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Private Equity, What would you spend it on?


Scotchy1

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Many threads here are discussing the pros and cons of Private Equity, so just a little thought exercise, less about whether or not you would go for PE but if we did what would you do. 

Personally I'm not convinced by it so would be interested in seeing some ideas about what 'the masterplan' could be

So the deal has been agreed, money is in the bank, £50m for 33% of SL's revenue (which for the sake of this is let's say £25m)

Where does the game jnvest and get that money and more back?

 

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Buy assets to increase revenue streams to make up for any reduced share going forward. This also provides assets that can be used to get loans etc for ever more if and when needed.

Obviously it is very much dependent on the amount of money but buying a stadium, whether that be an existing stadium or building one (there would be many grants available for a national stadium as other sports have shown). Moving all operations there saves a fortune in rent and reduces costs going forward. Semi-finals, lower level England matches, Championship summer bash type events, lower league finals etc all provide revenue. The right location would see a stadium with a Football team for even more revenue.

Create centres of excellence, again with facilities that can be rented out. Cumbria, North East, North West, Yorkshire, Midlands, South East. Develop the game around these hubs and hold events and regional competitions. Again I would be surprised if grants cant be obtained and it would help with Sport England funding forever more.

Create a digital arm to pump out media and digital content which should result in increased sponsorship.

If possible partner with a London Football team to take a 50% share in a stadium to provide a home for London RL and again where events can be held in London.

All would increase the games foundations and revenue streams massively and provide collateral that the game can use going forward.

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If we are going to give 30 to 50% of commercial rights away then that effectively means clubs will take that hit instantly, so the returns need to be pretty quick, making it harder to spend it all on long term projects. 

It feels like investing in a broadcasting platform to get every game filmed and then monetised is the one option which may deliver a quick return, although without established markets abroad eve that may not be quick. 

Take it at a club level, what is in it for St Helens to lose £600-900k per annum of their central funding (based on current central payments)? 

Most of the short term investments feel like they can be made with relatively modest investments, whether from existing clubs or loans. 

So, I don't know. 

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For me, I would buy the rights to the NRL and associated content, and for the lower leagues below SL, and if possible the infrastructure behind the Watch NRL app. I think that can be done 'relatively' cheaply because we also have some contra offer to the NRL, I.e the SL and lower league rights in exchange for the NRL rights and a bit of money. 

I would look to offer one of two packages to broadcasters. Either a 'freemium' offer to FTA companies. A low priced offer of 1 or 2 games per week as a tool to drive people to the app/channel.

Or to pay broadcasters a higher price with 2 games available on their platform plus the ability to sell the app/channel wholesale and direct.

I think, as a rough estimate we could do all that, piggybacking off the NRL, for maybe 40m but that wouldn't necessarily need to be paid all at once and it would receive substantial income back in straight away. So let's say the immediate cost of that would be £20m.

I'd spend £10m as a contribution to the upgrades of Elland Road in exchange for a percentage of ownership and the right to hold 10 events per year there and make it the Home of RL.

I'd spend another circa £10m on amateur 'super clubs' spread throughout the country to create pathways from youth RL up. These would be owned and operated as hubs to increase participation at all levels, with good facilities, a thriving social side of things (which would be a big focus). I'd also use some of that money to invest in L1 as a proper development competition rebranded as SL2. The plan being that the expansion amateur super clubs would grow to expand to an SL2 which fed in to SL with players, expertise and help coming back down.

The last £10m I'd split in to two pots. The first £5m can be used to improve match day presentation. The 2nd to create new IP and Events. Both of these pots would be used as their own profit centre with the profits going back in to those pots to be re-invested in the same areas.

 

 

 

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Either pay down debt or stick it into the highest earning long term bonds they can find and draw it down over several years to offset the huge hole in future revenues they've just created by doing something so stupid.

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2 hours ago, Scotchy1 said:

Many threads here are discussing the pros and cons of Private Equity, so just a little thought exercise, less about whether or not you would go for PE but if we did what would you do. 

Personally I'm not convinced by it so would be interested in seeing some ideas about what 'the masterplan' could be

So the deal has been agreed, money is in the bank, £50m for 33% of SL's revenue (which for the sake of this is let's say £25m)

Where does the game jnvest and get that money and more back?

