My interest in business or commercial activity first started when a work friend of my Mum visited our family. She brought a book on commerce which is what business studies would have been called decades earlier. I read the book and that piqued my interest.
At the end of your third year in secondary school you are allowed to pick optional classes that you will take exams in. this is supposed to be something that you’re free to chose.
I was interested in business studies (partly because my friend Joe was doing it). But the school decided that they wanted me to do physics and chemistry instead and they did the same for my advanced level exams because I had done well in the normal level ones. School had a lot to answer for, but fortunately I managed to get back on track with college.
Eventually I finally managed to do pass a foundational course at night school whilst working in industry. I used that to then help me go and study for a degree in marketing.
I work in advertising now. And had previously worked in petrochemicals, plastics and optical fibre manfacture. All of which revolve around business. That’s why you find a business section here on my blog.
Business tends to cover a wide range of sectors that catch my eye over time. Business usually covers sectors that I don’t write about that much, but that have an outside impact on wider economics. So real estate would have been on my radar during the 2008 recession.
One of the best YouTube channels that I currently subscribe to is the Foreign Correspondents Club of Japan. I used to enjoy visiting the Foreign Correspondents Club in Hong Kong. I particularly enjoyed their public talks. The Foreign Correspondents Club of Japan seems to run to a similar model as its Hong Kong counterpart. Its YouTube channel shares the regular public talks that they host by a wide range of experts. More Japan related content here.
Ronnie Drew on the Dublin Pub
Ronnie Drew of The Dubliners talks about the iconic nature of the Dublin pub. O’Donoghue’s was famous in Irish music and particularly famous for the short film O’Donoghue’s Opera, which Drew starred in.
Incremental metal forming
Additive manufacturing has managed to offer substitutes for short runs of moulded, cast or milled parts. Incremental metal forming offers a similar substitute for complex stamped parts. It’s an area that is is being currently developed. This has more potential than you would think due to the high cost and commitment to tool making needed if you wanted to use a process like progressive stamping.
The Boy and The Heron
The Boy and The Heron aka How do you live? is Studio Ghibli‘s latest film. I picked through the trailer with friends who are fellow Studio Ghibli fans. The Japanese movie title references a Japanese book How do you live? which features in the films universe. How do you live is a book where an Uncle documents his discussions with his nephew as the boy faces up to the challenges of childhood. In some respects How do you live? reminded of Jostein Gaarder’s Sophie’s World – in terms of feeling, if not style.
How do you live? is as well known in Japanese circles as a children’s classic in the same way that Ursula LeGuinn’s The Wizard of Earthsea would be known to English speakers. But in English it doesn’t have the same cultural resonance, so hence the much more descriptive The Boy and The Heron. We were all relieved that the film is not a 3D CGI work like Earwig & The Witch.
Looking at the trailer it evoked memories of other Studio Ghibli films
I got to see the film at a special screening at London International Film Festival. But not going to share any spoilers until well after it goes on general release, save to say it’s well worth watching, but you knew that anyway.
Create real magic
Coca-Cola tapped into the trend for generative AI to allow consumers to remix existing advert artwork and make their own version. As far as I know Accenture was one of the main agency partners involved. This is less about the future of advertising and more about how the technology itself has become the meme, rather like all things cyber in the mid 1990s.
A la Soledad O’Brien presenting with a Leo LePorte voiced avatar on MSNBC show The Site during 1996 and 1997.
TikTok quacks is a bit of a harsh label for TikTok content. The reality is that similar content to that turned out by various TikTok quacks appear on YouTube, Instagram and other social media channels. Quack and quackery are synonyms for medical false claims or a ‘snake oil salesperson’.
Social media not only spreads misinformation and false hope across a range of medical conditions, it allows the perpetrators to profit directly from their work. The rise of dodgy health businesses with commerce integrated into their social posts by the likes of TikTok (and Instagram) facilitates TikTok quacks.
Below are just some of the content currently exposing this intersection between health, wellness, beauty and dishonestly obtained profits.
