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Has David Dein's big gamble to control Arsenal backfired?

Alisher Usmanov seems to change his mind as often as Tottenham Hopeless are snubbed by potential new managers these days, but his latest charm offensive on the Arsenal board and supporters isn’t exactly susprising.

The Uzbeki-born billionaire, who now has a Russian passport, has sunk more than £120 million of his money into acquiring a 23% stake in Arsenal, making him the club’s second biggest shareholder behind Danny Fiszman, who controls a 24.1% stake. While I’ve no doubt Usmanov will soon become our biggest independent shareholder, I remain confident that the incumbent board know what they are doing and are resolute in not selling out to any foreign investors.

For his part, Usmanov has been quoted in numerous articles over the past couple of weeks about wanting to buy Arsenal. Then he reportedly said he didn’t want to own the club outright. Then he did. And latterly he seems to be saying he is a long term investor, he wants to make piles of cash from his investment in the club, but that he wants to work with the board to improve the business and, therefore, increase the value of his shares.

If you’ve seen any of the newspapers today (and if you haven’t, check out our news review here), then you’ll know that Usmanov yesterday said he was willing to part company with David Dein if the former Arsenal vice-chairman cannot repair his relationship with the club’s hierarchy.

Dein fell out with his boardroom colleagues spectacularly when he helped American sports billionaire Stan Kroenke acquire a 12% stake in the club and advocated a sell-out to the Denver-based businessman. That resulted in Dein being ousted from the board because of “irreconcilable differences” with his fellow directors.

Convinced that a billionaire owner is needed for Arsenal to compete at the highest level in Europe, Dein then sold his 14.5% stake in the club to Usmanov, thereby further driving a wedge between himself and the Arsenal board, but also alienating himself from Kroenke, who was reportedly furious that he was blocked from buying Dein’s shares.

Now, far be it from me to plagiarise someone else’s work, but there was an excellent article in Monday’s Evening Standard by the paper’s city editor, Chris Blackhurst, that almost predicted Usmanov’s latest move. I can’t find a cyber link to the story, so I’ll summarise the Standard’s article here...

Basically, Blackhurst drew a parallel between Dein selling his 14.5% stake in Arsenal to Usmanov, with the late Tiny Rowland’s move to sell his 29.9% stake in House of Fraser to Mohammed Al Fayed in the mid 1980s.

For those of you unfamiliar with the latter deal, Rowland was facing a monopolies commission inquiry, but thought if he sold his shares to Al Fayed he could buy them back later to fulfill his dream of a House of Fraser takeover. However, Al Fayed didn't stick to the script and seized upon the opportunity to buy the department store chain himself, including the jewel in its crown, Harrods.

The point being that Dein may have made the same fatal mistake that Rowland made. With no shareholding to leverage, Rowland was left powerless and spent the rest of his life futilely trying to get his foot back in the door.

Despite Dein being chairman of Usmanov’s Red & White Holdings, the comparison could not be clearer. Arsenal’s former vice-chairman may be £75 million better off, but with no shares in the club he loves, he might just have got into bed with the wrong investor.

There have been many derogatory things written about Usmanov, some of them scurrilous and some, no doubt, true, but I don’t think even he would deny that he is a ruthless businessman and if he believes David Dein will be a hinderance rather than a help to whatever his Arsenal ambitions are, then he won’t hesitate in distancing himself.

However, if that is the case, don't be too surprised if Dein scrambles to reacquire some Arsenal shares himself, bearing in mind that a 5% stake, if added to the current board's combined 45.5%, would absolutely secure the club's ownership remaining English. Whether the board would entertain such an offer from the former vice-chairman is unlikely, but the way the ownership battle is constantly developing, "never" seems to be a throw away word.

Do you think David Dein has miscalculated his gamble to become Arsenal’s supremo? Share your opinions on the ongoing takeover rumours here

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Posted by Gordon Masson on October 3, 2007 1:20 PM in Debate of the Day| News
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