I have read the open letter by Red and White Holdings and let’s not beat around the bush: it reads like a Gordon Gekko press release. For those of you who are too young to remember, Gordon Gekko is the antagonist from Oliver Stone’s 1987 smash hit Wall Street. Charlie Sheen plays a young hotshot stock broker and
his dad, Martin Sheen Michael Douglas* plays vulture capitalist Gordon Gekko. In the film, Gekko creates wealth by buying controlling shares in companies which are underperforming and then gutting those companies for their assets and specifically he buys a controlling share in a company called Teldar Paper, which he intends to liquidate because the value of the assets were worth more than the stock . This mirrored a practice at the time called corporate raiding, a practice whereby a person or group of people would buy a controlling share in a company and then sometimes liquidate them but more often simply make them more efficient by downsizing and other means.
The climax of the film takes place at a shareholders meeting where Gekko give this famous speech:
Teldar Paper, Mr. Cromwell, Teldar Paper has 33 different vice presidents each earning over 200 thousand dollars a year. Now, I have spent the last two months analyzing what all these guys do, and I still can’t figure it out. One thing I do know is that our paper company lost 110 million dollars last year, and I’ll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I’ve been involved with, there were 2.5 million stockholders who have made a pretax profit of 12 billion dollars. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.
I read the Usmanov letter in the Gekko voice. I’m not saying that I think he wants to liquidate Arsenal, but like Gekko, I hear an investor who is appealing to the people to get behind his plan which will give you what you want — trophies — and him what he wants — more shares of Arsenal and for his Arsenal shares’ value to increase.
The thing about trophies is that we know how elusive they really are. Even the most expensive squad ever assembled in the history of football finished 6th in the League this year. The second most expensive squad ever barely eeked out the League title over the third most expensive squad. Adding another £100m in players to Arsenal would only make Arsenal the fourth most expensive squad in England.
Though, that might be enough (with Arsene Wenger at the helm) to push us over the edge into that elite group and truly compete for a top spot. That’s why, in the end, I am ambivalent about Usmanov’s letter. Sure, cynically, I read it in the Gekko voice. But there’s another part of me that thinks he might be on to something. A point I will elaborate on in the very near future.
*Weird because I watched the YouTube video of this speech before writing this article and the video said “MICHAEL DOUGLAS GREED IS GOOD” and I still got this wrong.