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. Last Updated: 07/27/2016

Usmanov Gunning for Bigger Arsenal Share

VedomostiAlisher Usmanov
Billionaire Alisher Usmanov said Friday that he wanted to increase his stake in Arsenal Football Club to 25 percent and that although he was eager to play an active role in the London club, he was not seeking to buy it outright.

Usmanov's purchase of nearly 15 percent in the club Thursday -- the second investment by a Kremlin-friendly oligarch in a leading English Premier League team after Roman Abramovich bought Chelsea in 2003 -- received a mixed reaction from the club's fans and the British media, with some fearing a Russian takeover.

"I would increase my share to a blocking stake -- 25 percent -- if such an opportunity presents itself," Usmanov said. "Regardless of the size of my stake, I am ready to play an active role in the life of the club," he said in e-mailed comments through his spokeswoman.

Usmanov's Red and White Holdings on Thursday said it had paid ?75 million ($151 million) for a 14.58 percent stake in the club from former Arsenal chairman David Dein.

Asked why he bought into Arsenal, Usmanov said he loved English football and had been a fan of the team, whose nickname is the Gunners, for eight years.

"In the case of Arsenal, my love for the club and a successful business opportunity coincided," he said. "This is perhaps an opportunity of a lifetime."

The Arsenal purchase is the latest in a series of diverse investments by the Uzbek-born Usmanov, who ranked 18th in Forbes Russia's 2007 rich list with an estimated fortune of $5.6 billion.

Usmanov is majority owner of the Metalloinvest mining and metals group, and runs Gazprom's investment arm, Gazprominvestholding.

Last year, Usmanov bought business newspaper Kommersant from Badri Patarkatsishvili, a longtime associate of exiled oligarch Boris Berezovsky. This summer, Usmanov bought into the country's third-biggest mobile phone company, MegaFon. Both deals were widely seen as having the implicit backing of the Kremlin.

Usmanov joins a growing list of Russian tycoons buying into and bidding for British football clubs. Since Abramovich bought Chelsea, Alexandre Gaidamak, the son of Russian-Israeli billionaire Arkady Gaidamak, has bought Portsmouth.

Meanwhile, Lithuanian businessman Vladimir Romanov has bought control of Scottish club Heart of Midlothian, and a bid for West Ham fronted by Kia Joorabchian, a former business associate of Berezovsky, was rejected by the East London club in September.

Buying into Arsenal could be a smart investment for Usmanov. In a recent report, Deloitte ranked Arsenal as the world's ninth-highest earning football club in the 2005-06 season, with total revenues rising 12 percent to 192.4 million euros ($263 million). The figures were buoyed by the club's August 2006 move to the new 60,000-seat Emirates Stadium, which could bring in an estimated extra 58 million euros per season, the report said.

"Continued on-pitch success could see Arsenal break into the top five Football Money League clubs for the first time, and challenge Manchester United's long-held position as the leading English club," Deloitte said.

Television broadcasting was the club's largest revenue source, at 80 million euros, or 41 percent of the total, the report said.

Globally, broadcasters will pay a record ?2.3 billion ($4.6 billion) over the next three seasons to televise games in the world's most popular football league, Bloomberg reported.

Under the Usmanov deal, Dein becomes chairman of Red and White, the investment company established to hold equity in Arsenal. The company is owned by Usmanov and a longtime associate, London-based fund manager and Metalloinvest chairman Farhad Moshiri. Usmanov and Moshiri share an executive box at the Emirates stadium.

Dein, an ally of Arsenal coach Arsene Wenger, was ousted from the Arsenal board in April.

Red and White approached Dein "through a football intermediary after he stepped down from the board," said Rollo Head, a partner at public relations firm Finsbury, which represents Red and White.

Dein was forced to step down after he clashed with Arsenal board members, led by chairman Peter Hill-Wood, over his support for U.S. billionaire Stan Kroenke, who this year bought 12.2 percent in the club.

Dein will focus on increasing Red and White's share in Arsenal, Head said, and reiterated that there were no plans to make a takeover offer for the club.

A Metalloinvest spokeswoman, Yulia Mazanova, said Usmanov was prepared to invest further in the club but had no current plans to mount a takeover bid.

Kirill Vishnepolsky, deputy director at Forbes Russia magazine, said he doubted that a successful market speculator such as Usmanov would want to assume full control of Arsenal.

"This is just too small a business for him," Vishnepolsky said. "He'll sell it in half a year," he said of the stake.

The purchase met with a mixed reaction from British government and sports officials.

"There is nothing wrong with foreign ownership per se, but we do want to be sure that those people that come into English football respect the local traditions," said Anthony Wright, a spokesman for the government's Department for Culture, Media and Sport.

Previous British sports ministers have called for potential owners of Premier League football clubs to be properly vetted.

Wright said anyone looking to take over a Premier League club had to face two tests, one from the Department for Trade and Industry and another from the Premier League. He said his department held consultations with the Premier League in June to determine whether the tests were stringent enough. The consultations came at around the time former Thai Prime Minister Thaksin Shinawatra took over Manchester City.

Premier League spokesman Dan Johnson said that unless Usmanov increased his stake, he would not face any official scrutiny.

"Until Mr. Usmanov reaches 30 percent or becomes a director or becomes the owner of the club, not until that point would he be submitted to the fit and proper persons test," Johnson said. Anyone who acquires 29.9 percent stake in a Premier League football club is automatically required to lodge a takeover bid.

Many Arsenal fans expressed indignation at Usmanov's investment and worried about the source of the money coming into the club.

"This is a company that wants to buy up as many Arsenal shares as possible and take over the club," a blogger on said of Red and White in a posting Friday. "Usmanov is an oligarch. Do I need to tell you how they made their money?"

"Tradition, values, integrity, history -- all these go by the wayside if we allow ourselves to become another Chelsea," the blog said.

Berezovsky, who said last year that he strongly advised Abramovich against buying Chelsea in 2003, on Friday scoffed at Usmanov's latest deal.

"What Abramovich and Usmanov did is a sign of a barbarian mentality seeking to find its way into a civilized world," Berezovsky said by telephone.

Berezovsky himself is under investigation in Brazil over his purported involvement in Sao Paulo football club Corinthians. The country's Justice Ministry is considering whether to approve an international arrest warrant for Berezovsky, who is accused of laundering money through Media Sports Investments, a company headed until last year by Joorabchian.

Reaction in Britain to the purchase by Usmanov would be negative, regardless of whether it was a portfolio investment or a strategic one, Berezovsky said.

Britain's Guardian newspaper on Friday reported that the purchase might have been approved by the Kremlin, calling it "an intriguing move ... at a time when official relations between London and Moscow are at their worst since the Brezhnev era."

Berezovsky said he was confident that Usmanov had checked with Kremlin officials before going ahead with the purchase but added that it meant virtually nothing for the future of bilateral relations.

James Wyatt-Tilby of PR firm Finsbury sought to downplay the negative reports in the British media.

Usmanov "has been described as a successful Russian businessman with close ties to Putin. His purchase is perfectly well understood," Wyatt-Tilby said in e-mailed comments.

Arsenal managing director Keith Edelman sought to downplay the purchase Friday. "Our attitude is business as usual," he said in comments posted on the club's web site.

At a news conference later Friday, Wenger said, "At the moment we have 50 percent shares inside the board and 50 percent outside, which are very much shared. Who will go with who I don't know, and basically it's not my problem."

An Arsenal spokeswoman declined further comment on Friday.