Hong Kong’s corporate lawyers test boundaries as Beijing’s influence grows | Financial Times – legal practitioners, including corporate lawyers, are concerned the broadening scope of a sweeping national security law could jeopardise the independence of the city’s legal system, a legacy of British administration, as Beijing tightens its grip. “There is general concern . . . that people are not fully understanding where the boundaries lie,” said a senior corporate lawyer with a global firm who has worked in Hong Kong for more than two decades – not entirely unexpected and a great opportunity for Singapore
Digital materials look to use different geometry of materials to replace other materials with special properties like foams. It does this through 3d printed lattices.
Sweden Is Not Staying Neutral in Russia’s Information War | New York Times – The Psychological Defense Agency also raised political concerns when it was proposed, but its leaders have emphasized that mandate allows it to address only foreign sources of disinformation, not content generated in Sweden. The challenge is one facing all democracies that, as a matter of principle, decline to enforce official ideologies, allowing divergent points of view of what is true or false. “The government can’t control the truth if it’s going to be a democracy,” said Hanna Linderstål, the founder of Earhart Business Protection Agency, a cybersecurity firm in Stockholm, and an adviser to the International Telecommunication Union, part of the United Nations. “The government can’t control the truth if it’s going to be a democracy,” said Hanna Linderstål, the senior cybersecurity adviser of Earhart Business Protection Agency.
ChatGPT In Trouble: OpenAI may go bankrupt by 2024, AI bot costs company $700,000 every day – not terribly surprising, it’s computationally intensive and hard to monetise. Look at how Google and Facebook have looked to squeeze computing power per watt out of their data centres, along with squeezing cost per server right down as well – they did this to reduce operating costs versus income. ChatGPT hadn’t gone there on design and instead uses 10,000 plus servers based around power-hungry top-of-the-range Nvidia graphics processors
The luxury sector was surprised by the acquisition of Bucherer AG by Rolex. Bucherer was founded in 1888 by Carl F. Bucherer. Over time, it grew to be a 100 store international network of watch and jewellery shops. In addition, the company owns a watch brand called Carl F. Bucherer. The chairman Jeorg Bucherer is the last of Bucherer family. His lack of a successor and the family’s close connection to the Rolex Foundation were given as a reasons for the sale.
Bucherer in Lausanne
Why should Bucherer sell?
Bucherer pivoting to a sale was surprising. Part of this is down both companies being private. Neither publicly disclose finances or appear regularly in the media. We don’t know if the offer came from Rolex or if Bucherer approached Rolex with a view to sell.
If Rolex made the first move
If it was Rolex that made the move, then saying no would put the 100+ strong Bucherer retail showroom network at risk. While Bucherer represents 5 percent of Rolex’ global sales. Rolex means much more to Bucherer; 53 of their stores are Rolex authorised dealerships and 48 are Tudor authorised dealers. Having a Rolex franchise increases footfall and likely boosted sales of other brands in Bucherer stores.
If Rolex were invited to make an offer
If, like it was claimed that Bucherer’s decision was down to the lack of succession, why did Bucherer conduct a lot of activity to grow its business internationally?
Bucherer has continued to expand its retail and service network. It reputedly spent up to $350 million buying US luxury watch retailer Tourneau five years ago.
The Carl F. Bucherer (CFB) watch brand has put a lot of effort in terms of expanding its watch line-up, which are made in its own factory in Lengnau, Switzerland. This watch range uses some movements that are based on La Joux-Perret or ETA movements and some which seem to be complete in-house designs that look to mirror the kind of horology that the likes of Patek Philippe are better known for. A good example of this is the minute repeater below.
Watch featuring their inhouse M3000 movement.
The watch making side of the business has continued to design innovative movements including novel technology designs.
The brand has worked on marketing its watches globally from a roster of Chinese and western actors as brand ambassadors, movie product placement including Deadpool 2 and the John Wick series. In 2018, they worked with JD.com to establish a watch brand-specific online storefront for the China market. Marketing activity continued through the COVID pandemic.
At the beginning of July this year they launched a new watch model: the Heritage Chronometer Celebration in rose gold.
This doesn’t sound like the brand was preparing for a sale due to a lack of family members to take over the reins. So why the sudden change?
