City Talk: The fever pitch has passed for football investors

AS THE football season builds to a climax - the FA Cup, Coca-Cola Cup and the run-up to the championship - excitement off the pitch seems to be dwindling.

Take Chelsea. After beating Arsenal to secure its second appearance in a cup final in two years, the shares have barely budged. On Friday, they languished at 97p - a far cry from the 160p they stood at a year ago.

Further good news from an investment point of view may be the departure of Ruud Gullit, if only because of the reduction in the wage bill. But the response off the terraces has been muted.

Meanwhile, Manchester United's share price has trundled along for the past year and is currently an uninspiring 147.5p.

Tottenham Hotspur, hovering perilously over the drop zone, has fallen from 120p in the past year to 69p. Whatever the fans may think of Christian Gross as coach, it is clear he has yet to win much support from investors. Which is a roundabout way of saying that football has taken on an entirely different investment perspective over the past year. Over-ambitious valuations look to be a thing of the past - which is no bad thing, in the longer run.

Shareholders in GoshawK Insurance Holdings will receive pleasant news tomorrow when the group releases results for its non-marine syndicate 2021, set up last June. Syndicate 2021 underwrites reinsurance for orphan syndicates at Lloyd's - those syndicates which are in run-off. With a capacity of pounds 29m, it has already secured eight contracts for a total premium income of pounds 17.8m. It has generated pounds 20.1m in premiums since it began taking business. The broad-based marine syndicate 102, in which GoshawK has a 27 per cent interest, will report premium income of pounds 64.2m for the past year.

Tomorrow also sees the annual general meeting of Deltron Electronics, where chairman Paul Gourmand will disclose excellent progress in the first four months of the year. The specialist electronics components supplier will show that trading in the first four months "continues to perform ahead of our expectations" and is more than 50 per cent ahead in January on the previous year. That suggests brokers' forecasts of pounds 3.3m in pre- tax profits for the year to September 1998 already look in need of upward tweaking. The shares were at 132p on Friday.

Clearly, the news that Bass is lining up a $2.8bn (pounds 1.7bn) deal to buy the Inter-Continental Hotels & Resorts chain from the Seibu Saison Group of Japan has alarmed the markets. Shares in the brewing to hotels group fell 26.5p to 960p on Friday. Financing is understood to have been lined up with a consortium of half-a-dozen banks. The chief concern is that Bass is overpaying for the privilege. A source at a rival bidder said it was a surprised that Marriott International had failed to pull off the deal. "Marriott had prepared carefully. It's a surprise if they have been scooped."

While $2.8bn is seen as a reasonable ball-park figure, it also raises other doubts about the strategy adopted by the group. Granada's purchase of Forte is widely seen as having called the cycle as close to perfection as possible. Bass's move, by contrast, comes when the international hotel cycle is widely seen as having peaked. Asset valuations have more than caught up with the upswing in economic cycles - Inter-Continental, a global brand, will suffer from the fall-out in Asia, while there is a general consensus that worldwide growth is set to slow.

Finally, Bass has been exiting from businesses where it cannot see the prospect of annual earnings growth of more than 10 per cent. Yet purchasers of Bass assets have been pleasantly surprised by the return on capital the purchase price represents. And as assets where investment has been limited, the earnings upside is considerable. One interpretation, perhaps unjustly negative, is that chairman Sir Ian Prosser has been caught in a trap of seeking exciting new growth prospects, while overlooking the potential closer to home.

