Saturday, March 31, 2007

The Great Escape?

As I correctly predicted yesterday, an edgy affair would be sealed 1-0 by a Darren Bent goal. The transformation in our fortunes under Pards has been remarkable with virtually the same squad of players that his predecessors 'enjoyed', and arguably with worse injuries. If you strip out the Arsenal/Man Utd/Chelsea fixtures, we have taken 18 points from the other 9 'winnable' games under Pards, and have been beaten only once (by 'Boro).

Today's game threatened to give me heart failure; it also had me turning to religion for the first time in my life. My father-in-law is in NYC for the weekend, and being a slightly more pious sort, he asked if I minded if he said a small prayer for young Toby Charlton, the baby who doesn't know what it is to witness an Addicks defeat. "Of course not," I replied, secretly and selfishly putting my own interests before my son's; after all, with six minutes left to play, some divine intervention might indeed be required. The prayer was duly delivered, and within seconds the ball was on the penalty spot. Glenn Hoddle, eat your heart out.

Whether we stay up or not, Pards has given us our pride back and I really can't praise him highly enough. Everything he has said in the media, and all that we have witnessed on the pitch, suggests he is a wonderfully competent manager, and I think he knows it too. We finally have a worthy successor to Curbs, and his abilities clearly undermine the two sorry managers that failed in this regard. I just pray (enough religiosity - Ed.) that we can hang onto him in the event of the relegation that seemed a near certainty before his arrival, yet now is perhaps just a 50/50 proposition.

For me, two examples from today emphasise his tactical nous during a game we probably never quite deserved to win. Firstly his willingness to quickly acknowledge the starting formation was suboptimal, and to switch at half-time to two genuine strikers. Second, he proved he will be no hostage to players feelings by withdrawing Darren Ambrose, just minutes after putting him on as a substitute. The game had changed, and Ambrose's presence was no longer additive. Such as the emphasis of the team over the individual that Pards has engendered, the radio suggested Ambrose accepted his fate with just a wry smile.

Sheffield United's defeat leaves them just a point behind with identical goal difference, and their momentum and confidence is being sapped away. If we can garner a draw at Man City on Good Friday, we will find ourselves outside of the drop zone for the first time this season, a near unthinkable prospect back on Christmas Eve.

Fulham's late deflected equaliser was a blow, whilst West Ham are frustratingly refusing to give up (though defeat for 'Boro implies they are far from safe). Meanwhile, Aston Villa's game on Monday suddenly takes on monumental importance for that supposed 'big club' and their billionaire owner. Man City however are now pulling clear of the drop zone (a defeat against us not withstanding), which paradoxically may not be such a bad thing since our game there is not as critical for them as it once threatened to be. Oh, and keep an eye on Newcastle.

Newcastle, eh? When Pards spoke about dragging teams in, I don't suppose they would have been in most people's thoughts despite their volatile form. Four games ago they were 16 points ahead of us, now the gap is down to 7. And who do they play next? Yep, Sheffield United. I'm beginning to rather enjoy this relegation business.

Friday, March 30, 2007

Wigan preview

During the 48 days since we exited Old Trafford after our battling defeat, we have played just three times whilst United have played nine times. By my calculation, on an hourly basis that implies that the likes of Matt Holland are possibly earning more than Wayne Rooney or Cristiano Ronaldo. Heady times indeed.

The Charlton players should thus feel both suitably rested and remunerated for the vital visit of Wigan Athletic. The game is not being shown here in the US, the programmers deciding for example that Fulham vs Portsmouth is far more interesting. Worryingly, by way of precedents, I have seen all but six of our games on the box this season, and those half-dozen have yielded precisely one point (Watford away).

The main fitness worry concerns Alexandre Song who has been an extremely impressive combative presence in midfield. Then again we survived and indeed prospered after he departed the fray against Newcastle, so hopefully we will cope again. Zheng Zhi meanwhile surely deserves another opportunity 'in the hole' behind Darren Bent, implying a bench-warming afternoon at best for the remaining strikers. Meanwhile at the back, Pards must decide whether to recall Ben Thatcher in place of the Herminator, though the Icelander's muscular presence at set-pieces might be a deciding factor.

Derek 'Killer' Hales (KillerWatch© -£271) enjoyed perhaps his finest post-retirement moment two weeks ago, correctly predicting a 2-0 victory at tasty odds of 10/1. With a spring in his step, and the chance to bring his season-long record into the black, Killer is predicting a 2-1 victory for the Addicks at 15/2. However I'm going to predict an edgier affair with bookings galore, but most importantly a repeat of last season's scoreline. NY Addick predicts Charlton 1 (Bent D), Wigan 0. Att: 27,104.

Kish of Death

The eyes are puffy and bloodshot. The hair is shaven like a prisoner-of-war. And as if to taunt him, he is forced to parade before the world's media wearing the colours of his beloved club. It is clear today that the Charlton hostage crisis has moved into 'a new phase.'

The nine Charlton players are being held hostage by a myriad of lower league clubs, and were today named as Radostin Kishishev (pictured), Jonathan Fortune, Simon Walton, Lloyd Sam, Kelly Youga, Alistair John, Myles Weston, Nathan Ashton and James Walker.