Why should Rolex buy Bucherer?
Vertical integration?
Bucherer apparently counted for five percent of Rolex’ global sales, but had showrooms in strategically important markets like Geneva, London, New York and Paris.
Bucherer was the pioneer retail partner for Rolex’ CPO (certified pre-owned) programme; so their relationship was already very close. The programme was suspected to be rolled out for a number of reasons:
To try and deal with authorised dealers shortage of new Rolex stock, that had driven ‘watch flipping’ and allegations of corrupt sales practices at Rolex authorised dealers. If customers leave the authorised dealer network, Rolex loses control of the customer experience.
To allow Rolex additional profits from the inflated pre-owned watch market driven by pre-owned watch dealers catering to massively increased consumer demand.
More on the allegations of corrupt sales practices
While the CPO programme arrived just as the pre-owned watch market peaked (and at the time of writing its now at a two year low), it hints at the benefits to Rolex of having both circular and vertical integration.
Buying Bucherer potentially gives Rolex 100+ owned outlets. Why would Rolex want to own its retail outlets? Let’s go back to 1977 and a seminal event in the current luxury industry history. Madame Renée Vuitton asked her son-in-law to take over the family business. Henry Racamier got under the hood of the business and found that franchisees were making the bulk of the profits. So, slowly but surely Racamier set the business on the path to vertical integration. Racamier’s only business mistake was getting involved with Bernard Arnault, who took the Racamier formula and built LVMH into the giant that it is today.
Racamier, set a path that Audemars Piguet would eventually follow. Vertical integration would mean control and increased income for the Rolex Foundation.
For Rolex, owning its showrooms is not without risk. The reactive statements by Rolex that the brand shops would maintain their brand and management seems to be designed to placate Swiss competition authorities. What the subsequent integration into Rolex Group operations would look like may depend on regulatory concerns.
Swiss competition authority COMCO confirmed that was was analysing the deal. It accesses impact based on size and its possible effect to eliminate effective competition.
Bucherer is a sales agent for much of the luxury Swiss watch industry
Baum & Mercier
Bell & Ross
Blancpain
Bregeut
Bulgari
Cartier
Chopard
Frederique Constant
Girard-Perregeaux
Hublot
IWC
Jaeger LeCoultre
Longines
Maurice Lacroix
Montblanc
Omega
Oris
Panerai
Piaget
Rado
Roger Dubuis
TAG Heuer
Tissot
Ulysse Nardin
Vacheron Constantin
Zenith
Secondly, being a retailer and being a manufacturer is a very different business. If Rolex is going to learn about retail, it needs to spend years understanding Bucherer’s current business. Even then, there is no guarantee that it will follow the owned single brand showroom network model.
CPO and circular economy
The idea of the circular economy is now a big idea in the luxury sector and fits into the ‘Perpetual Planet’ tenet of the Rolex Foundation and at least part of the thinking behind the CPO programme. The idea is that a product can be serviced and or resold from its first owner to successive owners. This would require less new materials to be mined and less energy expended on the manufacturing process. The customer would end up with a product that is long-lasting and better for the planet.
Rolex watches like the 1960s era 5513 Submariner are still worn as everyday watches and will likely outlast you and I, if they are serviced once every five years and parts replaced on an as-needed basis. Secondly, there is a premium set on authenticity – vintage items that may have already lived an interesting life. You see this desire for authenticity from fashionistas thrifting to Rolex collectors prizing COMEX and military-issued models.
Finally, there is precedent for watchmaker participation in the circular economy; Richemont are already in the pre-owned market with their ownership of WatchFinder.
Avoiding a retail power shift?
Bucherer is the largest of independent privately owned Rolex authorised dealer networks. Rolex has about 2,000 outlets worldwide. If a rival or a private equity company bought Bucherer on its own, it wouldn’t be a big deal. But if the private equity buyer used Bucherer as a hub and bought up:
Wempe – which has a multi-country footprint (Austria, France, Germany, Spain, USA and the UK). Like Bucherer, Wempe is also a watch brand.
David Rosas that has a network of seven stores in Portugal.
