Investment

[Rupert Prince]

Hull KR are proposing to seek equity investment for their club. (BBC)

Its CEO suggests this is also a way forward or Super League.

It seems sensible. RU Premiership have done it.  F1 have done it. Where else could the SL/ RFL get money (investment !!) from?  How else could we pull ourselves up by our bootstraps?

[Damien]

Of course its CEO says its the way forward, Hull KR are skint and Hudgell cant even get a buyer for the club. Its the easy quick fix that requires minimal effort and doesn't fundamentally change anything.

 

[super major]

Not trying to stir but who would want to invest in any RL team in England let alone this mob. Hudgell has been pouring money in for years and they are bottom of SL. If he can't manage to make it self financing how will a equity investor see a return?

Some talk of them buying the ground back and there is  a fair bit of land involved but unless there is a deal ready I can't see it

[Cardypaul]

This is the problem with clubs who rely on a rich sugar daddy, clubs either need to develop better income streams or learn to start living within their means.

[Tommygilf]

1 minute ago, Cardypaul said:

This is the problem with clubs who rely on a rich sugar daddy, clubs either need to develop better income streams or learn to start living within their means.

Especially when the Sugar Daddy isn't actually that rich

[super major]

4 minutes ago, Cardypaul said:

This is the problem with clubs who rely on a rich sugar daddy, clubs either need to develop better income streams or learn to start living within their means.

Any suggestions?

 

[Sir Kevin Sinfield]

I hope they’re ready to prove they have £5M in the bank 

[sweaty craiq]

If we franchise SL then a share should cost £10m, the £120-140m should then be invested and the 5-10% annual growth should be used to market the comp. If you ever want out you get your £10m back.

[Blind side johnny]

My understanding of an investment is that it is something that you do in the hope orb expectation of getting a profitable return.

Wouldn't "donation in exchange for equity" be a better expression?

[DimmestStar]

2 hours ago, Cardypaul said:

This is the problem with clubs who rely on a rich sugar daddy, clubs either need to develop better income streams or learn to start living within their means.

Rovers would have earned £500,000 this year from 3 big concerts at Craven Park and there are numerous other income streams which are possible due to the club owning the leasehold on the ground. Every penny generated at Craven Park goes to Hull KR.

Hull KR have slightly upwards of 6,000 season ticket holders and an average crowd of over 8,000. The corresponding figures for Hull FC are 8,000 and 10,000 but they do not get the income from the stadium that Rovers do. So the real difference is the financial input from Adam Pearson which he himself says is unsustainable.

Neil Hudgell has handed the running of the club to Paul Lakin but is still the owner and is still backing the club financially. Paul Lakin  said this week that the club is very lucky to still have the financial support of Hudgell and stated that the financial position of the club is stable.

Neil Hudgell Law recently represented the sub postmasters in their case against The Post Office (successfully). He is an extremely busy man who is one of those people who never stops. He juggled the demands of Hull KR and his incredibly successful law firm for 16 years, he hasn't abandoned Hull KR far from it. He just thinks he has given it everything and the club isn't where wants it to be.

Of course COVID has hit the club very hard as it has most other clubs. Losing the £500,000 from concerts was a real blow because the club has worked very hard to establish Craven Park as a regular concert venue.

Regarding private equity investment Rovers have spent the last 2 months preparing a due diligence report on the club and Hudgell & Lakin say this is part of a process. No one expected any new investment before January and everyone knows that in the current climate it's a tough sell we I accept that.

 Rovers will not be at full cap in 2021 but do have a budget for new signings and expect to fill the 3 vacant overseas slots. The club is not one of those in dire risk if indeed any are.

[Cardypaul]

16 minutes ago, DimmestStar said:

Rovers would have earned £500,000 this year from 3 big concerts at Craven Park and there are numerous other income streams which are possible due to the club owning the leasehold on the ground. Every penny generated at Craven Park goes to Hull KR.

Hull KR have slightly upwards of 6,000 season ticket holders and an average crowd of over 8,000. The corresponding figures for Hull FC are 8,000 and 10,000 but they do not get the income from the stadium that Rovers do. So the real difference is the financial input from Adam Pearson which he himself says is unsustainable.

Neil Hudgell has handed the running of the club to Paul Lakin but is still the owner and is still backing the club financially. Paul Lakin  said this week that the club is very lucky to still have the financial support of Hudgell and stated that the financial position of the club is stable.