Some like Kishishev are being held by failed regimes (Leeds United). Others like Simon Walton have been captured by clubs led by a despot dictator (Cardiff City). And yet despite the media furore and the demands of thousands of Charlton fans, Addicks boss Alan Pardew is accused of wanton apathy, seemingly unconcerned ultimately about their safe return.

And in a potentially unlawful act, Radostin Kishishev was today paraded before Yorkshire Television, and forced to read out the contents of an allegedly personal letter:

Dear Mrs Kish

I am writing to you from Leeds where I am being held. I will try to explain to you the best what has happened.

We were out in the Charlton training fields when Mr Pardew asked us to practice our long-range shooting. Unfortunately some of my goal attempts trespassed into the London Boroughs of Lewisham and Bromley. I wish they hadn't because then I would be home with you all right now.

I want you all to know that I am well and safe. I am being well looked after, I am fed three meals a day (except matchdays, when we just have chicken and beans), and I'm in constant supply of fluids.

The people are friendly and hospitable, very compassionate and warm. The locals are very fond of an animal called a 'whippet' (similar to a greyhound), yet they refer to their wives as 'pet.'

Please don't worry about me. I'm staying strong. Hopefully it won't be long till I'm home and with a present from the people of Leeds, perhaps a stolen car stereo or a pair of hubcaps?

All my love, Radostin.

Thursday, March 29, 2007

Blogger's Night

As has been well-documented elsewhere, the club invited an assortment of bloggers and other pundits to The Valley last night for beer and sandwiches with Peter Varney. It must have been reminiscent of those old meetings between politicians and trade unionists, with Varney cast as the power broker and Frankie Valley as Arthur Scargill.

It was one of the rare occasions during the past three years when I've wished I lived in London, but then again I suppose I wouldn't have a blog called New York Addick (and probably no blog at all). It is frustrating (albeit understandable) that last night's discussion was strictly off-the-record, but hopefully a similar event will be organised (perhaps a convention of International Addicks, held somewhere like the Bahamas).

Pedro 45 has written a summary of the evening's events, although tantalisingly left unanswered the single question that keeps me awake at night - do the players and management actually read the blogs? It would be surprising to me if the management (especially the Board) didn't at least visit a selection of them from time to time. Combined with the comments left by readers, and the message boards like Charlton Life, they represent a solid cross-section of real time customer views, which are likely far more valuable than any club-initiated market research.

This type of progressive initiative is very typical of our special club, and helps to explain just why Charlton does have such a wide array of interesting and knowledgeable bloggers. I think it takes a certain type of person to have developed a fanatical passion for Charlton given everything we have been through in the past several decades. One of those confessed fanatics (Chicago Addick) discussed this in more detail here.

Given the difficulties we have had on and off the pitch since last May, I think in general the tone across the various blogs has been restrained, and from a personal standpoint there is only one post I genuinely regret. It was written in the aftermath of the Wycombe defeat, and thus might be considered 'mitigating circumstances'.

If you want to see an example of a club where the relationship between the fans and Board is slightly less amicable, check out the excellent TopSpurs website. It is written by Jim Duggan, a fanatical Spurs fan and arch cynic, and someone with whom I have had several pleasant correspondences about our two clubs and football in general. When a Charlton blogger sees fit to write the equivalent of, "..I hate them (the owners) more than I hate Arsenal.." and "..Spurs are a zombie which died a while back and has been taken over looking similar to what it was before but dead inside..", then we'd all better be careful about what's in those sandwiches.

Wednesday, March 28, 2007

Arcade Fire

(not Charlton related)

Thanks to a miscommunication with the immigration officer that welcomed me back to the US last weekend, tomorrow will be the most pointless day of my life. Instead of stamping my passport with 'March 31st 2009', he instead stamped it with 'March 31st 2007'.

Despite my best efforts to get the mistake corrected, I have been advised to leave the country and return again before Saturday to ensure I don't inadvertently become an 'illegal immigrant'. It's a complete waste of time and money, but I'm not yet ready to change my name to José and clear tables in New York restaurants. Hence tomorrow I will be flying to Montreal, hanging around in the airport for a couple of hours and then flying straight back home again. What this administrative cock-up is doing to my 'carbon footprint' I daren't even imagine.

The only bright spot of this unexpected trip is that it affords me brief homage to the hometown of my favourite band of the moment, Arcade Fire. Their first album 'Funeral' is the most outstanding album I have heard in a decade, and their latest offering 'Neon Bible' again has me shaking my head in sheer wonder. Their music is dark, beautiful and overlaid with as many instruments as an orchestra; you will hate it the first time you listen to it, and then one day like me, you'll have an ephiphany.

After an inauspicious beginning, Arcade Fire slowly built a reputation that translated into genuine record sales, and generated a following that borders on fanaticism. It must be a frustration that the painfully mediocre Coldplay sell millions more records, but in fairness Chris Martin had the humility to declare Arcade Fire to be, "..the greatest band in the history of music." Then again I think a band needs to sell a critical mass of records to be taken seriously in the music annals, else an obscure band's 'genius' offering borders upon narcissism.