Emperor Watch and Jewellery that has a footprint in Hong Kong, Macau, the Chinese mainland, Malaysia and Singapore.
You then have a private equity run authorised dealership network that would be a substantial part of Rolex Group sales and more likely to try and dictate terms to the watch maker. Often this doesn’t work, a classic example of this is how Phones4U went under after trying to dictate terms to the mobile networks. Regardless of whether Rolex fended this off or were enthralled by the dealer network, it would be damaging for the Rolex brand, its global reach and customer experience.
Realistically, Rolex dealers whilst profitable miss out on some of the things that private equity firms look for:
Huge cost-cutting potential – this might happen if you can scale to a dominant position in the Rolex dealership network and leverage it to get costs reduced. Stores tended to be staffed pretty lean already with Bucherer using one sales manager for three London showrooms. There would be limited scaling benefits for business functions.
Huge growth potential – maybe, but you’re still constrained by the nature of the luxury market and the complex eco-system of grey market and pre-owned specialists.
All of this would take time, likely longer than the 4 to 6 years that private equity investors typically look for their return. But that doesn’t rule out sovereign funds from the likes of the Gulf states.
Taking Bucherer off the table means that the notional private equity firm would likely need to buy a larger publicly listed partner like Watches of Switzerland. This would likely cost more on a store-for-store basis and be less attractive to private equity.
Watch servicing
Bucherer has provided Rolex with watch servicing capability through its retail network, which gives you the high level of trust that Rolex had in the brand. Having greater service capacity would be beneficial as waiting times can take as long as six months for a Rolex service. At best this is a secondary benefit for the Rolex organisation. Purchasing it would be beneficial to prevent it falling into the hands of LVMH who have increasing ambitions in watchmaking.
Manufacturing
Rolex is building three temporary manufacturing units, for use until its new factory comes online in Bulle, Switzerland some six years from now. This will be the fifth Rolex-owned factory in Switzerland. The Lengnau factory would their add to the existing manufacturing capacity or offer additional capability. Lengnau manufactures a range of movements and complications with COSC chronometer certification. The question would then be, what would Rolex do with the additional manufacturing capacity and how would it fit into the Rolex system?
In addition to manufacturing capacity, the brand brings innovation in movement design to the table from a novel balance wheel driving an automatic movement to a minute repeater movement.
if Carl F. Bucherer were kept as a separate brand it would likely benefit from being part of Rolex’ larger materials purchases from suppliers and transfer of process technologies to further improve its own manufacturing line. Scale has its advantages.
Rolex multi-brand strategy
Rolex has more demand than it’s prepared to supply for its own brand watches and the brand has been moved upmarket into the luxury space by management since the 2000s. Its second brand Tudor has been reinvigorated through the use of innovative watch materials and playing on both the Rolex and Tudor brands heritage. Tudor seems to be moving into Rolex’s classic brand positioning, while Rolex moves its price and positioning even further upmarket. But both of these brands sit firmly in the tool watch space, despite Rolex being available in precious metals.
Having a third brand would allow Rolex to move in a number of directions:
Have a brand that could slot in below Tudor, which the CFB Pratavi models could do.
Allow Tudor to go exclusively heritage in their design language. The CFB Pratavi models would represent a more contemporary looking alternative.
Go after the non-Rolex space of horological designs from the likes of Audemars Piguet, Blancpain, H Moser, Patek Philippe or Vacheron Constantin. Rolex hasn’t committed to going after this part of the market previously because of its Lexus-like reputation for reliability, even in their most expensive models. This could be done with the CFB Manero and Heritage ranges which have similar complications.
Rolex has shown for decades with the Tudor brand that it was prepared to take its time, so reinventing and repositioning another watch brand isn’t out of the question.
Watches of Switzerland
The long squeeze?
As news of the acquisition got out Watches of Switzerland (WoS) shares plummeted almost 30 percent. Rolex represents about 50 percent of WoS sales. So investors were concerned about the impact that this might have in the watch market.
What if Bucherer represented, just a first move by Rolex? What if Rolex wanted to get a readymade wholly owned global footprint. Buying WoS at a depressed price would provide the ideal footprint. Porsche very nearly succeeded in a buy out of Volkswagen in 2008 that riffed on this approach.