Neil Hudgell Law recently represented the sub postmasters in their case against The Post Office (successfully). He is an extremely busy man who is one of those people who never stops. He juggled the demands of Hull KR and his incredibly successful law firm for 16 years, he hasn't abandoned Hull KR far from it. He just thinks he has given it everything and the club isn't where wants it to be.

Of course COVID has hit the club very hard as it has most other clubs. Losing the £500,000 from concerts was a real blow because the club has worked very hard to establish Craven Park as a regular concert venue.

Regarding private equity investment Rovers have spent the last 2 months preparing a due diligence report on the club and Hudgell & Lakin say this is part of a process. No one expected any new investment before January and everyone knows that in the current climate it's a tough sell we I accept that.

 Rovers will not be at full cap in 2021 but do have a budget for new signings and expect to fill the 3 vacant overseas slots. The club is not one of those in dire risk if indeed any are.

It’s good to hear that they are diversifying with the concerts that’s the kind of things clubs need to do, even if they have been a bit unlucky. Do HKR own their stadium?

[Rupert Prince]

44 minutes ago, Blind side johnny said:

My understanding of an investment is that it is something that you do in the hope orb expectation of getting a profitable return.

Wouldn't "donation in exchange for equity" be a better expression?

No.

[The Future is League]

4 hours ago, super major said:

Not trying to stir but who would want to invest in any RL team in England let alone this mob. Hudgell has been pouring money in for years and they are bottom of SL. If he can't manage to make it self financing how will a equity investor see a return?

Some talk of them buying the ground back and there is  a fair bit of land involved but unless there is a deal ready I can't see it

Let alone a competition that has no ambitions and is happy to play along the M62 Corridor

If Super league wants to attract investment it will have to lose this "We only want to play in the M62 corridor" mentality.

[DimmestStar]

Hull KR own the leasehold but not the freehold.

Talks will be resumed soon between the club and the council who both want to see complete ownership in the hands of the club.

Hudgell had offered the market value which remains on the table. It's not about income - Rovers already get all of that but the club want to invest in the stadium knowing that the asset will grow for Hull KR nobody else.

Rovers have done amazing work in the local community in East Hull which has been recognized locally and appreciated. We are a good club with a big fanbase. I don't understand why there is negativity on this forum. 

[Smudger06]

1 hour ago, sweaty craiq said:

If we franchise SL then a share should cost £10m, the £120-140m should then be invested and the 5-10% annual growth should be used to market the comp. If you ever want out you get your £10m back.

A couple of slight problems, 1) not enough, actually 0 Clubs can afford 10 mil. 2) even if they could afford it they definitely wouldn't pay it over. 

£250,000 per franchise, maybe? 

[Hela Wigmen]

Good luck to KR for trying to do something a bit different. 

[Rupert Prince]

47 minutes ago, The Future is League said:

Let alone a competition that has no ambitions and is happy to play along the M62 Corridor

If Super league wants to attract investment it will have to lose this "We only want to play in the M62 corridor" mentality.

Isnt the point of 'investment' to grow and provide a return? 

I think we should ban the phrase 'M62 Corridor'.  If we look at the NRL it is heavily centred around Sydney.  And heaven forbid you want to look at the Rugby Premiership (12 clubs), but we find Exeter, Bath, Bristol, Gloucester, Worcester... All in the west.  Indeed you will find 'London' Irish playing in Reading, giving us 6 teams (half the league) out west. Even more of interest you find Wasps based in Coventry (not far from Leicester and Northampton).  There is no leading team in London.

We have no embarrassment in being in a major northern conurbation.  And no reason not to expect serious investment it our region and ample space to grow in London (and all points of the compass!).

[Rupert Prince]

25 minutes ago, Smudger06 said:

A couple of slight problems, 1) not enough, actually 0 Clubs can afford 10 mil. 2) even if they could afford it they definitely wouldn't pay it over. 

£250,000 per franchise, maybe? 

But its not the clubs putting in money (all though they might if they can afford it).

The point about private equity is that they (a PE company) puts money (invests) into British rugby league. In return they get a part of the profits.  The growth of the investment is what gives a return to the company and the RL.  

Also in return RL lose some control (i would imagine). But they would get some marketing clout... not unlike F1.