There is something special though about hearing an epic debut album, though it is usually tempered by a band's second offering. For example in recent years The Stone Roses, The Libertines, (yep, Daily Mail readers, that's Pete Doherty), The Strokes, and even Oasis produced impeccable debuts, yet each followed it up with solid yet unspectacular follow-ups.

However whilst 'Neon Bible' doesn't quite match the majesty of 'Funeral', I think Arcade Fire have just about met the near-impossible expectations they set themselves. In terms of back-to-back albums that actually generated some reasonable sales, I would consider them to be equal or even superior to, 'The Bends' and 'OK Computer' by Radiohead in the 1990s. However whilst Radiohead tend to leave me in a something of a hypnotic trance, it is hard not to be energised by Arcade's Fire,

There were some exceptional bands/performers in the 1960s-80s period of course, but productivity has been hampered by the short-termism of the labels and incessant touring. When bands like The Fall or Sonic Youth churn out dozens (of usually brilliant) albums, they very much become the exception that proves the rule, which is why I urge you to embrace Arcade Fire before they too 'burn themselves out'.

Saturday, March 24, 2007

Iranian Hostage Crisis: Blair Acts

With the Iranian hostage crisis threatening to become a full-blown diplomatic stand-off, under-pressure PM Tony Blair has contacted counterpart Mahmoud Ahmadinejad with a unique solution.

"I've asked President Ahmadinejad to consider a hostage swap," confirmed Blair, "...there are up to 15 young fit English men already in the Middle East and frankly of no use to anyone in this country whatsoever."

"I've enough knowledge of world history to appreciate that devastating and unnecessary wars can result from seemingly innocuous acts," mulled Blair, "...World War One began with the assassination of Archduke Franz Ferdinand, so it's appropriate perhaps that I'm offering up Rio Ferdinand."

"After they again shamed the nation with a bore draw in Israel, I have asked Major General McClaren to send his underperforming and overpaid squad straight to Tehran," the PM confirmed, "'s time to bring our soldiers home."

Friday, March 23, 2007

American Idol

"O, let us be gay for the spring is now here,
With its birds and its bees and its can of bock beer,
Its warmth and its sunshine so boundless and free,
Its sarsaparilla and sassafras tea."

You'll forgive me if I don't interpret Albert Stroud's poem too literally, but after last week's unusually late snowstorm, it seems that at last spring is indeed here. It has sadly also brought with it just a hint of the punishing humidity that New Yorkers find themselves strangely craving for during the depths of winter.

I've got an additional spring in my step this morning because my mother-in-law is finally moving out of our apartment after a three-week post-baby stint. When I first read Nelson Mandela's 'Long Walk to Freedom' I couldn't necessarily relate to it, but thankfully it seems, for no longer.

Also heating up, is the competition to find the next American Idol. I am usually pretty vociferous about the garbage served upon American television (and increasingly in the UK too), but I find myself unerringly drawn to this assembly of mediocre performers. Given the current obsession that programmers have for wheeling out C and D-grade celebrities for shows like 'Dancing With The Stars'. (Heather Mills anyone?), I'm happy to express my preference for never-will-bes over never-weres. Crucially too, American Idol casts Paula Abdul in a starring role, and for a relative youngster like me, she is very much the 45-year old it's ok to fancy.

However before you debate whether I've completely lost the plot, the competition does provide one of the most dynamic and interesting betting markets imaginable. Unlike almost every other event upon which one could gamble on the outcome, the winner of American Idol is decided solely (voting fraud aside of course) by the combined opinions of millions of Americans. Most importantly on Betfair the odds are dynamic and can be traded both ways, so profits can be taken (or losses realised) on the 'Winner' market at several junctures, without ever successfully predicting the winner (nor even bothering to have any bets in place when the final eventually comes around). Moreover it is made even more intriguing because as much as Simon Cowell might wish otherwise, the contestants receive votes for reasons nothing to do with their singing ability (no comment - Ed.).

As someone interested in both economics and betting, it is perhaps the purest form of the famous Keynesian 'beauty contest' that I have come across. In his analogy, entrants in a competition were asked to choose the six most 'beautiful women' from a selection of 100 photographs. Those entrants that picked the most popular face were entered into a raffle to win a prize. As a result, Keynes argued:

“It is not a case of choosing those [faces] which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees.” (General Theory of Employment Interest and Money, 1936)

Not only is his beauty contest analogy appropriate in my view for American Idol, but more interestingly each week there is a new calculation of 'average opinion' to be made because one contestant is voted off, requiring punters to wonder where 'average opinion' expects the votes for the rejected contestant to now end up.

Keynes was of course using the beauty contest example to describe the stock market, but the concept only applies in the short-run, since in the long-run a stock price will eventually equate to its intrinsic value. As the value investing guru Benjamin Graham put it:

"In the short-term, the markets are like voting machines, but over the long-term they are like weighing machines."

