Ownership Representation Influence
Sharing in the future of Arsenal Football Club


Minuted report of Arsenal AGM - full breakdown of all discussions

Posted Friday 27th October 2017

Thank you to all the shareholders who joined our call to oppose the nominations of Sir Chips Keswick and Josh Kroenke to the Board. The vast majority of custodian shareholders present supported this action. The AST feels that this action has sent a strong message to the Board that governance reform is needed as set out in our previous statement.

You can read a fuller account of the AGM in most media outlets today including coverage by Henry Winter and Rob Harris.

Set our below is a detailed minute produced by AST member Tim Stillman, as opposed to a verbatim account. Tim has reflected the comments and events faithfully. You can read his own personal opinion of the meeting here.


The 2017 Arsenal Annual General Meeting was attended by, approximately, 130 shareholders and media in the Woolwich Suite of Arsenal's Club Level facility. In fact, there weren't quite enough seats for everybody.

The FA Cup and Community Shield trophies were on display as the board of directors climbed to the stage to take their seats, the presence of both trophies noted by chairman Sir Chips Keswick in his opening address.

The chairman explained that all questions had been submitted in advance and, where necessary, questions would be grouped together by theme for the sake of brevity. Full questions were displayed on screens around Club Level for people to see and so that the chairman could summarise them where necessary. But all submitted questions were to be addressed.

The first order of business was to answer questions concerning the accounts.

Q: 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.

Answer summarised below.

-          Increase in support structures around the club, such as coaching staff, performance staff, player salaries, the women's team and the academy.

-          More commercial partners require greater outlying costs to support. Ivan is comfortable that the commercial revenue far outstrips the cost required to service partners.

-          Increased cost to support pre-season tour of the US in 2016.

-          An additional £4 reduction on all away tickets, a cost met by the club.

-          Increased business rates

-          The need for greater security measures in light of increased terrorist threat around the capital.

-          One off costs, including dilapidation costs off lease expiring on property site

-          Only related company costs are to Arsenal Broadband, which are disclosed in the accounts.

Q: 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 2nd to 5th 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?

Sir Chips Keswick's answer is summarised below:

-          Bonuses are decided by the remuneration committee, chaired by Lord Harris and attended by Sir Chips Keswick.

-          Based on wide range of financial targets based over longer period of time than one season.

-          Upgrade of Hale End Academy facility and London Colney

-          Remuneration must be competitive with other big football clubs in order to continue to attract talent.

-          The chairman outlined his belief that Ivan Gazidis is "doing a first class job that I and the board are thankful for."

The formal part of the meeting then followed, with 5 resolutions put before the shareholders.

Resolution 1 to receive the accounts, carried.

Resolution 2 to reappoint Deloitte as auditors, carried.

Resolution 3 to authorise the directors to determine the remuneration of the auditors, carried.

Resolution 4 to reappoint Sir Chips Keswick, who retires by rotation, as Chairman. The resolution was defeated by a show of hands from the floor. Club Secretary David Miles invited the floor to vote again, with the proviso that the board held proxies voting in favour of Sir Chips' re-election worth 97% of the total vote. The resolution was again defeated from the floor and, in accordance with governance procedures, a poll was sought and voting cards handed out to the floor.

Resolution 5 to reappoint Josh Kroenke as a Director, who retires by rotation. The resolution was defeated by a show of hands from the floor. Club Secretary David Miles invited the floor to vote again, with the proviso that the board held proxies voting in favour of Sir Chips' re-election worth 97% of the total vote. The resolution was again defeated from the floor and, in accordance with governance procedures, a poll was sought and voting cards handed out to the floor.

The results of both polls will be made known at a later date, but with 97% of the proxies in favour of re-electing Sir Chips Keswick and Stan Kroenke, the motion was carried.

At this point, CEO Ivan Gazidis spoke briefly, but promised not to subject the audience to "death by powerpoint" as in previous years, but showed a video showcasing some of the positive work Arsenal Football Club does, investing in its women's team, facilities, people and communities- both in Islington and overseas. Initiatives highlighted in the video are summarised below:

-          Player purchases

-          Investments in London Colney and Hale End facilities, as well as an upgrade in Club Level facilities

-          Disability platforms, such as the club's new sensory room and the Arsenal for Everyone matchday against Brighton & Hove Albion recently

-          The club's new Innovation Lab

-          The club's commercial revenue for last year totalled £117m, with £100m on matchday revenue. The remainder of the £424m revenue was made up by broadcasting rights.

