When Stan Kroenke first joined Arsenal's board in September 2008, the club had enjoyed a trophy-laden golden decade the likes of which they had not experienced since the 1930s. A lot has changed in the 10 years since.
Kroenke's initial accession to the board was as a minority shareholder, but he has held a controlling stake at Arsenal since 2011. Now he is set to make the club a wholly owned subsidiary of his Kroenke Sports & Entertainment (KSE) business as Alisher Usmanov agreed to sell his 30.05 percent shareholding for £550 million ($697.9m), triggering the mandatory purchase of another £33.3m ($42.4m) of shares belonging to small shareholders.
Here is how Arsenal got to where they are, and what comes next.
Q. How did Kroenke buy his shares?
A: Kroenke began building his stake in Arsenal in 2007. First he bought the 9.9 percent holding belonging to Granada Media and topped this up with shares that had belonged to the club's largest single shareholder at the time, the late Danny Fiszman, who had not known he was selling to Kroenke. At the time the American was involved in a race for shares with Russian billionaire Usmanov and his co-investor Farhad Moshiri, whose Red & White Holdings had built a 21 percent stake by May 2008.
Committed to a plural ownership model for the club, and to prevent the club falling into private hands, the directors issued a moratorium on major share sales to all but "permitted persons." Ultimately, in 2011, that cold war ended with Kroenke acquiring 32 percent of the club's equity to add to the 29.9 percent he already held, the bulk of them from Fiszman, who was by now terminally ill.
Q. How is he buying the 30.05 percent from Usmanov?
A: Kroenke's overall acquisition of Arsenal has been achieved by him paying a total of roughly £1 billion ($1.28bn) for the shares, which are now valued at £1.8bn ($2.29bn). The bulk of the funds he used for the purchase was raised through debt.
The latest 30.05 percent stake from Usmanov is costing £602.4m ($768.2m) and 92.5 percent of the funds (£557.0m or $710.8m) is being raised through a loan with Deutsche Bank. The offer stresses that "the payment of interest on, repayment of, or security for any liability (contingent or otherwise) will [not] depend on the business of Arsenal."
In plain English, this means the club will not have to pay or be liable for the debt.
Q. What about the rest of the shares?
A: Usmanov was not the only remaining shareholder. There remained 1,781 shares in private hands, many of whom, such as the Arsenal Supporters Trust, do not wish to sell. Many are upset that Kroenke's bid of £29,419.64 per share undercut the price at which they had been trading on the open market of £37,000. Others consider their shareholdings in the club they support to be a priceless, emotional investment and not a financial one.
The Trust is taking legal advice to explore whether it will be possible to block Kroenke's compulsory purchase of their shares under the City Code.
Q. What does it mean if Kroenke owns 100 percent of the club?
A: Although this is not a naked leveraged buyout such as the Glazers' controversial hostile takeover of Manchester United in 2005, there are similarities. Arsenal is about to become a wholly owned subsidiary of KSE, just as United belongs wholesale to the Glazers.
Following Kroenke's purchase, the club is valued at £1.83bn ($2.33bn) and, with only £56m ($71.5m) of net debt at the last count, that gives KSE just under £1.8bn ($2.30bn) of net equity in his business.
It is the KSE business as a whole against which the borrowings are secured, but a very substantial part of that is Arsenal Football Club. If at any point the KSE gets into trouble with its borrowings, then its constituent companies will clearly be affected.
Q. How has Kroenke bought his other sporting franchises?
A: Very little of the financial detail around KSE is known, since it accounts through the secrecy jurisdiction of Delaware. But it is clear that it has an enormous appetite for debt-fuelled growth. It took full control of the St Louis Rams shortly before buying Arsenal, which it has since moved to Los Angeles, and it is building a new stadium near Hollywood that some estimates have said will cost $5bn (£3.92bn).
Normally NFL teams are allowed to borrow a limited amount but the league made a massive exception for the Rams, lifting its limit to $2.25bn (£1.76bn): 2.6 times higher than for any other franchise.
To accommodate all this debt, KSE's U.S.-based sports businesses certainly throw off a lot of cash. Earnings before interest payments, tax, depreciation and amortisation (EBITDA) at KSE's NBA basketball team, the Denver Nuggets, were $49m (£38.4m) in 2017, according to Forbes.com. At the LA Rams, EBITDA was $82m (£64.3m). There is of course effectively no transfer market in American sports, unlike in European soccer.
Q. Will Arsenal have lots of money to buy players, then?
A: In 2009-10 they made a net transfer profit. Since then, the spending on player transfers has steadily risen to a massive £102.5m ($130.8m) in 2016-17, the latest season for which data is available.
Over that eight-year period, the net cash expenditure on transfers was £227.4m ($290.2m), or £28.4m ($36.3m) per year on average.
Transfer spending has not abated over the past season or so either. In the second half of the 2017 summer transfer window, a net £15.2m ($19.4m) was spent on transfers, according to the interim accounts for November 2017.