However unlike a stock price, the performers on American Idol have no 'intrinsic value' which they are approaching, albeit in a random fashion buffeted by the vagaries of sentiment. (Then again Keynes assured us we were all dead in the long-run anyway.) Thus take for example the incomparably awful Sanjaya Malakar. If American Idol was genuinely a singing contest, then the adrogynous Malakar would have been booted off the programme weeks ago so diabolical are his powder-puff performances.

However thanks to popular DJ Howard Stern's on-air backing for him 'in jest', there is enough momentum behind him to suggest that the 40/1 odds on his victory are generous in the extreme. I would be astonished if he won, but I am confident that 'average opinion' will begin to bullishly reassess its view on the 'average opinion' of Malakar, thus narrowing his odds accordingly.

There are now only ten contestants remaining, and if the A&R executives waiting on the sidelines had their way, they would push the detritus to one side and focus only upon the two performers who can actually sing, Lakisha Jones and Melinda Doolittle, leaving the remainder to ply their trade in the karaoke bars where they belong.

However frankly I couldn't care less who wins the show, I'm just grateful to Simon Cowell et al for creating this apotheosis of a betting medium, and express my regret that short of driving down to Altantic City, I can't get financially involved in this puritanical city, and must remain a mere unhealthily eager observer (and not just of Paula Abdul).

Monday, March 19, 2007

Charlton Athletic TV (CATV)

Following the success of MUTV and Chelsea TV, next week sees the exciting new launch of Charlton Athletic TV (CATV). With an initial target audience of 742 viewers, and an enviable distribution footprint in wealthy Kidbrooke, CATV offers unparalleled advertising opportunities to today's luxury lifestyle brands.

Here's just a taste of what viewers can look forward to:

Deal or No Deal: Players compete to persuade Alan Pardew they’re worthy of a new contract. This week: Jonathan Fortune.

Extras: Docu-soap focused upon players with no hope of a first-team berth. This week: Nathan Ashton.

Absolutely Fabulous
: A re-run of the 4-0 win over West Ham.

Last of the Summer Whine: Iain Dowie complains he didn’t get enough money to spend.

Casualty: A look inside the Charlton treatment room. (Warning: This programme may over-run).

The Weakest Link: In-depth profile of Bryan Hughes.

Comic Relief: A nostalgic look back at the careers of Charlton players past. This week: Jamie Stuart.

Neighbours: A comical look at the fate of local rivals Millwall (Warning: This programme contains scenes that may be disturbing to viewers in Bermondsey)

Drop the Dead Donkey: Pards contemplates the future of Jimmy Floyd Hasselbaink.

Bottom: A review of Les Reed’s reign as Charlton manager.

The Office: Fly-on-the-wall documentary set in Richard Murray’s office. This week: Murray laughs off Andrew Mills' request for a payrise.

Are You Being Served?: Charlton fans struggle to get a half-time pint.

What Not To Wear: Trinny and Susannah get to grips with some fashion disasters. This week: Charlton’s away kit.

Red Dwarf: A profile of Addicks starlet Lloyd Sam.

Prime Suspect: Charlton fans seek someone to blame for their current woes. This week: Alan Curbishley.

Teletubbies: starring Andy Reid, Ralph Milne, Neil Redfearn and Peter Garland.

The Gentle Touch: A discussion of Dennis Rommedahl’s tackling skills.

Men Behaving Badly: Secret cameras follow Luke Young and Jerome Thomas on a night out.

Parkinson: Assistant manager Phil conducts exclusive interviews. This week: Muhammed Ali.

Faking It: Painter and decorator Kevin Lisbie has just two weeks to convince the judges that he’s really a footballer.

The Young Ones: A review of recent players who have emerged from Charlton’s youth system. (Warning: contains Pathe News footage)

One Foot In The Grave: A review of the 2006/07 season so far.

Give Us A Clue: Iain Dowie is asked why he bought Djimi Traore.

I’m A Celebrity, Get Me Out Of Here: Danny Murphy insists upon a transfer.

Sunday, March 18, 2007

Chinese interest rates

Chinese rates of interest rose for the second time this weekend thanks to the exciting attacking exploits of national captain Zheng Zhi. An injury to Marcus Bent saw him thrust into a central position just behind Darren Bent (a role his manager used to fulfil successfully), and he transformed our fortunes scoring once, winning a penalty and generally being a thorn in Newcastle's side. I probably wasn't alone in viewing his signing as a cheeky way of selling a few shirts in Shanghai, but he looks completely comfortable at this level.

I missed the first 22 minutes of the game thanks to the inadequacies of Setanta Sports, but for the remainder of the first half we were generally second best to a mediocre Newcastle side. The sight of Darren Bent in the line-up was encouraging with Pards rightly acknowledging that yesterday's results effectively left him with little choice. However it was the injury to namesake Marcus which though unfortunate actually served to our advantage, allowing replacement Rommedahl to add some right-sided width and permitting Zheng the attacking cameo.

