Quote: The Ghost of '99 "
Yeah I know all about PE thanks - I currently work for a company owned by PE and previously worked for a company which was bought by them, overleveraged, incompetently run and then sent bust. They claimed exactly what you suggest, "corporate knowledge" and "expertise". The reality was millions spent on consultants to come up with reports that the expensively-assembled board could approve and thereby dodge responsibility for the consequences. They added millions of overheads but never got to grips with the fundamentals of how to run what was a quite specialist business. Which brings us to Rugby League. . .
PE are interested in short, at best medium-term returns. Which is incredibly dangerous in a sporting context where expansion is a fundamentally long-term, decades-long, investment. Moreover the proposed deals are money up front in return for a large share of SLE's share capital AND going forward a third (!!!!) of the league's TV income every year. It's madness, an historically terrible deal. No wonder the best-run clubs (also those least desperate for cash) vetoed it (essentially Leeds, Saints, Wire).
And let's look back at the history of "professionalism, corporate knowledge and expertise" being applied to Rugby League - it's such a niche business that it really doesn't lend itself to people with a background in traditional business - in fact we've seen over and over again supposedly high-flying businessmen lose a bundle in the sport because they simply don't understand that the usual levers they would expect to pull often simply don't work in a sporting context. From Richard Branson down to Ian Lenagan and Ken Davey we have seen myriad failures whereas the people who have done best have decidedly haphazard backgrounds - Hetherington was a player and a door-to-door salesman, David Oxley a teacher, David Howes a journalist, Maurice Lindsay a bookmaker, Richard Lewis a tennis player and LTA official.
The sort of deal that's been proposed so far is dangerous. The sport needs investment, but not at any cost and with at such a huge danger to its long-term future.'"
If that was the terms of the PE investment then i completely agree they were right to veto it. But let's not throw the baby out with the bath water on this one. There are many different types of PE investors....yes those you describe who are just interested in over leveraging a business exist, but as do private investors who add a huge amount of value.
It is exactly because we have door-to-door salesmen, journalists and tennis players etc. running the game that this is needed imo. Yes, they have been very successful within their own fields, but often have very significant blind spots when it comes to business, which, along with protecting short term self interest, is a huge reason the game has never realised its potential IMO.
If we could secure a minority PE partner who has a longer term exit strategy that could only be good for the game IMO....it is about finding alignment with the partner and what the game needs. The very reason the last one probably failed is they were chasing huge sums, which brings in the corporate PE sharks, with expectations of huge investment and returns.
A much smaller PE partner who brings a smaller value of investment but prepared to provide greater expertise is what we should be looking for, with a longer term time horizon.
