Friday, 17 June 2011

Key post from New York Addick

One of the most important posts I have ever seen on a Charlton blog has appeared from the New York Addick: Revealing .

The NYA understands how markets work and the business side of football. He has been researching the background to the Charlton takeover and I think that he has seen more than the tip of the iceberg. He has some very important reflections on the role of Chris Powell which on one reading would see him as being more or less 'set up'.

The NYA has an important analogy with value investing and that is as much a matter of luck as skill. He provides cogent reasons why the new owners, and the mystery funder behind them, should choose Charlton. But whether it will all turn out well is in the lap of the gods - and the other teams we have to play against in the third division.

At one point he talks of promotion in 3-4 years and that would stretch the patience of most fans. The brutal truth is that the standard of football in League 1 is not very good.

The one factor he underplays in my view is the general economic context. The Times has recently named Bexleyheath, a core area of Charlton support, as the typical home of the 'squeezed middle'.

Let me give you a free stylised facts about the British economy:
1. Britain has been living beyond its means for years in terms of public and private consumption and now the bill has come in.
2. The squeezing of consumer income is a deliberate objective as part of 'rebalancing' the economy towards export led growth: any government would have to do pretty much the same (if they didn't the Bank of England and the international financial markets would make sure they did).
3. The long-term economic and geopolitical balance in the world is shifting against countries like Britain and indeed almost all European countries (the three main exceptions are Germany, Sweden and Switzerland).
4. Living standards of those on median incomes are likely to fall for some time and may never fully recover.

This does have implications for discretionary leisure spending: essentials like food, petrol and utilities are going up fast (and there are global structural forces underpinning these increases which are not likely to disappear).

What this means is that if a club like Charlton, many of whose supporters are in the median income range, is going to get fans through the gate to an extent that sustains the club it is going to have to deliver on the pitch. The Addickted are loyal, but they can only take so many years of failure.


Rob Killick said...

I'm a firm believer in the phrase'by their deeds ye shall know them'. On that basis, and with the exception of BWW, there has been little evidence yet that the new owners are willing to invest in a serious promotion challenge next season. Few of the players linked with the club so far this summer are good enough to guarantee this. Of course, there may be a lot going on behind the scenes, but time is running out to assemble a really good squad in time for a proper pre-season.There are currently only 12 experienced players signed up for next season. Maybe NYA's '3/4 seasons for promotion' is not off the mark.

Anonymous said...

Spot on Wyn

Mr. I.M. Squeezed of BHX.

Anonymous said...

This is probably the wrong forum for the debate but I would suggest the UK's long term economic prospects may be better than Switzerland's and I would certainly suggest better than Sweden's and Germany's. Short term maybe not, but long term, the UK's economy should be robust assuming government policy doesn't force the financial sector to move elsewhere.

I think football operates in a false economy, it is not subject to the same market necessities as other industries owing to the continued enthusiam of wealthy benefactors. Though this is arguably complacent thinking, the fact that no league clubs have gone out of business in spite of their financial mess, is evidence that clubs do not operate in the same manner as other businesses. That should be cause for optimism. Anything could happen to Charlton over the next few years...

Wyn Grant said...

Let's hope that there isn't a disorderly sovereign default in Greece. In the medium term, take home pay is going to be squeezed and Charlton need to provide attractive football to maintain support levels.