There are several things that impress me about Pardew's management, but I find myself implicitly trusting his tactical judgement, and this credibility must flow through to the players also. You just sense that he will 'do the right thing' and it was exemplified again later in the game when despite defending a slender 1-0 lead, he resisted the temptation to replace the tiring Darren Bent with Bougherra (and presumably pushing Rommedahl upfront), going instead like-for-like (positionally only of course) with Lisbie, to ensure we did not lose our shape. Within minutes his hawkish approach paid dividends thanks to the second goal that completed my pre-match correct score forecast. Under Curbs we'd have been holding a defensive line just north of Charlton Park Road.

We only played well in spells but as in our previous two Premiership games, we showed plenty of attacking flair, and it was only Given's heroics and Bent's profligacy that kept Newcastle in the game. Obafemi Martins had missed a self-created gilt-edged chance early in the second half, but that let-off roused us, and Zheng's cleverly taken goal thereafter gave us the confidence to go on and really test their makeshift defence (which bizarrely included Damien Duff).

My baby son (Toby Charlton) is yet to witness a Charlton defeat, and he celebrated this vital win by showing he's already strong enough to roll over, a couple of months ahead of schedule. The galvanising influence of our newly found form seemingly affects both very young and old(er) alike. The eight goals he's seen us score in three games is not the return one expects from a relegation-haunted side, and hence the frustration remains that we are now playing 'top-half' football with a proverbial mountain to climb.

That mountain however looks more surmountable than it did yesterday night, and the injury to Sheffield United's Rob Hulse combined with our home fixture against them on 21 April makes the 7/2 odds on their relegation appear outstanding value, despite their comfortable run-in. Moreover, as Pardew always wanted, we are slowly dragging the likes of Villa and Fulham into the fray, whilst on Saturday week we have the chance to haul back in-form Wigan. The fat lady may have cleared her throat, but she is yet to find her voice.

The stop-start fixture list however is a further frustration, and the ongoing talk about 'fixture congestion' is certainly passing us by given that we will have played just 3 games in 48 days by the time the Wigan coach drives into The Valley. Frankly it can't come around the corner soon enough.

Friday, March 16, 2007

Newcastle preview

I am currently enjoying a brief trip to London but the UEFA Cup-inspired decision to move the Newcastle game to Sunday ensured that I cannot double the matches seen live this season to two. Having said that, the unseasonal snowstorm currently dumping six inches of snow in New York (before making its way over here) may see my flight conveniently cancelled. "Sorry darling, all flights cancelled....I might just be able to get on the Sunday flight at 8.30pm."

Newcastle's surprise exit from the UEFA Cup will hopefully work in our favour. With their season effectively over, heads may drop and minds may wander to summer holidays in warm climes. Despite having some exciting attacking options in Duff and Martins, their defence is notoriously porous and presents us with a good opportunity to close the gap on our rivals.

Talking of rivals, whilst we can hopefully assume a defeat for Sheff Utd at Chelsea, both Wigan (especially) and Man City have winnable games. Worryingly 'Boro have more important business to attend to on Monday than a meaningless (for them) Premiership fixture, and hence I fear that the gap will be at least seven points implying anything other than a win for Charlton will leave us in a horrendous position.

The absence of Ben Thatcher will probably see a return at left-back for Hermann Hreidarsson, whilst Jon Fortune's return to the Championship (where he belongs) will likely see Bougherra's second outing. The cautionary withdrawal of Darren Bent is a huge blow, and potentially a fatal one for our chances but at least the return of his namesake Marcus ensures we can continue with a 4-4-2. The long-term injury to Andy Reid (who is rapidly earning the nickname 'the new Gary Rowett') will surely ensure no change to a midfield that has created six goals in two games.

Pards must be cursing his luck given his never-ending injury problems, and with nine players now out on loan, he is clearly trying to patch together a team for the remainder of this campaign, whilst with one eye firmly upon rebuilding for next season. Our failure to defeat a very beatable Watford side two weeks ago has sucked out some of the belief generated by the West Ham result, but I will continue to predict a Pards-inspired victory to keep us in the race. NY Addick predicts: Charlton 2 (Ambrose, Song), Newcastle 0. Att: 26,210.

Tuesday, March 13, 2007

Long Time No See

Charlton boss Alan Pardew has welcomed new signing Martin Christensten to the club and declared, "I know the fans can't wait not to see him."

Christensen follows in the footsteps of other great Danes including Claus Jensen, Dennis Rommedahl and Viggo Jacobsen (Danish? - Ed), and Pardew was adamant he would make a great impression. "He's got plenty of tricks," beamed the gaffer, "...the Gravesend and Northfleet fans are in for a real treat."

The 19-year old is the latest in a series of exciting young foreign signings that have included rock solid full-back Kelly Youga, creative midfielder Rurik Gislason, the towering Jani Tanska and enigmatic Goncalo Brandao. "Their impact on the first team is impossible to overestimate," mused Pardew, "..everyone talks about the likes of Cesc Fabregas and Salomon Kalou, but they've not seen these lads play, and neither have our fans."

STOP PRESS: Charlton sign non-league sensation Chris Dickson. "He's one for the future," cooed Pards.