Like the Bucherer deal, it may receive competition scrutiny. However such an approach would likely face action from the Swiss regulator COMCO, even if the UK’s CMA didn’t step in.
A second reason not to do an intentional long squeeze on WoS is that it might attract institutional investment from deep pocketed hedge funds and private equity firms who previously wouldn’t have looked at WoS as a target, to build a dealer network and in turn squeeze Rolex.
Preference
Rolex wouldn’t need to get rid of Watches of Switzerland in order to do damage to the brand. Just the perception that Bucherer had a more favoured status for Rolex availability would be enough to adversely affect footfall to its showrooms.
This is something that could happen even if Bucherer remained an independently operated multi-brand watch retailer.
What prompted me to write about Geico advertising was a stream of news from marketing services companies about the state of technology company advertising. At the time of writing Stagwell are just the latest marketing services firm after S4, IPG, Omnicom and WPP have pinned declining profits on a reduction in technology company advertising spend. Then this story broke about Geico advertising: Insurer Geico made more money after benching its famous gecko | Quartz – and my first reaction was that the wrong lessons might be taken away from this.
Geico advertising – a primer
Geico îs an unfamiliar name to most people outside of the US. If you’ve read American magazines chances are there was a print ad or two in there with their iconic Gecko spokesperson. It’s a similar case on American television.
Geico advertising and their Gecko are as familiar to Americans as the meerkats of Comparethemarket.com are to your average Brits.
The truth about technology marketers vs. Geico advertising
Having worked with technology brands on and off for the past three decades, I have enough experience to know that generally, they aren’t great marketing organisations.
Coinbase’s Super Bowl ad drove traffic to a site that fell over.
Geico reinforced brand equity in the insurance space and pointed out their 24-hour claims hotline (I imagine that this isn’t an exclusive feature, but you wouldn’t know it from the advert).
Growth mindset ≠ marketing mindset
As organisations, they have a growth mindset, but not a marketing mindset. Before the internet, this meant a powerful field sales force organisation and marketing meant a bit of branding / design work coupled with case studies for the sales people. With the internet came constant iterative ‘growth hacking’ on digital channels, that mirrors agile software development rather than the best practices of marketing science.
There is a good reason why organisations like the Ehrenberg-Bass Institute for Marketing Science are supported by FMCG manufacturers, luxury goods makers, media companies, marketing services firms and pharmaceutical companies, BUT has no technology company sponsors.
The reasons are cultural in nature:
Engineering – if I haven’t heard of it or invented it then it’s not valid and you’re just a suit. At best great product is the marketing – and that’s great if you have a clearly differentiated great product which is self evident. The engineering mindset is also why they trust adtech and marketing automation services which outsource your marketing communications approach to a black box
Sales – marketing is just support. Which is the reason why my early clients (like old school Silicon Valley royalty LSI Logic) promoted long serving secretaries and administration staff into marketing roles
Even if they had a marketer who knew about Ehrenberg-Bass they wouldn’t be able to get in buy-in from the wider organisation to participate and they’d likely be fighting other dumpster fires elsewhere
Secondly, their laser focus on data affects their outlook. To paraphrase the comedian Bill Hicks: they know the price of everything, but the value of nothing. Because they are only looking at short term data. Great marketing and advertising also has long term effects that both screws with the short term marketing data focus.
Marketing and growth hacking are considered synonymous. It would seem ridiculous for me to to claim in any large marketing orientated organisation that sales and marketing are synonymous. The differences and complementary aspects of both would be well known. Yet in technology companies, this isn’t the case.
By contrast Geico as a brand is an organisation who understood marketing. You make your car or house insurance decision at best once a year (though there is friction in making a change).
The technology sector approach would be for Geico to bid on search ads and aggregators to acquire customers and then do direct mail or email when it comes to renewal times. But Geico advertising does something different. Geico advertising builds mental framework, so that Geico means car insurance and will be one of the brands that you consider.
This achieves a few things:
You are less likely to move away from Geico, you may not love them, but searching for an alternative might be too much of a hassle.