 

As you've suggested in the past , a RL owned production company to create the content to sell on to broadcasters 

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Private Equity, What would you spend it on?

A cliff-top house on a remote part of the Californian coast, a new car -probably a vintage  Bentley Contrnental, a new bike, and the services of a transplant surgeon for er..er..a particular  organ.

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2 hours ago, Scotchy1 said:

Many threads here are discussing the pros and cons of Private Equity, so just a little thought exercise, less about whether or not you would go for PE but if we did what would you do. 

Personally I'm not convinced by it so would be interested in seeing some ideas about what 'the masterplan' could be

So the deal has been agreed, money is in the bank, £50m for 33% of SL's revenue (which for the sake of this is let's say £25m)

Where does the game jnvest and get that money and more back?

Developing players. Support the amateur game.  Get more players playing, not least from a very young age. Encourage and support parents.  And grand parents (help the bank of mum and dad).

Get help ... 'expertise' ... to energise and market the game.  Learn about 'Advertising'. Understand from the professionals just what it is we are.

P and R should not stand for Promotion and Relegation.  It should stand for Public Relations.   

We should not just market the game though, we need to make ourselves marketable.  This will need investment in the game itself ... it's very being, it's fabric, it's organisation & structure ... but we first need to understand it.

It should not really be about paying off debt, nor about building silly stadiums.  But whatever we were going to spend it on, it would be WASTED if we ignore the elephant in the room -- ourselves, the baggage that comes with the game and state where it has left us in now.

 

Here enter the lesson.

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The way Elstone has constructed the deal,there will be very little capital left to do anything useful with. Much of the capital will be swallowed up by investment bankers and solicitors. Clubs will be lucky if there is sufficient left to re roof a single stand.

As far as PE is concerned,its totally no risk and like taking candy from a baby. They are laughing all the way to their next bonus.

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As  I understand it, PE is not just about buying in for a slice of income.  Is about taking actions to increase the value of the investment.  In other words,  they would want to make SL more sucessful, more valuable.  They would not just sit there and watch the organisation spend the money on anything.

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2 hours ago, JF1 said:

Before we dive headlong into any partnership,we should ask ourselves one simple question.

What is the primary purpose of Private Equity?

I'd invest in a large barge pole.

I wouldn't touch it with a disinfected barge pole THIS IS NOTHING SHORT OF LOAN SHARKING AVOID.

 

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4 minutes ago, ATLANTISMAN said:

I wouldn't touch it with a disinfected barge pole THIS IS NOTHING SHORT OF LOAN SHARKING AVOID.

 

The problem is we now cant avoid it,as Elstone has spent nearly £2 mill in non refundable professional fees. We now have to do the deal,merely to pay the fees! Truely unbelievable.

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20 minutes ago, cookey said:

The problem is we now cant avoid it,as Elstone has spent nearly £2 mill in non refundable professional fees. We now have to do the deal,merely to pay the fees! Truely unbelievable.

If true (and that sounds very high for non-contingent costs incurred to date to be honest so I have my doubts) presumably the clubs as SLE shareholders authorised this spend - I'd love to know the breakdown of such a vote.

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12 minutes ago, M j M said:

If true (and that sounds very high for non-contingent costs incurred to date to be honest so I have my doubts) presumably the clubs as SLE shareholders authorised this spend - I'd love to know the breakdown of such a vote.

A forum prob not the best place to discuss this but I do find the costs on the high side, regardless if we take this deal its basically desperation.

Someone posted an idea here the other day about reducing costs by cutting down the number of overseas players allowed and investing more in the academies sadly this idea is too sensible:(

 

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7 hours ago, Scotchy1 said:

Many threads here are discussing the pros and cons of Private Equity, so just a little thought exercise, less about whether or not you would go for PE but if we did what would you do. 

Personally I'm not convinced by it so would be interested in seeing some ideas about what 'the masterplan' could be

So the deal has been agreed, money is in the bank, £50m for 33% of SL's revenue (which for the sake of this is let's say £25m)

Where does the game jnvest and get that money and more back?

 

Development officers.... Lots of them

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1 minute ago, Bedfordshire Bronco said:

Long term it introduces loads of kids to playing RL

Kids who play the game get a connection for life

Connections for life buy tickets, merch, TV subs 

So you get a return in 40 years time ?

 

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