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#Post#: 110622--------------------------------------------------
Re: 10 team league.....
DIR By: Captquin
Date: June 30, 2023, 12:57 pm
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I can understand the frustration of peoples posts on here at the
ebbing away of the value in a season ticket and I think the
comparisons to premier league football are unfair as rugby clubs
can only dream of the extra tv, advertising and other streams of
revenue that are open to footie clubs.
Therefore, if we as fans want prem rugby to continue and have a
chance of growing the league to a size, scale and heath of what
they have across the Channel then I’m afraid we are going to
have to loyally stick up and continue supporting our mighty club
(financially too!) as we navigate trying and tricky times for
the fortunes of rugby in this county.
One has to accept the financial realities for clubs that
inflation at various levels and not least the rather permanent
puncture in rugby clubs’ finances that saracens artificial
inflation of wages across the board has had which in my mind has
really been an underestimated nail in the coffin that is now
getting passed onto fans…
So question is do we stay or do we go?
#Post#: 110625--------------------------------------------------
Re: 10 team league.....
DIR By: RodneyRegis
Date: June 30, 2023, 5:16 pm
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Again, no. Sorry. It doesn't work like that.
Nobody releases a new phone and says "hi, we have the same
components as Apple, but we don't have their buying power or
their reserves, so please pay us 5 times the price".
Rugby is a massively inferior product to football in delivery,
status, popularity etc. OK some teams have a sort of scarcity
due to tiny stadia, but that's hardly anything to boast about.
People pay good money to see global superstars in mega state of
the art grounds, it's not feasible to say "sorry, nobody really
cares about our sport, so we don't get any tv money, so please
pay 5 times the price"
the financial reality is that if owners want to buy rugby clubs,
they have to subsidise the game. They aren't going to make
money, and to suddenly decided you want to mitigate losses when
the people who come to watch can't afford massive price hikes is
just idiotic.
To break even with current tv money and general interest, you'd
need to charge what - £150 a ticket? It's just never gonna fly.
#Post#: 110627--------------------------------------------------
Re: 10 team league.....
DIR By: Quinky
Date: June 30, 2023, 8:41 pm
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--- Quote from: Brown Bottle link ---
>
> Technically, but I'd be astounded if that was their intention.
>
--- End Quote ---
I'd say it's a mix of love for the club, and a long term "bigger
picture" investment.
#Post#: 110628--------------------------------------------------
Re: 10 team league.....
DIR By: deadlyfrom5yardsout
Date: July 1, 2023, 2:54 am
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Now listen 'ere Spleenky, I love and adore the Club, its
history, its traditions, its shirt but....I think they are
caught in no mans land between its origins and its ambitions.
Whither the clear path?
Personally, I yearn for the old days and all its inconveniences
(pardon the pun) with a more Corinthian approach to everything
and, frankly, would be happy to watch Quins play in a league not
full of money men, cheats and pot pinchers. If that could be
somewhere in Somerset that would be even better :)
#Post#: 110629--------------------------------------------------
Re: 10 team league.....
DIR By: poorfour
Date: July 1, 2023, 4:07 am
---------------------------------------------------------
--- Quote from: RodneyRegis link ---
>
> Again, no. Sorry. It doesn't work like that.
>
> Nobody releases a new phone and says "hi, we have the same
components as Apple, but we don't have their buying power or
their reserves, so please pay us 5 times the price".
>
> Rugby is a massively inferior product to football in delivery,
status, popularity etc. OK some teams have a sort of scarcity
due to tiny stadia, but that's hardly anything to boast about.
People pay good money to see global superstars in mega state of
the art grounds, it's not feasible to say "sorry, nobody really
cares about our sport, so we don't get any tv money, so please
pay 5 times the price"
>
> the financial reality is that if owners want to buy rugby
clubs, they have to subsidise the game. They aren't going to
make money, and to suddenly decided you want to mitigate losses
when the people who come to watch can't afford massive price
hikes is just idiotic.
>
> To break even with current tv money and general interest,
you'd need to charge what - £150 a ticket? It's just never gonna
fly.
>
--- End Quote ---
I disagree with almost all of that. The bit that I do agree with
is your iPhone analogy[1]; if you want to establish a mass
market presence, you need to be prepared to take losses until
you’re established.
But not indefinitely. Rugby clubs are owned by wealthy people,
who got wealthy by knowing how to make a profit. Most sports
club owners are willing to tolerate losses in that “investment”
for far longer than they would be in their other businesses -
which probably comes from a combination of sentimentality for
the club or sport, hubristic belief that they can turn it around
and pragmatism about this being a long game.
The mix seems to differ - there have been a lot of owners who
have come and gone, some (including Quins’) who are genuinely in
it for the long, long haul, and Nigel Wray, who doesn’t seem to
have appreciated that playing beggar-my-neighbour with the
salary cap ultimately damages his own investment.
The point being that club owners go into the game expecting to
take losses for several years, but they also expect to be able
to turn that to profit eventually. They do subsidise our
enjoyment of the game, and have done for a long time, but the
aim for all of them is to have a business that makes money
eventually [2].