Sunday, March 11, 2007


(not Charlton related)

With Charlton at severe risk of becoming a 'subprime' football club (sub-Premiership to be precise), it's appropriate perhaps that the US media is finally waking up to the 'subprime lending scandal' that is beginning to unravel. Barring something unforeseen, it is likely to lead to tens of billions of dollars of bad loan write-offs, and the enforced homelessness of hundreds of thousands of families.

The scandal can trace its roots back to the beginning of the US housing bubble which began (not coincidentally) after the collapse of the technology-fuelled equity market in 2000. The Federal Reserve subsequently cut interest rates to 1% in order to avoid a Japanese-style deflation, thus providing the fuel that replaced an equity bubble with a housing one. Having risen at 2.9% pa for the 1990-1999 period, prices rose at 9.3% pa from 2000-2005.

The rapid rises in house prices (most vivid in hotspots such as Florida, California and Arizona) were a boon to anyone who owned a home, but they were particularly welcomed by low-income families previously shut out from the mortgage market. So long as prices kept rising, low-income families were able to borrow from specialised unregulated lenders such as New Century (see recent news) at low initial 2 or 3-year 'teaser rates', safe in the knowledge that when the subsequent 'payment shock' occurred, they would easily be able to refinance into a new loan (thanks to the equity they had built up). What's more, as the cartoon shows, some of that equity could be turned into cash and added to the principal of the new loan.

Whilst low interest rates were a boost to homeowners (and anyone owning risky assets, including equities again), they were most unwelcome to those lenders that rely upon yield to fund liability obligations, from insurance companies to pension funds. They were also a bore to foreign governments from Riyadh to Beijing, who needed to recycle income from imports back into US dollars to prevent their currencies from appreciating against the greenback. I discussed this phenomenon in more detail in my Dec 2006 post on Petrodollars.

Wall Street firms are rarely slow to spot a profitable opportunity, and the context described above encouraged them to aggressively promote new complex financial products (known variously as 'securitisations' and 'collateralised debt obligations') that would marry the homeowning dreams of the subprime borrowers with the yield-hunting needs of the cash-rich.

The initial 'teaser rate' described above was still higher than the interest rate charged on mortgages sold to so-called 'prime borrowers' (steady jobs, no history of default etc..). Hence billions of dollars of subprime mortgages could be originated (increasingly with ridiculously weak lending standards), and then sold on via the banks through the above securitisation process (essentially describes the repackaging of pools of loans into several 'tranches' with varying risks and returns). Because the ultimate liability in the event that these mortgages became non-performing was passed on to a third party, there was no incentive to stop lending, and so it continued.

Whilst house prices were rising, not only was the higher interest rate attractive to those seeking yield, but defaults were low because only the most desperate homeowner will hand the keys back if they have built up some equity. Hence it really did seem to be a 'free lunch' (higher yield for no additional risk) and hence the party continued, and the lenders created ever more complex products to entice the most vulnerable borrowers into buying their first home. A particular favourite of mine was the negative amortisation loan, in which a borrower could opt out even of paying the interest due each month, with unpaid amounts simply added to the principal. In 2004 and 2005 alone, nearly $1trillion worth of subprime mortgages were originated, representing some 10% of the entire US mortgage market.

In November 2005, something rather important happened; house prices stopped rising. Although the housing bubble had never truly been a nationwide phenomenon (the Midwest and Texas for example never joined the party), prices began to fall hardest in those very areas where subprime borrowing had been the greatest. However there was inevitably going to be a delay between the fall in house prices and homeowner defaults, because rolling annual house price growth did not turn negative until well into 2006. It was only those unlucky enough to have bought right at the very peak that would not have enjoyed any appreciation.

Inevitably, as the wave of newspaper headlines declaring the end of the bubble spread across the nation, those homeowners whose timing had been the least fortuitous did exactly what one would expect from a segment of the population that quite frankly should never have been permitted to borrow money; they simply stopped paying. After all, it was not as if they had a credit rating to protect. Indeed as one commentator put it, "...most of these people had credit ratings equivalent to the one they give you upon leaving prison."

Some of the earliest implications of this lending extravaganza ironically surfaced in the UK when that bastion of cool-headedness HSBC, was forced to admit it would take a $1.8bn hit for bad loans issued by its subprime subsidiary HSBC Finance (formerly Household International). And closer to home far less scrupulous lenders than HSBC began to admit to the scale of the problem, with the outright closure of some entities (Ownit, Sebring) and the collapse in the valuations of the likes of the aforementioned New Century. These lenders rely upon so-called 'warehousing' to finance loans between the date they are originated and the date they are securitised (ie. sold on). As their problems came to light, the warehouse financing option was simply removed and their business models collapsed. Even the world's bulge-bracket banks are under scrutiny by investors as they scramble to unravel where the exposure to this lending spree really lies.

