Arsenal’s stadium naming rights deal with Emirates included the recapture of certain advertising hoardings inside the stadium back to Arsenal’s hands for sale to third party advertisers. This, Tom Fox estimated, will bring a few million extra pounds to Arsenal over the next few years. I say this only to highlight that Arsenal are well aware of this “effectiveness of commercial earnings” issue, as had been highlighted by the Arsenal Supporter’s Trust for a few years now, and are working diligently to increase this revenue stream.
The Usmanov interview with CNBC did little to quell the debate on either “side” of the argument over whether Arsenal need a sugar daddy or should prefer the “self-sustaining” model that they have been operating under since moving from Highbury. Clearly Usmanov will not be adding any of his own money to the club unless they want to sell to him and even then he seemed more interested in maximizing commercial revenue rather than buying big players.
When asked if Arsenal should buy Messi, he equivocated saying only,
For Messi! Any club would play any money for Messi! Now particularly today. But you cannot pay enormous price, nor unrealistic price. You need to give this to the hand of professional people like Wenger or his successors.
This talk of “realistic” prices for certain players and of maximizing revenue streams is precisely the kind of talk that the current Arsenal board and manager are criticized for every single day. It remains to be seen what Usmanov’s intentions are with Arsenal but on the basis of this interview it looks more like Arsenal are just another part of his diversified investment portfolio rather than the chimney for Saint Usmanov to climb down and give gifts of Cavani or Falcao.