Fanshares are worth one hundredth of a normal share
In British football, the trend over the last decade has been for clubs to de-list from the stock market and fall under the ownership of one or two wealthy individuals. While this has given some clubs the financial strength to buy the best players and challenge for the highest honors, it has had a negative effect on the ability of fans to have a say in the running of their clubs.
Arsenal Football Club, based in North London, is one of the only Premier League teams that remains quoted on the public markets, although it is also difficult for fans to invest in and have their say about its running. That’s because Arsenal’s shares trade at a prohibitively high price – currently around £10,000 ($15,900) a share – on PLUS Markets, a specialist trading platform run out of the UK. And even fans with very deep pockets may soon lose the ability to buy a stake in the club they support: Arsenal’s two biggest shareholders are both reportedly interested in taking full control of the club.
To address this issue, the Arsenal Supporters’ Trust has launched a scheme to help ordinary fans invest in their club’s stock. Called the Arsenal Fanshare Scheme (AFS), it allows fans to purchase ‘fanshares’ worth one hundredth of a normal share. When the scheme began, in mid-September, each Arsenal share was worth around £9,500, so fanshares were made available for £95 each.
The project has proved very successful. Indeed, on the day it launched, the website where fans could sign up crashed due to the extreme demand. ‘We’ve had a very positive response; it’s way beyond what we modeled for,’ says Tim Payton, a spokesperson for AFS.
AFS has designed the scheme so each fanshare holder is treated as much as possible like a full shareholder in the club. To this end, each holder will receive a certificate of ownership and the proxy form in advance of the annual meeting. He or she will also go on the mailing list for the CEO’s shareholder letter. Equiniti, the share registrar, is handling this part of the scheme for AFS.
In addition, Equiniti has come up with a way for fanshare holders to be represented at the AGM. After the proxy form has gone round, holders will be invited to vote on the proposals. Once all the votes are in, AFS will consolidate them and vote as directed at the annual. There will also be a ballot that gives holders the chance to win a seat at the AGM. ‘It brings direct democracy to Fanshare holders,’ says Payton.
It has not been hard to galvanize support for the scheme; Arsenal’s fans clearly like the idea. What’s more, influential football commentators and the UK sport minister, Hugh Robertson, have all weighed in quickly with their backing.
Actually buying the shares on the open market may prove a bit tricky, however, as Arsenal’s shares rarely become available in large numbers. And the few that do appear are often snapped up by one of the two big investors in the club: American sports tycoon Stanley Kroenke and Uzbek billionaire Alisher Usmanov, through his investment vehicle Red and White Securities.
While speaking with IR magazine, Payton refused to divulge details of how many users had joined up to AFS, and how much they had put in. This is because, at the time of writing, AFS had not yet bought any shares and doesn’t want to give potential sellers too much information about likely demand resulting from the fanshare scheme. ‘I don’t want to give the overall figures as we are going to have to buy the shares in the open market now,’ Payton explains.
AFS’ position is that, at present, there should be enough supply to meet the demand of its members, as there are many shareholders out there who will only sell their stakes on to fellow fans. If the scheme proves successful, though, AFS says it may have to go into negotiations with the club and its main shareholders to try to secure a greater supply. It remains to be seen how many of those shareholders might assist. AFS’ stated purpose is to prevent any one individual taking over the club, and this may clash with the ambitions of Kroenke or Usmanov.
For now, the club itself is completely behind the scheme. Not only has it fully endorsed AFS, it has also promoted it in its literature and at the Emirates – Arsenal’s home stadium – during games.
‘A copy of our initial marketing leaflet went out to 180,000 Arsenal fans in the pre-season membership pack,’ explains Payton enthusiastically. ‘Arsenal is promoting Arsenal Fanshare on the LED screens around the pitch before the games, and it is promoting it on its website. The marketing time support is huge.’
One thing Payton – and AFS – is keen to point out is that fans should not view this in any way as some kind of financial investment. ‘It is promoted and recommended as a custodianship investment,’ he states. ‘We make it very clear: do not buy fanshares to trade equity in Arsenal. Buy them because you want to own a bit of the club, because that’s your custodianship; it’s the long-term future of the club.’