Which means, one way or another, the fans pay enough that the
club is profitable, whether that’s through tv subscriptions,
season tickets, merch or food and beverages. And we should
welcome that, if we want the club to be sustainable rather than
dependent on the largesse and patience of a wealthy individual.
We’re closer to that point than we think. I was looking for the
table with this year’s club P&Ls in it and couldn’t find it, but
I did find this:
HTML https://thematchreport.co.uk/2023/05/05/why-english-rugby-is-unsustainable/
What it shows is that Quins made a small operating profit in
2021 - which is surprising given it was during COVID but there
isn’t enough detail to dig into that.
It isn’t going to take £150 a ticket to break even. I think the
season ticket changes this year have been done with the intent
of ensuring an operating profit, and if the club can sustain
that they will probably be in a position to be profitable on an
ongoing basis and start paying down some of their debt.
As to whether rugby is a vastly inferior product to soccer, well
that depends on your taste. I don’t pay to see global megastars
in super state of the art grounds, because I don’t like paying
those megastars’ wages, I don’t like the atmosphere in those
grounds [3], and I find the product on the pitch utterly lacking
in entertainment value. But I know I’m in the minority, and I am
willing to pay more for a product I actually do like to watch.
Some people do make a trade off between soccer and rugby, and
that’s fine. Some people make a trade off between Premiership
and lower league rugby, and that’s also fine. Quins are betting
that there are enough people who will now pay enough to watch us
that the club can look at standing on its own financially. So
far that bet looks to be a good one.
——
[1] Though actually, Apple make a very large margin on their
iPhones - something like 40%. They sell it as a premium product
with a price tag to match, and basically use it as a vehicle to
develop new technologies that they then sell in iPads and the
like at a much lower margin.
[2] …and not by selling off the assets at a profit. Racking up
years of losses in the hope of recouping it in a land
transaction is not a sensible business model.
[3] And Chelsea and Fulham’s grounds are hardly state of the
art.
#Post#: 110630--------------------------------------------------
Re: 10 team league.....
DIR By: RodneyRegis
Date: July 1, 2023, 10:25 am
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'Rugby is a massively inferior product to football in delivery,
status, popularity etc'
'I don't like football'
OK.
#Post#: 110631--------------------------------------------------
Re: 10 team league.....
DIR By: Quinky
Date: July 1, 2023, 11:33 am
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--- Quote from: poorfour link ---
>
> [2] …and not by selling off the assets at a profit. Racking up
years of losses in the hope of recouping it in a land
transaction is not a sensible business model.
>
--- End Quote ---
That would depend on the value of the land. Asset stripping can
be a very lucrative business. I recommend reading the biography
of James (Lord) Hanson. He didn't do too badly from it.
#Post#: 110632--------------------------------------------------
Re: 10 team league.....
DIR By: poorfour
Date: July 2, 2023, 2:57 am
---------------------------------------------------------
--- Quote from: Quinky link ---
>
> That would depend on the value of the land. Asset stripping
can be a very lucrative business. I recommend reading the
biography of James (Lord) Hanson. He didn't do too badly from
it.
>
--- End Quote ---
Asset stripping is a valid strategy for a second buyer - someone
who buys a business, usually along with its debts, at a discount
to its asset value and then breaks it up and sells the parts.
It’s not a remotely sensible strategy if you’ve owned the asset
and built up the debts while it’s appreciating. In the case of
land, if your aim was to make a profit and sell it on, you’d
have been better to do nothing than to pour money into a sports
club for decades.
Stripping your own assets might be possible as a desperation
move if the club is going under and you want to salvage
something from it. That’s what the Worcester owners seemingly
tried to do at the end.
#Post#: 110637--------------------------------------------------
Re: 10 team league.....
DIR By: Quinky
Date: July 2, 2023, 8:44 am
---------------------------------------------------------
--- Quote from: poorfour link ---
>
> Asset stripping is a valid strategy for a second buyer -
someone who buys a business, usually along with its debts, at a
discount to its asset value and then breaks it up and sells the
parts.
>
> It’s not a remotely sensible strategy if you’ve owned the
asset and built up the debts while it’s appreciating. In the
case of land, if your aim was to make a profit and sell it on,
you’d have been better to do nothing than to pour money into a
sports club for decades.
>
> Stripping your own assets might be possible as a desperation
move if the club is going under and you want to salvage
something from it. That’s what the Worcester owners seemingly
tried to do at the end.
>
--- End Quote ---
People hang on to failing businesses, especially in the case of
assets being land, as it's possible to massively increase the
value of those assets - but it can take time. For example, land
value multiplies when planning permission is obtained.
#Post#: 110639--------------------------------------------------
Re: 10 team league.....
DIR By: poorfour
Date: July 2, 2023, 9:42 am
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Yes, but in that case they generally aim to keep the business
limping on with minimal investment and minimised losses. Quins’
owners have supported significant investment and losses over the
years. I doubt that the Stoop site is more valuable than the
£33m in debt Quins reportedly have.
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