You may be reassured that you have chosen ‘the’ car insurance
It helps new customers get over the ‘which car insurance company to choose’ decision
It helps with upsell on the products due to the reassurance of the brand
Technology companies deal with these problems in a slightly different way:
Certification of engineering staff. If you are Microsoft certified or Cisco certified, you are less likely to use open source software or Juniper Networks products respectively. It would be against your self interest and the investment in terms of time and money that you have made in your self development
Contractual lock-in – self explanatory
Technology lock-in. You can put your data or programming code into a particular system, but its much harder and more expensive to move on to another system
Owning the entire technology stack. This is the approach that Adobe Systems have taken, gradually acquiring over the years the entire marketing, workflow and creative systems used by ad agencies, media agencies and their clients
So why was Geico advertising spend cut?
This is the crux of my point about how the wrong lessons might be taken away from the Geico advertising spend cut, with no ‘apparent’ impact.
There are a number of good reasons why Geico made the cut in advertising spend:
There was a cut in insurance sector advertising overall, so that Geico maintained or even grew its relative share of voice while spending less. This should see it emerge with improved economic performance over time. Procter and Gamble became the behemoth it now is by INCREASING advertising during the great depression of the 1920s. So the idea of relative share of voice and its relationship to market share is older than I am. Further more research by the IPA has found that holding or increasing relative share of voice during a downturn has a positive impact for business performance over a five year period
Geico may have managed to make some efficiency gains, this is most likely to occur in brand activating activities
There is also a bad reason: saving money in the short term. Kraft Heinz cut marketing to the bone under the guise of zero based budgeting (ZBB) – which made a mockery of ZBB as a concept. Kraft Heinz shares massively underperformed and were down 60% in the last 5 years, compared to the S&P 500 having gone up 69%. If Geico is following this route then it bodes ill for the long term performance of the business.
Without us knowing the real reasons and focusing on the short term measure, it reinforces a growth hacking mindset.
Hard times mean no sustainability premium in North America | WARC | The Feed – every single economic recession this comes around and marketers are surprised. Time to pay attention to what the longitudinal research data says. I really like the work that Gallup have done on macro trends and the American consumer, in particular their work on attitudes to the environment.
‘Pokémon Sleep’ Review: Sleep-Tracking Game Made Me Into Snorlax – gamifying sleep. Pokemon Sleep has surged to 3.2M global downloads and an estimated $130k in daily revenue according to SensorTower data. The app ranked in the top 5 in the U.S. Games charts. It’s even more popular in Japan (the home of Pokemon), where it’s number 1 across the App Store categories
Using attention to scale creative excellence at Mars | WARC – Sales, distinctive assets, and attention to advertising are the go-to metrics to guide marketing decisions at Mars. Mars use Attention as a pre-testing tool, to inform creative choices in digital and also proxy in TV. Mars believe that an execution with a better attention score will travel across media channels better and will be a safer bet for you when you need to make a choice. Measuring Attention is a key element in helping us improve the creative hit rate. Advertisers should question how they measure consumer responses and focus on measures of real consumer behavior.
One of the biggest things that have impacted many British people has been overseas money that has resulted in soccer team acquisitions. There is a certain irony in someone like myself who isn’t that emotionally invested in sport writing about the impact of soccer team acquisions – but maybe my view from the outside in may get somewhere closer to the truth.
I worked on lacrosse brand Warrior’s foray into soccer and helped relaunch the New Balance offering in football. (It had previously made football boots in the 1980s and had English football team captain Bryan Robson as their spokesperson.)
I have visited major football stadiums in Ireland, the UK and Spain – but still don’t have an emotional connection to the game.
Changing landscape
Over my life I have seen football change as a pass time. Football was a decidedly working class sport with concrete floors on terraced stands with railings to lean on, clubs could pack in their fan base to watch a game standing up.
Roy of the Rovers
The sport was lionised in comics, notably football player Roy Race aka Roy of The Rovers, which ran from 1954 – 1993. It has been rebooted a couple of times, most recently by Rebellion, publisher of 2000AD and Judge Dredd.
https://flic.kr/p/2oHEYiX
Roy of the Rovers from 1977
It is no coincidence that most of the UK’s most prestigious clubs were in historic large working class population centres: Liverpool, Manchester, Nottingham, Leeds and Leicester.
