Results of AST membership survey into Ownership and Governance issues

Thank you to all of our member who completed our recent survey into ownership and governance issues. The results are set out below and will inform the AST’s positions on key issues going forward. We will also be writing to Stan Kroenke to request he speaks at the next AGM further to question 4 below. 

1. Stan Kroenke has now been majority owner of Arsenal Football Club for more than six years. Are you satisfied with Stan Kroenke’s ownership?

• Dissatisfied: 90%
• Neither satisfied nor dissatisfied: 7%
• Satisfied: 3%

 2. Following campaigning by the AST and challenge by shareholders at the AGM, Arsenal ceased paying an annual consultancy fee of £3m to Kroenke Sports Enterprises (KSE). Do you agree with this decision not to pay a consultancy fee

• Yes: 92%
• No: 4%
• Unsure: 4%

 3. Do you support the payment of dividends or management fees by Arsenal Football Club?

• Yes: 13%
• No: 74%
• Don’t Know 13.5%

4. Should Stan Kroenke speak at the next AGM and set out his vision for the club to supporters and shareholders?

• Yes: 96%
• No: 3%
• Don’t know: 1%

5. Do you think that Alisher Usmanov, who holds a 30% equity stake in Arsenal through Red and White Holdings, should be offered a place on the Arsenal Board?

• Yes: 92%
• No: 5% 
• Don’t Know 3%

6. Should appointments be made to the Arsenal Board to strengthen its composition and governance arrangements by adding personnel with more independence and a greater diversity?

• Yes: 97%
• No: 1%
• Don’t Know: 2%

 7. Do you think that Arsenal should appoint a Director of Football?

• Yes: 68%
• No: 14%
• Don’t Know: 17%

8. The Club are very confident that season by season they make improvements to strengthen the club’s competitive position. Do you agree that this is happening?

• Yes: 4%
• No: 94%
• Don’t Know: 2%

 
9. In light of the recent football performance, commercial activities and other factors, do you think the Board should award Chief Executive Ivan Gazidis a considerable bonus similar to previous seasons?

• Yes: 6%
• No: 86%
• Don’t Know: 8%

 
10. Do you think the way that the Arsenal Board handled the reappointment of Arsenal manager Arsene Wenger this year represented best practice?

• Yes: 5%
• No: 92%
• Don’t know: 3%

 
11. With reference to what happened in the first half of 2017, do you think the Arsenal Board should make a firm decision about the future of Arsene Wenger, and announce that decision, well before the end of his contract in May 2019?

• Yes: 90%
• No: 5%
• Don’t Know: 5%

12. Looking at Arsenal’s ownership structure, the ‘self-sustaining’ business model, its football management and financial resources, and comparing it to other Premier League clubs, how optimistic are you about Arsenal’s prospects during the next five years?

• Extremely optimistic: 2%
• Somewhat optimistic: 10%
• Neither optimistic or pessimistic: 15%
• Somewhat pessimistic: 45%
• Extremely pessimistic: 28%

Questions for the Arsenal Annual General Meeting (AGM) on Thursday

The following are the questions that we know of posed by both AST members and individual shareholders. Many of the questions are based on feedback from the recent AST survey into Ownership and Governance — results below.

Question: In May 2013 the Arsenal Supporters’ Trust commissioned an independent review of corporate governance at Arsenal. This report, and the failings it identified, have been well-publicised. In particular it identified an ageing board lacking in diversity, without the breadth of skills required to run a modern professional football club. All of the non-executive directors have been in office for far too long and are not regarded as independent under the corporate governance code. There is therefore no independence from the controlling shareholder, no one free of conflict of interest and no one on the board with professional football playing experience. When is the Board going to address these significant corporate governance failings, appoint a number of truly independent non-executive directors capable of challenging the majority shareholder and who will act in the interests of shareholders as a whole?

Question: In a membership survey conducted this month 92% of AST members said that they believed that Alisher Usmanov, who holds a 30% equity stake in Arsenal through Red & White Holdings, should be offered a place on the Arsenal Board? Why has the Board not offered a directorship to Alisher Usmanov?

Question: The AST welcomed the decision to reduce ticket prices this season for the Europa League competition compared to the Champions League pricing. As the report and accounts demonstrate, income from broadcasting continues to surge ahead. Can the Board confirm they remain committed to the position that general admission prices will be frozen for the full period of the existing TV contract and therefore that this will cover next season as well?

Question: Ivan Gazidis’ total pay package remained £2.6m this year including a bonus of £919,000. Yet the Club’s performance in football performance (falling from 2^nd to 5^th place — no Champions League) and predicted income – falling by up to£20m on the Club’s own estimate. Can the Board please justify this payment and give a more comprehensive answer than to say it was a decision made by the remuneration committee?

Question: The 2016-17 accounts show a £9m (13%) increase in ‘other football costs’ from £70m to £79m. The explanation given is that USA tour costs, partnership costs, extra security, legend match proceeds and a £1m surplus property provision are behind this increase. The level of increase is unprecedented in the absence of a management fee and more surprising in view of the reduced number of home games last season (including no Emirates Cup). Can the Board explain how it has cost an average of over £2m a year more for the items listed? Surely there must be other factors at work? Please provide a fuller breakdown of the increase. 

Question: Arsenal has never had a single owner, and before Stan Kroenke never even a majority owner. The club was run for 125 years on a custodianship model and principles that recognised the value of supporter shareholders. Even Henry Norris deliberately resisted becoming majority owner when he ran the club for over 20 years. Do the club recognise the value of supporter shareholders and do the current board commit to allowing all small shareholders who want to retain shares in a public company to do so regardless of any deals between the two major shareholders or any other parties? 

Question: The CEO suggested in 2013 that Arsenal could be similar to Bayern Munich. Has anyone taken a close look at how the decision-making process is made at Bayern, who are a member of an elite group of clubs Arsenal aspire to join, to see what can be learned from their organisational structure and division of key roles, especially regarding their strategy towards playing staff? Previously the Chairman has indicated that all such decisions are left to the manager – is this still the preferred modus operandi for the Arsenal directors?
 
Question: Does the Board recognise that the appeal of the Premier League is founded on the basis that any team can beat any other team in a one-off match? A redistribution of income that further separates the biggest clubs from the rest will undoubtedly harm competition and the vast majority of fans are against it. Will the Board publicly state Arsenal’s commitment to upholding the current equal distribution of overseas TV money? 

Question: The problem of there being large numbers of empty seats at the Emirates was greater than ever last year. In the past the principle of home credits to encourage those not using their seats to put them back in the ticket exchange has been acknowledged but no change has occurred. Please can the Club address in more detail the specific issue of home credits and what holds back their implementation – cost?, technology?, policy? – and indicate when and how these obstacles will be overcome?

Question: Can the Club explain why it is facing an unprecedented number of senior players being on contracts in their last or penultimate year? What action is being taken to prevent this happening in the future and are further appointments expected to replace Dick Law?

Question: With the PUMA and Emirates commercial partnerships representing over two thirds of commercial income and described as “mid-term” what do Arsenal intend to do to close the near £100m commercial income differential with Manchester United and substantial shortfall to other leading EPL and European clubs? Chelsea triggered a termination clause to buy out Adidas and more than double its annual income from a new deal with Nike. Would Arsenal consider a similar early termination with PUMA if a substantial uplift could not be re-negotiated?

Question: Arsene Wenger himself admitted that the uncertainty around his contract situation was highly disruptive to the team’s end of season performances. What has the Board learnt from the way this was handled and will a decision on the manager’s future be taken any earlier than May 2019 in a bid to avoid more confusion?