One business or two?

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chewbacca
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One business or two?

Post by chewbacca » Fri Jan 05, 2018 12:04 pm

There have been a number of assertions that the building of the hotel etc does not impact the budget of the rugby business. If so then is the implication that any profit from the hotel etc will not be available to the team. If this arises then the playing side of the business will need to exist within its own revenue stream, this could potentially become more difficult should fortunes on the field not improve drastically. What are others views?
I'm not cynical just experienced

cpwhelan
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Re: One business or two?

Post by cpwhelan » Fri Jan 05, 2018 12:57 pm

I have not been alone in feeling that Mr.Cohen et al have favoured the corporate side of the whole business at the expense of better all-round recruitment of the playing team. I feel that this is now evidenced by our lack of a competitive back 5 in the scrum - without them, we can't feed our strong backline with front foot ball.

ourla
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Re: One business or two?

Post by ourla » Fri Jan 05, 2018 1:40 pm

It just means we will still be using the full cap, maintaining the playing support team - coaches, medical, etc., and not using the playing budget to pay for off the field projects.
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Clowbeck
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Re: One business or two?

Post by Clowbeck » Fri Jan 05, 2018 3:23 pm

The leisure development will be funded as capital expenditure (long term loan or mortgage) which is a completely different accounting line from operational expenditure (running costs). The capital expenditure on the leisure complex could restrict Tiger's ability to invest in Welford Road redevelopment and or training facilities until revenues materialise but should not see an impact to the playing side of the business which is effectively P&L based.

Cohen has mentioned that at present they are in the process of selecting a hotel operator to run the facility; I'd expect the hotel operator will pretty much lease the hotel from Tigers plus there will no doubt be other mechanisms in the contract where Tigers will cream profits from additional leisure revenues generated from the Tigers brand. The profits from the hotel operator can then be spent as the club deem fit, playing squad, further facility investment, etc.

I suppose Cohen has elected to utilise Tiger's surplus commercial headroom to invest in Tiger's long term commercial future as opposed to a short term high investment in the playing squad over the wage cap (ala pests) to grow the brand and revenue that way.

chewbacca
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Re: One business or two?

Post by chewbacca » Fri Jan 05, 2018 3:27 pm

Clowbeck wrote:
Fri Jan 05, 2018 3:23 pm
The leisure development will be funded as capital expenditure (long term loan or mortgage) which is a completely different accounting line from operational expenditure (running costs). The capital expenditure on the leisure complex could restrict Tiger's ability to invest in Welford Road redevelopment and or training facilities until revenues materialise but should not see an impact to the playing side of the business which is effectively P&L based.

Cohen has mentioned that at present they are in the process of selecting a hotel operator to run the facility; I'd expect the hotel operator will pretty much lease the hotel from Tigers plus there will no doubt be other mechanisms in the contract where Tigers will cream profits from additional leisure revenues generated from the Tigers brand. The profits from the hotel operator can then be spent as the club deem fit, playing squad, further facility investment, etc.

I suppose Cohen has elected to utilise Tiger's surplus commercial headroom to invest in Tiger's long term commercial future as opposed to a short term high investment in the playing squad over the wage cap (ala pests) to grow the brand and revenue that way.
Thanks for the explanation. Hopefully the hotel venture makes huge profit which we plough back into the playing side.
I'm not cynical just experienced

Flash
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Re: One business or two?

Post by Flash » Fri Jan 05, 2018 4:02 pm

Maybe the hotel will be able to employ some of the players family members :smt047

G.K
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Re: One business or two?

Post by G.K » Fri Jan 05, 2018 4:34 pm

Flash wrote:
Fri Jan 05, 2018 4:02 pm
Maybe the hotel will be able to employ some of the players family members :smt047
And pay them in Rand?
Nowadays referees decide matches, players by how much.

ellis9
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Re: One business or two?

Post by ellis9 » Fri Jan 05, 2018 6:07 pm

chewbacca wrote:
Fri Jan 05, 2018 3:27 pm
Clowbeck wrote:
Fri Jan 05, 2018 3:23 pm
The leisure development will be funded as capital expenditure (long term loan or mortgage) which is a completely different accounting line from operational expenditure (running costs). The capital expenditure on the leisure complex could restrict Tiger's ability to invest in Welford Road redevelopment and or training facilities until revenues materialise but should not see an impact to the playing side of the business which is effectively P&L based.