According to estimates by transfermarkt.co.uk, this summer's transfer spending was £71.1m ($90.7m), offset by only £5.8m ($7,4m) of transfer income from players leaving. Added to that was the £57.4m ($73.2m) fee for Pierre-Emerick Aubameyang, again offset by the £35.6m ($45.4m) raised from departed players.
All in all, the estimated player-trading deficit since January 2017 is £87.1m ($111.1m), although how much this will add up to in terms of cash impacts on the accounts for 2018 and 2019 is as yet unclear. The amount spent on future transfers really depends on Kroenke's future authorisation of deals but it is unlikely to match other Premier League rivals.
Q. And what about new contracts for players like Aaron Ramsey?
A: Another element that has not filtered in to declared figures is the impact of the new acquisitions on the wage bill, along with the cost of new deals for established stars.
Mesut Ozil's new wage is reportedly more than £15m ($19.1m) a year, Aubameyang's above £9m ($11.5m), Lacazette's over £7m ($8.9m) and Henrikh Mkhitaryan's more than £6m ($7.7m). If true, then those four players alone have combined wages of around £38.5m ($49.1m), or about 10 percent of the club's entire revenues.
The wage bill has consequently ballooned to an unsustainable level of more than 60 percent of turnover, even before Ramsey has signed. This has led to a scramble to shuffle high-earning players out the door, but that does not generate much value in the transfer market.
West Ham acquired Lucas Perez for £3m ($3.8m) with a further £1m ($1.27m) in potential bonuses as Arsenal paid off his contract with the balance of the transfer fee, because the Hammers were not prepared to foot his £80,000-a-week ($101,600) wages.
Q. So are Arsenal's finances in good health?
A: Arsenal's spending had already begun to exceed their means. Even before missing out on Champions League football for 2017-18, Arsenal's cash balances, after some years of substantial growth, were shrinking significantly.
The £46.3m ($59.1m) cash deficit of 2017-18 is not something a self-sustaining club like Arsenal can afford for many years in a row. Yet the improved transfer activity of the past couple of windows and the new wage commitments both suggest a decision has been taken to push the available resources hard.
In the early part of 2017-18, sales of development properties raised £14.5m ($18.5m). Had they not, then the £19.7m ($25.1m) net operating cash inflow of the first six months of the year would have been commensurately lower. There is still a stock of £8.1m ($10.3m) worth of property on the books and if similar margins can be realised from that, then there could be upwards of £35m ($44.7m) more to come in property sales.
But that would still not cover the absence of even one season's Champions League football.
Q. Can the club afford to miss out on the Champions League again?
A: Arsenal's estimated turnover dipped by a little less than £20m ($25.5m) to about £400m ($510.4m) in 2017-18. Yet costs rose, cutting the £52.0m ($66.4m) profit of 2016-17 in half to around £25m ($31.9m). The cash inflow will have added an estimated £10m ($12.8m) to the overall balance.
Assuming revenues stay flat in the current season, the rising wage costs will likely wipe those profits out altogether, with additional spending on transfers, debt interest and repayments, tax and infrastructure shrinking the cash balance by a further £30m ($38.3m) or £40m ($51.0m).
A figure at the upper end of that scale would eat up more than 25 percent of all the cash Arsenal have. And if that eight-figure gamble does not pay off this year with a return to the Champions League, there could be trouble ahead.
An expected new shirt deal with Adidas from next season will reportedly double revenues on the current Puma agreement to £60m-a-year ($76.2m). And the Emirates title-sponsorship extension, also in 2019, will add another £20m ($25.4m) to Arsenal's bottom line. But in comparison with other clubs, Arsenal do not earn much else from their sponsorships. In 2016-17 Arsenal's commercial revenue was £90.9m ($115.4m). Manchester United's, by contrast, was three times higher at £275.5m ($349.7m). The gap is only growing: in the week Kroenke's takeover took place, United announced two new global partnerships, their top-level sponsorship.
Q. What happens next?
A: Champions League riches would lead to Arsenal being self-funding again, without having to dip in to the cash reserves. But if they do not return to the competition this year, the club will recalibrate their sights.
It could mean an extended period of financial frugality, while others in England who are unconstrained by the limits of a self-sustaining model, such as Everton -- whom this week Usmanov ironically declared himself open to investing in -- Wolves or Leicester, perhaps, burst past them.
Kroenke is a self-declared "investor," for whom football is a financial, not emotional activity. Most investors have an eye for a return, a yield in the form of dividends, and Kroenke is no different. A full takeover means are no other shareholders to vote against that happening.
Kroenke has demonstrated from his debt-geared share purchases that he has no taste for spending his own money. His acquisition of Arsenal has been conducted through loans raised in a zero-interest-rate world at an epochally low cost. That paradigm is now changing, though, with interest rates rising in the U.S. and the UK.
There may come a time where the interest rate could make KSE's borrowings unsustainable and if that happens then the costs may be passed on to its subsidiary sports franchises like Arsenal, with cash being siphoned upwards towards the parent company.
For now, though, it does not look like there is much profit at Arsenal to pass up the food chain. Their fans must hope interest rates stay low for a good few years yet.