Following the video, Arsene Wenger addressed the audience with a short speech, which I have summarised:

-          Arsene says he spends 99% of his time trying to keep fans happy. "Looking at today, that is not easy!"

-          Mr. Wenger says that, for him, a club is about the past, the present and the future and that football is always a little ahead of society in its attitudes and culture.

-          He admits that "the weight of the present is heavy" and that each game brings absolute judgement.

-          Arsene says he has "guided the club with one idea- it is about the values of the club created in the past." He says he feels obligated to protect and respect those values with "integrity and total commitment", adding "I will not betray the people that gave these values."

-          Says that the present and winning is the "essential part of my job", but that he also wants fans to be entertained by the style of play.

-          Arsene stresses that he respects the commitment of the fans, but there is a danger in the current climate of instant gratification. He asks that fans "be behind the team."

-          One of Arsenal's values is giving a chance to young people.

-          He outlines that the concentration of finances in the modern game is very small and the game is becoming more competitive and more predictable as a result.

-          Wenger finishes by saying that "my hunger and my desire are stronger than ever" and says "whatever happens to me one day, I will always love this club."

The pre-submitted questions that do not concern the accounts are addressed at this juncture. Again, I have summarised the questions and the answers.

Q: What are the club doing to address the ticketing situation with the recent game against FC Koln, where many thousands of seats in the home end were taken by visiting supporters?

IG: Controls are in place to prevent this, but touts purchased and sold tickets at a very high volume for this fixture. Ivan admitted that many made their way into the wrong hands as a result of the club's 'Friends and Family' scheme, which would be reviewed in light of the events of the evening.

He confirmed that many memberships have been cancelled due to links with touting on the night, but investigations are continuing and more memberships will be cancelled if found guilty of this practice. Around 1,000 memberships a season are cancelled as the club attempt to fight touting.

Q: What steps are the club taking to compete for the Premier League title?

IG: All resources are made available for the club to spend on improving the team, be it on playing staff, coaching staff or on facilities. Over £200m has been spent on transfers in the last 2 years and £40m on facility upgrades, as well as new coaching staff, performance staff and additions to the negotiating team.

Q: 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?

IG: Arsenal have, but Bayern operate in a very different football environment. Many clubs come to Arsenal too, who are seen as a standard bearer. Most big football structures have a chief decision maker, be it the Sporting Director or the Head Coach. At Arsenal, the Head Coach is the chief decision maker, supported by a wide network of support staff.

Q: Would Mr. Kroenke consider increasing his engagement levels with the club or else selling his shares, because he seems to care little?

SCK: "You are wrong." Mr. Kroenke in constant contact with myself and the board and he totally shares our ambitions for the club. As to whether he will sell his shareholding, that is a matter for him, but I would point to the statement made by SKE on the 22nd May this year.

Q: 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? 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?

SCK: This is a diverse, modern organisation and we were the first football club to achieve the advanced equality standard, a project driven by this board. We are aware of the need to regenerate as we inevitably get older. All of the directors want what is best for the club and its shareholders. Alisher Usmanov has not been offered a place on the board and that policy will continue.

IG: Sir Chips has huge experience of leadership and board positions in a number of high profile organisations, including the Bank of England and Hambros Bank. He brings a wealth of knowledge and experience and is a lifelong Arsenal fan. He is an independent and forthright voice, not beholden to anyone. The board is lucky to have such a wealth of experience in a committed Arsenal fan.

Q: The Director's Box often appears to be half empty, can the club take steps to fill it, perhaps by holding a raffle to invite shareholders or other club members to sit in it when seats are not filled?

IG: All of the seats are allocated. Occasionally people cannot attend at the last minute, but all seats are vouched for. Club uses Directors Box seats to invite representatives such as 'Kick It Out', 'Show Racism the Red Card', we use it for distinguished former players, current players in the women's team as well as Directors of the opposing team and their guests.

Q: Can the club consider its approach towards ticket pricing to make it more affordable?

IG: All stadium revenue is reinvested into the club and we have to strike a balance between making it affordable for our fans and keeping the team competitive, but we continue to review our pricing and provide cheaper tickets in the Europa League, the Carabao Cup and for teenagers.

Q: 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?

IG: Commercial revenue grew again this year and Arsenal has a record number of secondary partners. The pre-season tour to Australia and China was the biggest the club has put on to date. The board cannot discuss negotiations with Puma publicly. In 2012-13, commercial revenue was £62m, this year it is £117m.

