I got a letter from my bank recently informing me that the interest I receive on my balance was about to drop from the less than generous 0.1 per cent per annum to the Scrooge-like 0.001 per cent. Naturally enough, I shopped around to see what else might be available and happened upon an investment opportunity from the nice folks at Murrayfield PLC. They are willing to sell me a slice of their pro team action and, with rugby’s global brand growing as never before, this was an opportunity too good to miss.
For the sake of arguments let’s sweep the “fit and proper partner” bit under the carpet and proceed like I was Warren Buffett after a two bottle lunch… Warren Buffoon.
Murrayfield would prefer to keep for themselves a controlling stake in the business, which obviously excludes any investor with serious plans rather than those who just want to boast in the hospitality box.
Although that also ignores the fact that neither Scotstoun nor Edinburgh’s soon-to-be new home Myreside boasts anything that can be labelled a hospitality box.
Still this is a vanity project for Mr Buffoon, who ignores Murrayfield’s preference for a minority partner because the salesman has hinted that, for the right kind of moolah, pretty much everything could be negotiated away.
Mr Buffoon undoubtedly has pockets deep enough to make most small problems disappear but even he doesn’t have the wherewithal to magic a stadium out of thin air, which is what is urgently required.
Both Glasgow City Council’s Scotstoun and Watsonians’ Myreside are rentals but teams really need to own their own facilities to have any chance of scratching a living out of professional rugby. It is the sine qua non of sporting franchises.
When Wasps were playing in High Wycombe’s Adams Park they received exactly 15p for every £1 spent at the stadium which held just 12,000 fans (almost twice Scotstoun’s capacity) and the club, bleeding £3 million a year, was one hour from insolvency.
“One of the most important things was a 365-day income for the club,” Wasps’ owner Derek Richardson, pointed out in an interview a while back. Now Wasps are comfortably ensconced in the Ricoh Arena and the club attracted a whopping 28,000 fans for their league debut in Coventry.
The rugby club also receives something like £2m per annum from the on-site casino/hotel complex.
That may be a extreme scenario but Exeter Chiefs received £1.2m from Sandy Park in 2014 and have since extended it to include a 1,000-seat auditorium and conference facilities. It is tricky making money from a sports franchise unless you own the stadium and there simply isn’t an appropriate stadium in Scotland. Murrayfield is too big, Scotstoun too small and Myreside far too old.
Incidentally, Mark Dodson let slip that the SRU are in talks with Glasgow council about building a bigger stand on the railway side of Scotstoun such is the demand, although it might have been nice to take one European match to Ibrox, just to test the depth of Warriors’ support in the city.
By now my make-belief millionaire Mr Buffoon is somewhat disillusioned so I decided to speak to a real one instead, a contemporary of mine at London Scottish who made a huge pile in the City and has since bunged a little of it the way of the exiles.
He contents himself with a few venture capital projects these days and knows his stuff. Edinburgh and Glasgow are, I tell him, up for grabs, which one would he like me to bid for on his behalf?
“That is what we call a ‘black hole’ investment,” he says by way of reply, insinuating that nothing will ever come out of it.
Which is precisely what anyone else with the requisite expertise would conclude.