Cohen has mentioned that at present they are in the process of selecting a hotel operator to run the facility; I'd expect the hotel operator will pretty much lease the hotel from Tigers plus there will no doubt be other mechanisms in the contract where Tigers will cream profits from additional leisure revenues generated from the Tigers brand. The profits from the hotel operator can then be spent as the club deem fit, playing squad, further facility investment, etc.

I suppose Cohen has elected to utilise Tiger's surplus commercial headroom to invest in Tiger's long term commercial future as opposed to a short term high investment in the playing squad over the wage cap (ala pests) to grow the brand and revenue that way.
Thanks for the explanation. Hopefully the hotel venture makes huge profit which we plough back into the playing side.
You do realise we always spend all of the salary cap? This money isn't suddenly going to get us loads of world class players. We cannot spend any more on players even if we have 10 billionaires own the club who are willing to spend every single penny of theirs on the club, we still wouldn't be able to spend any more than we currently do on players.

Obviously, it will give us more income which will help with other expenditures like coaches, stadium development and better things for players and coaches.

Clowbeck
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Re: One business or two?

Post by Clowbeck » Fri Jan 05, 2018 7:32 pm

ellis9 wrote:
Fri Jan 05, 2018 6:07 pm
You do realise we always spend all of the salary cap? This money isn't suddenly going to get us loads of world class players. We cannot spend any more on players even if we have 10 billionaires own the club who are willing to spend every single penny of theirs on the club, we still wouldn't be able to spend any more than we currently do on players.

Obviously, it will give us more income which will help with other expenditures like coaches, stadium development and better things for players and coaches.
Kind of. Wasps and and Sarries hold firm to the salary cap, absolutely not. Whilst the salary cap does exist it seems to be more of a guideline that an enforced rule, could be Tigers may decide to join the party at somepoint. Bare in mind that this investment is for decades, in that time the game and it's rules will change significantly. To base long term commercial model on current state of the game is short sighted.

ellis9
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Re: One business or two?

Post by ellis9 » Fri Jan 05, 2018 7:41 pm

Hopefully Tigers don't "join the party" at some point!

I'd prefer that we abide by the laws.

chewbacca
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Re: One business or two?

Post by chewbacca » Fri Jan 05, 2018 10:43 pm

The salary cap will increase year on year. If the on pitch performances do not improve and rapidly then it will be difficult not only to attract more supporters but also sponsors and the amount that they are prepared to contribute. There may therefore be a gap between the cap and the available revenue from the rugby side of the business hence my interest as to whether profits from the non-rugby business could be used to make good any shortfall. You may not like the notion of supporters voting with their feet but it's their feet and their wallets to do with as they please.
I'm not cynical just experienced

Clowbeck
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Re: One business or two?

Post by Clowbeck » Fri Jan 05, 2018 11:38 pm

I wouldn't get hung up on the salary cap long term. Within 5 years the European leagues could be quite different, in the extreme with salary cap removed. Regardless, it makes commercial sense to maximise long term investments to generate funds whilst the brand is still strong.

teds
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Re: One business or two?

Post by teds » Sat Jan 06, 2018 9:27 am

Clowbeck wrote:
Fri Jan 05, 2018 3:23 pm
The profits from the hotel operator can then be spent as the club deem fit, playing squad, further facility investment, etc.
For Wasps I thought I had read they share the leisure profits with their partner -is it a firm called Compass?
Are we doing the same or would our income be the lease revenue?

NONAME
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Re: One business or two?

Post by NONAME » Sun Jan 07, 2018 10:16 am

Think you'll find initially income generated from the Hotel will be used to build a new Car Park or should we build the Car Park first?

Salary cap....I'd like to see all players that have come through a Clubs Academy be exempt from the salary cap for life or until they leave the Club whose Academy they were in. This would not only benefit Tigers but other clubs too and England. We would not have to lose good young players from our development squad because we can only spend so much money. Can you imagine losing WE and GW because we have to increase a current first team players wages to keep him here. Surely that can't be right having invested many thousands on their development?

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Re: One business or two?

Post by TigerCam » Sun Jan 07, 2018 3:49 pm

cpwhelan wrote:
Fri Jan 05, 2018 12:57 pm
I have not been alone in feeling that Mr.Cohen et al have favoured the corporate side of the whole business at the expense of better all-round recruitment of the playing team. I feel that this is now evidenced by our lack of a competitive back 5 in the scrum - without them, we can't feed our strong backline with front foot ball.
SC and the BoD have to fill up their pension pots from somewhere?>
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