Q: Can the club say more about its transfer policy. Players such as Gabriel and Lucas Perez have been disregarded quickly and Arsenal tried to get rid of Shkodran Mustafi after one season too.

IG: With regard to transfers, there is a lot of inaccurate and incomplete information that drives opinion and narrative, which leads to a lot of noise. Arsenal did not try to 'offload' Mustafi this summer.

But there is an objective, industry standard to compare money spent against football performance (that is, league position, league points and trophies won). Arsenal are one of the most consistently overperforming teams in the world against this measure. But we acknowledge that we have to find ways to perform better and we will continue to do that.

Q: 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?

IG: Again, there is lots of incomplete and inaccurate information on this issue. People outside of the club do not know what goes on in those negotiations and what demands are being made. One of the more emotive AGMs was after we sold Robin van Persie and we were told we were only serious about making money.

This time, with Alexis Sanchez and Mesut Özil we have taken a different approach to give the team the best chance to compete. Transfer fees are going up and so are salaries. Many clubs are facing this issue.

Relatively, the financial impact of Champions League football is not as big now due to increased commercial revenues and broadcast money. But obviously the main thing is that it is a sporting disappointment not to be in it, but recruitment of players not dependent on it. If it were, Arsenal would still be considered a good club to come to considering our unrivalled record of qualifying for it.

Q: 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?

IG: We have held season ticket prices for 9 out of our 12 seasons at the Emirates and we will continue to try to make tickets affordable. But no decision has been taken for 2018-19 yet.

Q: 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?

IG: Our ticket exchange system is working well. Over 100,000 people sold or transferred tickets through our systems last season. The board has looked into the idea of home credits, but don't see it as a total solution. Instead we are focussing on other initiatives, such as donating unused seats to the Arsenal Foundation. We will also look to do greater promotion of existing schemes.

Q: 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?

IG: Arsene Wenger does have targets, but it isn't helpful to the club or their aims to make them public. We also don't want to publicise a pre-existing schedule for 2019 either, because it would create innuendo and speculation that would not be helpful to the club.

Arsene has great experience, values and quality. Winning 3 out of 4 FA Cups is impressive and something we can all be proud of. But our ambition is to win the Premier League. It is impossible to quantify how much is needed to win the league, many clubs have spent many billions trying to win it. More important is to invest well. We have to excel more than every other club in every single area to do so and we will continue to try and do that.

Q: 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?

IG: Arsenal support the collective model and the competitiveness it creates. The Premier League is one of the most competitive in the world and that accounts for a large part of its popularity. The team that finishes top of the Premier League earns just 1.5 times more than the team that finishes bottom in the current overseas rights model.

In France, it is 3.8 to 1 and in Germany, the league closest to the Premier League's egalitarian structure, it is 3.1 to 1. Premier League teams need to be able to compete with biggest teams from other leagues so that an English club can win the Champions League again. There were no Premier League players named in the latest FIFPRO World XI. Under the new proposal, the Premier League would remain the most egalitarian in Europe.

So concluded the pre-submitted questions. Sir Chips invited people to the microphone to ask unvetted questions, though he admitted that the period for unvetted questions would be abbreviated due to the length of time taken to vote on Resolution 4 and 5 of the meeting.

Q: The AGM is an important meeting for shareholders to question the board and should not be regarded as an inconvenience. We appreciate the need for pre-submitted questions so we can have full answers. But lots of questions arise as a result of the answers and time ought to be taken to address those questions. Can the board commit to making the meeting half an hour longer next year?

SCK: That wasn't a question, you made a statement. (After some shouting from the floor, Sir Chips readdresses the question). We will consider it.

Q: Every year I ask whether the board will assess its composition and the diversity of its composition and every year I am told 'we will look into it.' Can the board tell me what it is doing to assess this?

Sir Chips invites the next question without answering, which draws an angry reaction from the floor. Mr. Gazidis and Mr. Keswick plead with the crowd to stop shouting. The questioner asks the question again. Sir Chips declines to answer.

Q: Can Stan Kroenke say something to his fellow shareholders? Can he talk to us about his vision?

SCK: I am afraid that is not on the agenda, but if you read the Daily Telegraph today you will find out.

After further commotion from the floor, the chairman declares the meeting closed to the sound of booing. After which, Mr. Keswick invites the floor to "write in if you have a problem.