Swans chairman Andrew Pridham on investing – in business and sport
ANDREW Pridham is an investment banker who worked for UBS and JP Morgan before setting up the Australian arm of New York-based investment bank Moelis five years ago. A passionate Australian Football League fan, he took over as chairman of the Sydney Swans last December after having been on the board since 2002.
How are you enjoying being chairman of the Swans?
You can’t relax at all during the games, even if you are winning. It can be very stressful. Anything can happen. I had a pretty good apprenticeship as a director under (former chairman) Richard Colless.
The AFL grand final is approaching, on September 27. How much is football management like business?
Football is very different to the business world in every aspect, from the draft through to the salary caps. It’s a highly regulated environment. You have your set industry competitors – in the AFL it is 17 competitors – and then you have the other football codes all competing for fans, media time, and sponsor dollars. There are similarities in terms of business but just because you are in business you shouldn’t think you can run a football club.
But let’s face it, the Swans are not broke. They are a class team.
It is a great time to be involved. We have a record membership, a record sponsorship. Our TV audiences are blitzing it. We are having crowds of about 34,000 for home games – the best since 2007. Our membership is 40,126 and insurance company QBE has just re-signed as sponsors until the end of 2019. It’s incredibly important for us.
How much work is it being chairman of the Swans?
You don’t just turn up at game time and sit in your seat. There’s a lot around the game, particularly the away games. There are always team commitments and a lot of media commitments. During the week things pop up that you don’t expect – things that have to be dealt with. Someone says something negative about the club and you need to deal with it because it is damaging the brand. There’s a lot of emotion in football – from the supporters to the players and the staff and the other clubs. It’s not just about dollars and cents. It’s about pride and integrity. No one gets paid to be a Swans director. It’s a labour of love. There’s a definite excitement and an electricity about the Swans. We are extremely important to the AFL broadcast rights. In 2013, the Swans were the most watched team on Foxtel of any code nationally. We have already had more than four million viewers on Foxtel so far this year.
“There are similarities between business and football but just because you are in business you shouldn’t think you can run a football club” Andrew Pridham, investment banker and chairman of the Sydney Swans
We have the most digitally engaged member base in the country. The Swans have a million supporters nationally, according to (market research firm) Roy Morgan which is the highest of any club. Collingwood has 840,000. It has been a lot of hard work.
What was it between you and Collingwood president Eddie McGuire?
The issue is finished. I don’t need to go on about it. I have said my piece, and he has said his piece. We will move on. Eddie is … omnipresent.
How did you come to work for Moelis?
I was at UBS for 13 years. I ran investment banking and then I went overseas to be closer to the global real estate markets. When I came back to Sydney I went on the Swans board. A few clients asked me to help them and I was working harder than I had ever worked. Then JP Morgan bought the business and I was executive chairman of JP Morgan Australia for six years. Then (veteran Wall Street investment banker) Ken Moelis approached me and asked if I was interested in working with him in Australia. I never met him at UBS. He started there just as I left. I liked him from the moment I met him. He kept calling me. I said I only want to do it if I think the structure is right for this market. I wanted the local management to own 50 per cent of the business, which he agreed to. We have 65 executives in Australia. If you are going to attract the best talent from the global investment banks you need to give them skin in the game. We have an investment banking business but we also have a stockbroking business which Moelis doesn’t have in the US. It’s partly because we want the research function and the sales function for our market intelligence.
What deals has Moelis done in Australia?
We have just done the float of a funds management business called Elanor. We did the spin-off of Shopping Centres Australia from Woolworths. It has done very well. We do a lot in the small cap space; we do a lot in the property space. We acted for SAB Miller when they bought Foster’s. We are advising Graysonline on a $220 million merger. It is a backdoor listing of the company through a merger with (online shopping website) Deals Direct.
You have also done a lot of corporate restructuring?
We did the restructuring for Centro, Channel Nine, Atlinta, Reliance Rail. (Tasmanian forestry company) Gunns has been the most recent. Some of these transactions can take three years. The lead time is very long. It’s a very specialised piece of the market, of which we are the market leader by a long way.
You are known for your expertise in property. At JP Morgan you were advising shopping centre group Centro which expanded rapidly in the boom but was hit by the global financial crisis. Any lessons
It was the perfect storm for Centro. They had made a major acquisition. They had a bridging facility, which in the ordinary course of business would have been refinanced. Then the financial crisis hit and you couldn’t refinance anything. Clearly there are lessons there. You can’t assume anything. To say it was unlucky would be an understatement. The fact that Centro is still alive and didn’t go into administration, whereas a lot of other property companies did, probably tells you something about the quality of the underlying assets. But the lesson is to have a Plan B and a Plan C
Which deal has been the hardest for you?
They are all hard. Investment banking is harder than it was 15 years ago …
You have just launched a fund chaired by Seven’s Sunrise host David Koch?
We want to build up the asset management side of the business. We have a fund aimed at Significant Investor visa investors from overseas. We have just launched Global Wealth Partners. It is aimed at retail investors, including people managing their own superannuation funds. Most of them are heavily invested in the Australian market. It is invested in four US hedge funds. We want to give Australian investors access to high quality fund managers based in the US who are investing globally. I am a strong believer that the Australian dollar is overvalued and it will correct. It’s just a matter of time. Most of my own personal money is invested offshore. I have known David Koch for a long time. He’s there for oversight and independence – to keep us honest as a manager. It is not a marketing role; it’s because of his experience in the financial world and with financial planning.
You have been an investor in art, but you got your fingers burned buying a painting you thought had been done by Brett Whiteley but ended up being a fake …
Regrettably. I love Australian art and I collect it. But I am a lot more careful now. There are a lot of practices that go on in the art industry that if you did them in the business world, you would be in prison. There are a lot of good people in the art world but there needs to be significantly more regulation of the industry.