Estimates of the eventual losses to be sustained vary. Currently approximately 13% of all subprime loans are 'delinquent' (at least 60 days behind with payments) and in the absence of a sudden rebound in house prices, it is reasonable to expect the vast majority to proceed to outright default and foreclosure as the date of the 2 or 3-year 'payment shock' looms. Assuming a total subprime market of $1trillion, and assuming approximately 65% recovery (the firesale proceeds when the lenders reclaim the properties), then it is likely that total losses will be at least $85billion. This is six times greater than the profits earned in 2006 by perhaps the world's premier investment bank, Goldman Sachs and is likely to be the first genuine test for the world's financial system since the Russian default and LTCM crisis of 1998. Meanwhile the number of families likely to be turfed out of homes that they should never have been permitted to buy in the first place, might reasonably be estimated to be at least 500,000 (assuming an average property value of $250,000).

The ultimate responsibility for the subprime scandal lies in several places, but it ought to be seen in the context of the same global liquidity explosion that helps to explain everything from the extreme values of modern art and high-end real estate, to the fundamental undervaluation of the Japanese Yen. At some level, the homeowners themselves ought to have remembered the concept of 'caveat emptor' ('buyer beware') since many seem to have done less research into their home purchase, than they did for the furniture and appliances that went into it.

The concern however is that it seems that no-one ultimately seems to know where the financial buck actually stops. Who is on the hook for $85billion? The regulators will hope the risk is sufficiently diversified to ensure the damage is restricted to 'wounding by a thousand cuts' rather than likely to cause to a localised blow-up. Few of us will lose sleep if governments in Asia and the Middle East take the brunt of the losses, but you can also rest assured that there are millions of pensioners and insurance policy holders worldwide (including the UK) blissfully unaware that their 'fiduciaries' saw fit to invest in subprime mortgages.

And when the losses have been digested, lessons learned and some fraudulent practioners are doing porridge, the next wave of business school undergraduates will learn about the wonders of securitisation and the damage it caused, before they are let loose on the same global banks that invented it in the first place. And perhaps the brighest in the class will be able to explain how on earth a pool of low-grade subprime mortgages issued to homeowners with no money down and no proof of income could, thanks to Wall St wizardry, be sliced and diced such that fully 75-80% of it was awarded bullet-proof AAA credit ratings, when infact the underlying creditworthiness was, in short, absolute crap.

Wednesday, March 07, 2007

Just the Ticket?

Monday's announcement about season ticket prices was a smart public relations move, but it didn't "...send shockwaves through the game..." and rightly so.

As Charlton fans we've never been able to quibble about ticket prices (at least not in a relative sense), and the club has been proactively early in announcing its plans, aware of course that many are disenchanted with on-pitch performances.

In order for the headline-grabbing 'free season ticket' offer to come into fruition, it requires that we are both relegated then promoted. Our current probability of being relegated is approx 74% (per Betfair) whilst if it occurs, I would estimate our probability of bouncing straight back to be approx 5/2 or 28% (others may disagree of course). Hence the probability that the free offer becomes reality is only 21% (74% x 28%).

From memory we have approx 17,000 season ticket holders, and I would estimate that under normal circumstances something like 50% would renew in the Championship. I doubt whether those fans unlikely to renew will be swayed by a 28% chance of a free Premiership season ticket in 08/09 (and certainly will be unlikely to move before April 30). That doesn't necessarily imply that 50% of our fans are Premiership glory-hunters, but it is not unreasonable to pick and choose a little more from 23 League games, particularly with none likely to sell out.

However of those 50% who in my view will renew, they are probably diehard enough to take advantage of the 'free offer' by applying before April 30 (cashflow considerations permitting). Hence, the expected cost of the 'free offer' (assuming an average season ticket price of £400) is approx £715,000 (21% x £400 x 8,500). As I said at the start, it's nice PR but not much more; after all £715k represents the typical annual wages of a first-teamer or 1/3 of a Madjid Bougherra. Of course, in the event that we are relegated then promoted, then it will 'actually' cost the club approx £3.4m (£400 x 8,500) , but the TV money will more than compensate for it.

It is worth considering then what other options the club might have considered with a ticket price-cutting budget of £715k in addition to the welcome pre-April 30 discounts announced anyhow. Would for example a general price cut (in the event of relegation) of approx £85 per ticket (£715k/8,500) have been more appropriate? Such a price cut would almost certainly have seen a tick-up in demand too, hence such a discount would either cost the club less, or offer scope for an even greater cut.

As I discussed back in November, the goal of a high fixed cost business like Charlton should be to maximise revenues (since every marginal pound goes virtually straight to the bottom line). A football club is a little different though since most fans either 'consume Charlton' or no football at all (they don't switch allegiance to the team down the road). Hence building goodwill is important (I just doubt this is the best way of doing it).

Simply offering a free season-ticket offer in the circumstances described above is gimmicky (as well as costly), because virtually all fans that are willing to renew in the Championship, would be willing to pay for their Premiership season ticket. It's nice to reward their loyalty but with a flimsy Zheng Zhi replica shirt costing £51.99, you'll excuse my cynicism. Personally I'd like to see our loyalty rewarded by the Board promising never again to piss away £2m on Djimi Traore and his ilk.

