Soccer changes the guard
All eyes may be on Qatar, but Premier league football also is on the cusp of big change. Chelsea is now controlled by an American West Coast sports franchise. Fenway sports Group has put a for sale sign over liverpool FC. And the Glazer family, after 17 years of ownership, looks ready to part with Manchester United.
The big difference for the sales process for United is that it is a quoted company on the Nasdaq stock exchange, so the inner-workings of the club’s finances and prospects and the bidding will take place in full public view. The current market value of the club is a relatively modest £2.3bn but that is only a starting point.
If the same sort of earnings-to-price multiple which saw the transfer of ownership of Chelsea from HM Treasury (where it had been sequestrated) to Todd Boehly were applied, then you would get to a United price of £3.4bn.
For the Glazer family, which paid £790m in the first instance in a highly leveraged structure, it has proved a good investment, although unpopular among fans. It nevertheless caught the zeitgeist of the times.
Naturally, given the moment we live in, the most obvious new owners might come from the Gulf. After all, Manchester City, Newcastle United and French champions PsG are all providing kudos for their respective potentate owners in what has become known as sports-washing.
Rich entrepreneurs such as tax exile Jim Ratcliffe will be among the possible buyers for Manchester United.
But private equity is certain to see the opportunity. RedBird already has a stake in liverpool. CVC is active with Barcelona and six Nations Rugby. Private equity has the vision for financial transformation, as was seen dramatically at Formula 1 where huge value was created through sponsorship, marketing and digital innovation.
The grassroots may not be happy. But without ‘protection’ afforded by the relatively benign ownership of the Glazers at United, and Abramovich previously at Chelsea, a european super league could be back on the agenda.
Swiss exit
sWIss banking is all about safety and discretion. When a CD loaded with data about dubious clients escaped from HsBC’s Geneva branch in 2015 there was huge embarrassment but no questions about stability.
Credit suisse has the reverse problem. The mistakes at its investment bank – from the implosion of the Archegos Capital hedge fund to executives spying on each other – have been well rehearsed, requiring a saudibacked £3.5bn cash infusion.
No sooner that the capital rebuild was completed than a more fundamental problem has loomed into view. Chief executive Ulrich Koerner has embraced a new strategy of focusing on rich people. even though the safety of its entirely separate wealth management operations are not in question, the bank’s reputation has been through the wringer. There is no shortage of alternatives for rich clients, so while shareholders were putting in new cash, wealthy savers were busy redeeming holdings.
An alarming 10pc of wealth assets, reckoned to be £55bn, escaped through the back door between the start of October and November 11. It is not possible to blame all of this on market turbulence, which largely has been confined to Britain’s gilts market. In spite of the outflows, Credit suisse appears to have a decent liquidity buffer.
even though new capital has arrived, the difficulty is going to be convincing rich customers – and potential clients – that after the bank’s helter- skelter behaviour in recent times, it is a good place to horde money. Until that happens, fee income and prospects for recovery will retreat into the distance.
Investment management is all about confidence and performance, as UK investors found to their chagrin when Neil Woodford’s investment empire folded. Credit suisse has a big boulder to heave up the Alps.
Salad days
WHeN it comes to overseas takeovers, directors are only too happy in most cases to roll over and let the buyers tickle their tummies. In the case of the wounded schneider effort to buy out the minority in UK industrial software pioneer Aveva, the deal, if completed, would leave directors wealthy with no worries about the oversized mortgage on the country house.
Incentive shares are vested, accumulated stock bought for cash sold at a premium price and service agreements honoured.
At Aveva, directors stand to collect £5.6m from their declared holdings. Nice work if you can get it.