[Smudger06]

38 minutes ago, Rupert Prince said:

But its not the clubs putting in money (all though they might if they can afford it).

The point about private equity is that they (a PE company) puts money (invests) into British rugby league. In return they get a part of the profits.  The growth of the investment is what gives a return to the company and the RL.  

Also in return RL lose some control (i would imagine). But they would get some marketing clout... not unlike F1.

Sweaty was talking about franchising. Why would a PE firm buy a franchise in a franchise system sports league if it wasn't a Club? Part of the agreement of a franchise league throughout the world is that you have to participate in the League, to participate in the League surely you would have to be a sports club? 

[sweaty craiq]

1 hour ago, Smudger06 said:

Sweaty was talking about franchising. Why would a PE firm buy a franchise in a franchise system sports league if it wasn't a Club? Part of the agreement of a franchise league throughout the world is that you have to participate in the League, to participate in the League surely you would have to be a sports club? 

Surely the location of the franchise is irrelevant, and if moving,say, Wigan to Bristol to get 20000 crowds every week is better for the sport then few Wigan fans would object

[Smudger06]

5 minutes ago, sweaty craiq said:

Surely the location of the franchise is irrelevant, and if moving,say, Wigan to Bristol to get 20000 crowds every week is better for the sport then few Wigan fans would object

Very true. 

[BrisbaneRhino]

Private equity investment is definitely a double-edged sword, as you pretty much have to sell your soul to get the cash. I  don't see a single club being big enough to be of any interest to serious private equity investors - throw in whatever you want in terms of the stadium and on its own its still basically a small business.

SL as a whole might be big enough, but they would only invest with a view to earning a big return, which would require fundamental changes to the sport which might not sit well with a lot of fans - like franchising, expansion to bigger cities, overseas etc.  They wouldn't give a rats about any smaller heartland clubs. 

[The Future is League]

11 hours ago, Rupert Prince said:

Isnt the point of 'investment' to grow and provide a return? 

I think we should ban the phrase 'M62 Corridor'.  If we look at the NRL it is heavily centred around Sydney.  And heaven forbid you want to look at the Rugby Premiership (12 clubs), but we find Exeter, Bath, Bristol, Gloucester, Worcester... All in the west.  Indeed you will find 'London' Irish playing in Reading, giving us 6 teams (half the league) out west. Even more of interest you find Wasps based in Coventry (not far from Leicester and Northampton).  There is no leading team in London.

We have no embarrassment in being in a major northern conurbation.  And no reason not to expect serious investment it our region and ample space to grow in London (and all points of the compass!).

We've had 125 years to grow in this country and basically we've failed

[cookey]

I wonder what would happen to any investment in the Club?

Would I be cynical to suggest that any money raised,might be used to pay off existing loans - to Hudgell perhaps? If so,Hudgell gets his money back and the club somehow has to try and survive on a reduced perecentage of revenue. They cant survive on existing revenue!

Private Equity aren't generous benefactors,they solely exist to make substantial returns on equity,15- 20 % annually.Frankly they would run circles around any rugby club.

By the way,the professional fees incurred in raising a relatively modest sum would be vast,as a percentage of the capital figure. So substantial fees for solicitors,accountants and investment bankers. There are three options here,Hudgell gets his money back,the ground ends up being sold for more money than its worth as a rugby club,or it doesn't happen.

 

[ATLANTISMAN]

12 minutes ago, cookey said:

I wonder what would happen to any investment in the Club?

Would I be cynical to suggest that any money raised,might be used to pay off existing loans - to Hudgell perhaps? If so,Hudgell gets his money back and the club somehow has to try and survive on a reduced perecentage of revenue. They cant survive on existing revenue!

Private Equity aren't generous benefactors,they solely exist to make substantial returns on equity,15- 20 % annually.Frankly they would run circles around any rugby club.

By the way,the professional fees incurred in raising a relatively modest sum would be vast,as a percentage of the capital figure. So substantial fees for solicitors,accountants and investment bankers. There are three options here,Hudgell gets his money back,the ground ends up being sold for more money than its worth as a rugby club,or it doesn't happen.

 

Totally correct the fees involved are incredibly high, my wife was offered PE investment to expand her radio station network after we number crunched the offer just did not make any sense.

PE in a way is the business equivalent of loan sharking nothing beats personal private investment and good old fashioned hard work to find new revenue streams and increase old ones.

Paul