John Moores to Delia Smith
For working class entrepreneurs, soccer team acquisitions and team ownership were a way of demonstrating their position at the acme of their community. John Moores – the scion of the Moores family who founded the Littlewoods empire based on the working class love of betting on football match outcomes. Moores then went on to set up a mail order retail company also called Littlewoods, which mixed a wide product range with payment by instalments.
From mail order Moores rolled out a network of value orientated department stores that catered to working class communities. To give you an idea of how ubiquitous Littlewoods was, everyone I knew at school had school shirts, trousers, jumpers and blazers from Littlewoods.
In 1960, Moores become a director and then sealed his place in Liverpool society by becoming chairman of Everton Football Club. From this achievement he became a freeman of the city of Liverpool in 1980 and received a knighthood ten years later.
via Wendy House
Delia Smith is as famous in the UK for her cookery as she is for her ownership of Norwich City Football Club. A school leaver without qualifications, Smith built up a reputation for cooking after the austerity of the post-war years when cooking had no longer been passed down from mother to daughter due to food rationing. This eventually garnered being published in newspapers and magazines, her own TV series, books, a sponsorship deal with Sainsbury’s and an online cooking portal.
Smith and her husband were not from Norwich, but had chosen to make their home there. They cemented their place in the community when Smith bought into the club in 1996, where she has a reputation as an impassioned owner.
“This is a message for possibly the best supporters in the world. We need a 12th man. Where are you? Where are you?”
Delia Smith broadcast on BBC Radio Norfolk during a match against Manchester City
Smith like Moores was never going to make a fortune from football.
Football is our religion
In their push for viewer subscriptions, British satellite pay TV provider Sky Sports ran an anthem advert that got to the core of the British relationships with their football team.
In the advert, actor Sean Bean reads a manifesto written by Leeds United fan, who also wrote, directed and produced the film.
Life
It can be difficult
You know that
We all need someone to rely on
Someone who’s going to be there
Someone who’s going to make you feel like you belong
Someone constant
It’s ectasy, anguish, joy and despair Part of our history Part of our country And it will be part of our future It’s theatre, art, war and love It should be predictable … but never is It’s a feeling that can’t be explained but we spend our lives explaining it It’s our religion We do not apologise for it We do not deny it They’re our team, our family and our life.
Barry Skolnick
If the football match is their service, then the football stadium is their church and their bible is the history of teams and and their gospel chapters individual player biographies. In Britain weddings, funerals and baptisms may happen in a church – but that’s about the limit of religious activities for many people.
Catalysts
Catalysts were in place for new types of soccer team acquisitions.
How to become a millionaire?
The perceived wisdom about owning a football team was encapsulated in a British joke:
How to become a millionaire? Be a billionaire and then buy yourself a football team
But that isn’t always the case. In America there was a class of investors who realised that owning sports teams with substantial media rights didn’t give regular dividends but did offer the opportunity of a big payout when exiting and selling the business on. People like the Glaser family and their experience with the Tampa Bay Buccaneers took their expertise to English Premier League football. Acquiring undervalued teams, maximising the value and selling them on. This hasn’t been without controversy with fans being openly hostile to the owners.
A new type of British entrepreneur tried the same thing, the exemplar being Mike Ashley at Newcastle United.
Hot media property
Remember when I said about owning substantial media rights? The media rights themselves were a catalyst to changing the business and driving soccer team acquisitions. 1991 was a seminal year in English football with the founding of the Premier League. It was a break top flight football needed. At the time stadiums were in need of refurbishment and fans facilities were in a poor state. There were security issues at matches due to organised crowd violence. The English were only recently allowed back into European inter-league competitions after bans due to hooliganism.
The Premier League allowed clubs to tap into funds to help rebuild stadiums and make nicer facilities. Knock on effects of this included a pivot towards middle class customers and corporate entertainment which affected the atmosphere in the stadiums, but made the matches more media friendly. This meant football clubs became more brand friendly and opened new commercial doors for sponsorships.