The key to successful pricing in my view lies in diversifying the types of season tickets offered as far as possible, and allowing each fan to 'signal' how much he/she is willing to pay via their selection. The possibility one day of standing in the lower tier of the North Stand would be an important step in this direction, and hence I support Peter Varney in this regard. However there must be more that can be done to segment the stadium further and thus permit far higher prices for those willing and able to pay up for a 'luxury experience', whilst reducing the prices for those not so inclined (yet leaving total revenues higher). It seems bizarre for example that a lower tier West Stand seat next to the goalline costs the same as one on the halfway line.

The ultimate goal of any ticketing strategy should be to fill every seat in the stadium ensuring that every fan is paying the maximum they would have been willing to pay (and not a penny less). This is essentially the strategy that the hotels and airlines utilise so effectively. Lack of information and ticketing technology prevents this from occurring easily, but offering (unlikely) free tickets in a blaze of publicity (to those that would have been happy to pay anyway), whilst doing virtually nothing to encourage the less committed fans (aside from a early-bird discount) just doesn't seem great business with relegation looming.

Monday, March 05, 2007

A Lesson for Pards

With Charlton in desperate need of a cluster of three points, today's Sunday Times reminded me of an inspirational tale.

I don't know whether this heart-warming sports story from Feb 2006 received much coverage in the UK at the time, but you'd have to have a heart of stone not to be moved by it. Even President Bush said he wept when he saw it, and he is probably not prone to regular emotional outbursts.

Previously considered too small for the team, Jason McElwain an autistic 19-year old, was given a four-minute cameo in a non-descript high school basketball game in recognition of his hard work for the team behind-the-scenes.

In those four minutes McElwain provided the script for a perfect Hollywood tear-jerker, and his extraordinary performance was subsequently voted as ESPN's 'Best Sports Moment of 2006'.

To put his achievement in perspective, it is worth noting that the very best NBA pros only manage a 3-point attempt success rate of 40-50%. Admittedly McElwain's opponents were not exactly doing their level best to stop him from shooting but even so, why let a minor technicality get in the way of such a touching story.

A total of twenty points plucked out of nowhere. It can be done. Believe.

Saturday, March 03, 2007

Two Points Dropped

A gallant fightback, but ultimately this afternoon will be seen with hindsight as two points dropped rather than one gained.

Our cause was not helped of course by our lack of defensive options. The complete lack of cover at left-back reflects badly upon both the productivity of our youth academy, and the efficacy of signings such as Kelly Youga who was not recalled from his Bradford loan. If there isn't a willing and able left-sided youngster able to step into such a desperate breach (and avoid unbalancing the side in this way), then you have to wonder what the point of the academy is at all.

Having fought back from 2-0 down it sounded like Kevin Lisbie had a gilt-edged chance to pay us back for ten years of frustration, but he finished with the aplomb to which we are accustomed.

Results elsewhere put Man City into 17th place and whilst its welcome to have a new team firmly in the dogfight, it would be preferable if Wigan and Sheff Utd were closest given our home games against them both (we travel to Eastlands on 6 April).

In short, it's been a frustrating afternoon which leaves us worse off compared to Wigan obviously, and Sheff Utd (because there is now one game less to catch them) whilst allowing us to edge just a point closer to Man City. We now have a tiresome 15 day wait to play again, a period in which I will find myself in the unusual position of cheering on Chelsea against both City and Sheff Utd.

Thursday, March 01, 2007

Watford Preview

For reasons best known to the TV schedulers, the viewing public in the US will be treated to the enormously important Fulham vs Villa and Newcastle vs Boro fixtures, instead of the relegation six-pointer at Vicarage Road. Hence whilst I've been royally spoiled until now having been able see 23 of our 28 matches, I would happily have given up a few of them to see Saturday's tussle.

As I've suggested before, the appropriate analogy for our current relegation battle is 'matchplay golf'. It's the points we earn relative to our competitors that is key, but unfortunately we find ourselves a few holes down with the clubhouse rapidly coming into view.

The Wigan result on Sunday was a not wholly unexpected hammer blow (no pun intended), but at least their Man City match-up this weekend ensures that a victory for the Addicks will see the gap close somewhat, and a draw would probably be the ideal result (because only two points are taken from the fixture). Sheffield United meanwhile play Everton who have quietly (to me at least) secured a spot just behind the European places, and they thus have plenty to play for. I would expect a resurgent Spurs to beat West Ham on Sunday, and thus we have a real opportunity to become the only member of the bottom three with scope to survive.

Unfortunately however, Watford refuse to accept their fate and their uber positive manager will send out a team of little quality, but full of honest endeavour that we will have to match. We should not lack confidence after the demolition of West Ham though, and we should have enough attacking flair to create the chances required for three points. Pards will be unable to field an unchanged side however, and the recalled Jonathan Fortune may well slot straight back in alongside El Karkouri (not an ideal state of affairs). Elsewhere the continued (and worryingly lengthy) absence of Andy Reid will however ensure an unchanged midfield and forward line, and rightly so.

Derek 'Killer' Hales (KillerWatch© -£721) is still to offer his prediction, but I will steer him towards a comfortable away win that leaves us with real hope. NY Addick predicts Watford 0, Charlton 3 (Bent D, Bent M, Ambrose); Att: 21875