PROMOTED VIDEO
Sport
Shinji Kagawa and Reece James celebrate after the latter scores in Manchester United's 7-0 victory over LA Galaxy
football
Voices
voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
Sport
Farah returns to the track with something to prove
Commonwealth games
Life and Style
fashion Designs are part of feminist art project by a British student
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
film
News
Very tasty: Vladimir Putin dining alone, perhaps sensibly
news
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
Top guns: Cole advised the makers of Second World War film Fury, starring Brad Pitt
filmLt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a uniform
Life and Style
Listen here: Apple EarPods offer an alternative
techAre custom, 3D printed earbuds the solution?
News
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
News
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Arts and Entertainment
A scene from Shakespeare in Love at the Noel Coward Theatre
theatreReview: Shakespeare in Love has moments of sheer stage poetry mixed with effervescent fun
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Transition Manager - Stirling - Banking - £400

£400 - £420 per day: Orgtel: IT Transition Manager - Banking - Scotland - £400...

Test Lead - Financial Reporting - Banking - London

£350 - £400 per day: Orgtel: Test Lead, London, Banking, Financial Reporting, ...

Business Analyst, Retail Bank, £375-400p/d

£375 - £400 per day + competitive: Orgtel: My client, a leading bank, is curre...

PMO Analyst - London - Banking - £350 - £400

£350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

Day In a Page

Screwing your way to the top? Good for Lana Del Rey for helping kill that myth

Screwing your way to the top?

Good for Lana Del Rey for helping kill that myth, says Grace Dent
Will the young Britons fighting in Syria be allowed to return home and resume their lives?

Will Britons fighting in Syria be able to resume their lives?

Tony Blair's Terrorism Act 2006 has made it an offence to take part in military action abroad with a "political, ideological, religious or racial motive"
Beyoncé poses as Rosie the Riveter, the wartime poster girl who became a feminist pin-up

Beyoncé poses as Rosie the Riveter

The wartime poster girl became the ultimate American symbol of female empowerment
The quest to find the perfect pair of earphones: Are custom, 3D printed earbuds the solution?

The quest to find the perfect pair of earphones

Earphones don't fit properly, offer mediocre audio quality and can even be painful. So the quest to design the perfect pair is music to Seth Stevenson's ears
US Army's shooting star: Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform

Meet the US Army's shooting star

Lt-Col Steven Cole is the man Hollywood calls when it wants to borrow a tank or check a military uniform
Climate change threatens to make the antarctic fur seal extinct

Take a good look while you can

How climate change could wipe out this seal
Should emergency hospital weddings be made easier for the terminally ill?

Farewell, my lovely

Should emergency hospital weddings be made easier?
Man Booker Prize 2014 longlist: Crowdfunded novel nominated for first time

Crowdfunded novel nominated for Booker Prize

Paul Kingsnorth's 'The Wake' is in contention for the prestigious award
Vladimir Putin employs a full-time food taster to ensure his meals aren't poisoned

Vladimir Putin employs a full-time food taster

John Walsh salutes those brave souls who have, throughout history, put their knives on the line
Tour de France effect brings Hollywood blockbusters to Yorkshire

Tour de France effect brings Hollywood blockbusters to Yorkshire

A $25m thriller starring Sam Worthington to be made in God's Own Country
Will The Minerva Project - the first 'elite' American university to be launched in a century - change the face of higher learning?

Will The Minerva Project change the face of higher learning?

The university has no lecture halls, no debating societies, no sports teams and no fraternities. Instead, the 33 students who have made the cut at Minerva, will travel the world and change the face of higher learning
The 10 best pedicure products

Feet treat: 10 best pedicure products

Bags packed and all prepped for holidays, but feet in a state? Get them flip-flop-ready with our pick of the items for a DIY treatment
Commonwealth Games 2014: Great Scots! Planes and pipers welcome in Glasgow's Games

Commonwealth Games 2014

Great Scots! Planes and pipers welcome in Glasgow's Games
Jack Pitt-Brooke: Manchester City and Patrick Vieira make the right stand on racism

Jack Pitt-Brooke

Manchester City and Patrick Vieira make the right stand on racism
How Terry Newton tragedy made iron men seek help to tackle their psychological demons

How Newton tragedy made iron men seek help to tackle their psychological demons

Over a hundred rugby league players have contacted clinic to deal with mental challenges of game