The world is watching
The rise of the Premier League also saw the rise of international media rights. Matches were broadcast around the world. Clubs suddenly found that they had a fan base half way around the world. English football tended to be more exciting to watch due to its playing style versus European clubs. It also attracted sports betting. One of the things that most surprised me travelling in Asia was running into fans not only of Liverpool or Manchester United but also lower profile clubs like Blackburn.
The renovation of stadiums meant that clubs were ready for tourism and their merchandise sold around the world. A Manchester United football shirt appeared in even more cities than an ‘Irish’ pub. The clubs became global brands, which attracted the interest of American investors who realised the opportunity that English soccer clubs offered.
Second wave buyers
Skilful investors in English clubs don’t make money in soccer team acquisitions and running the clubs, but in selling their team. The next tranche of investors to shake up English football were foreigners resident in the UK and looking to enmesh themselves in British society some of them like Alexander Lebedev managed to buy the Evening Standard newspaper, which instantly gave him influence. However there are more opportunities to own a top flight football team due to media consolidation, AND, you probably have more chance of making more money on exiting the investment.
Roman Abramovich
The exemplar for this second wave would be Russian business man Roman Abramovich who had made is money in the post-Soviet era from energy and aluminium processing. He went on to buy Chelsea Football Club, one of the most high profile soccer team acquisitions of the early 2000s, if not the past quarter century. Under his ownership the club went under the kind of development that American owners had looked to achieve, but on a world stage. His ability to spend also distorted the transfer market for football players.
By the end of the decade, a Europe wide set of regulations were brought into effect to try and reduce the distortion that second wave buyers and their soccer team acquisitions could bring to club competition called the UEFA Financial Fair Play Regulations.
Even as a high profile member of British society, Chelsea couldn’t provide the shield that Mr Abramovich needed to stave off suspension of his tier one visa allowing entry at will to the UK in 2018. It also didn’t stop the sanctions deployed against him, amongst other Kremlin-connected business people after the 2022 invasion of Ukraine.
Third wave of soccer team acquisitions
The third wave of soccer team acquisitions are from Gulf Cooperation Council member states:
Bahrain – Bahrain is unlikely to be doing any large soccer team acquisitions, though it has bought into second tier side Paris FC. It is a regional tourist destination for people in the Middle East and has built up a finance services sector that has a regional footprint. However it has relied on financial help from the Kingdom of Saudi Arabia
Kingdom of Saudi Arabia
Kuwait
Oman
Qatar
Their motivations are multi-pronged in nature:
Diversification of national wealth out of extracting oil and gas into assets that will continue to deliver returns after the oil runs out. In this respect they are no different to the sovereign funds of countries like Norway or Singapore
Media ambitions, Qatar already hosts the main service provider showing life professional football across the Middle East. Soccer team acquisitions could be thought of as vertical integration. For other countries, it could be seen as hedging against Qatar’s sports media hegemony
Increasing their soft power to improve their security status. This is also why Qatar hosted FIFA World Cup in 2022
Societal influence. The House of Saud have been the guardians of some of Islam’s holiest sites for about a century. Now they are the guardians of St James’ Park through their majority ownership via the Saudi government Public Investment Fund. This may give them a contingent to draw upon during difficult times in their relationship with the UK, particularly as Saudi oil becomes less important as an energy source. (Saudi oil will still be important as a chemical feedstock for every aspect of modern life including Tesla batteries, but hydrogen and electric power via alternative energy sources will reduce the impact of an oil embargo considerably.)
The outlier
Ryan Reynolds purchase of Wrexham is an anomaly. Soccer team acquisitions to build a media juggernaut are hard to do and Reynolds has shown he is uniquely creative with Aviation Vodka and Mint Mobile. He has managed to create a media property out of a lower league football team and bring pride back to a small North Wales town that hasn’t had much going for it since I was a child.
The club was community owned and has had a modest 2 million pounds invested in it since 2011. But it made great reality television in a healthy way. How long the halo of Hollywood lasts is a bigger question, but any attention given to the former steel making and coal mining town has got to be welcome.
