Tuesday, November 09, 2010

Supermarket Sweep

I'm a Waitrose man myself, but it seems that Sebastien Sainsbury's proposal of marriage has failed to persuade Richard Murray to walk down the aisle (geddit?).

Sainsbury had very subtly indicated his interest in the club, by becoming director of a newly incorporated company called Charlton Athletic 2010 Ltd.

However it seems proof of funds were not forthcoming, which combined with plenty of unsubstantiated rumours about his character, has probably led most fans to breathe a sigh of relief that Murray held firm.

The episode is an uncomfortable reminder of the fact that when you are a considerably less than outstanding investment opportunity, then you can't expect to attract outstanding investors. He just has to see off Peter Ridsdale now.

We might dream that an investor with a bottomless pit of money will seek us out, but surely most of them are seeking instant gratification (witness the Liverpool takeover for example).

It's a shame really because in the context of football investment opportunities (which are pretty awful relative to virtually any other global industry), then Charlton Athletic actually is a pretty good one for those with a medium to long-term view.

The club is essentially available for nothing (subject to any existing obligations to creditors, including former directors).

It has a largely modern stadium, a relatively stable fan base, a solid local reputation amongst the community, and most importantly a good location (more about that later).

Assume that an initial investment in additional transfer fees and wages of say £25m could virtually guarantee promotion to the Premiership within five years.

The resulting TV money (even if received for just one season), and subsequent four years of parachute payments would more than repay the initial investment, and leave plenty of potential future upside if the club remained sensibly managed.

We could even dream of the prospect of a new stadium on the Greenwich Peninsula, a massive modern tube station, ticket promotions tied in with events at the hugely successful O2 Arena, and with the massive corporate demand potential at Canary Wharf just a short tube or boat ride away.

The question is whether anyone serious is willing to forgo the aforementioned instant gratification, and see the above potential.

Unfortunately most billionaires don't have the patience, whilst the types of chancers we seem to have been linked with so far are presumably proposing to fund the ongoing investment with debt, and if ever an industry was ill-suited to a leveraged buy out then it was football (too unpredictable).

This is not the investors' problem ultimately (they could just walk away) but not such great news for the club and its fans who are lumbered with the debts. This story has played out already numerous times as Portsmouth fans will remind you.

In the meantime the big unknown is obviously Murray's financial position, and the timescale in which he and his family can continue to fund the ongoing operating shortfalls.

Ultimately it may be this issue which determines the timing and nature of any sale, rather than any honourable view about the motives of the buyer.

Oh, and let's not forget Phil Parkinson's ability to extract the full potential from his team too of course.

That might just allow us to preserve the status quo, which might be what we're all secretly hoping for anyway?


At 11:45 AM, Anonymous Anonymous said...

When the Zabeel deal died the club plumetted. That was such a negatvie catalyst for us, I really hope we get a happy ending this time around.


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