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WSW Wanderers on a street parade in Parramatta following last year's success. PHOTO by Milestones Photography. WSW Wanderers on a street parade in Parramatta following last year's success. PHOTO by Milestones Photography. Featured
03 August 2013 Posted by 

What makes the Wanderers sale different?

By Anthony Stavrinos

AFTER just one trailblazing year in the A-League, the NRMA Insurance Western Sydney Wanderers are on the market and the Football Federation Australia’s timing makes plenty of business sense.

The FFA recently engaged investment bank, UBS, to find a suitable buyer for the club, with the stipulation that a new owner must guarantee the club colours, name, location and culture. The Australian Financial Review has reported that the FFA is seeking $15 million for the club.

UBS is expected to move to the next phase of the sale process later this month when it calls for expressions of interest from potential buyers.

FFA chief executive David Gallop believes the Wanderer’s story is “unprecedented in world sport”.

“The way their fans engaged with the club is a phenomenal story,” he recently told leading Australian football website, theworldgame.com.au.

“It shows that western Sydney is football heartland and that they were waiting for their team, and when they got it they grabbed it with both hands.

“Kids now look at the Western Sydney Wanderers - when they kick a ball around on a Saturday morning they've got genuinely local heroes to look up to.”

Wanderers executive chairman Lyall Gorman told WSBA a cap of 15,321 had been set by the club across the range of annual memberships on offer and by the end of July, the target of 14,000 memberships had been reached, with the cap also expected to be easily reached.

“We’re about to reach our cap,” Gorman said. “So we’re working feverishly with government trying to get in more seats before the season commences.”

Short-term upgrades to Parramatta Stadium will lift its crowd capacity to nearly 20,000, including corporate seating, providing an opportunity for the club to generate additional revenue on the back of ever-increasing interest from sports fans in western Sydney.

David Hagger, a sports-loving Englishman who heads Deloitte’s Corporate Finance team for western Sydney, agrees the Wanderers’ achievements have been ground-breaking for Australian football.

He broadly understands the global football business and arguably has a slight soft spot for the game but sentimentality has no place in his analysis of the Wanderers sale.

"It's very hard to put a number on the football club for various reasons,” Hagger told WSBA. “Obviously there's been some speculation in the wider media around what some might pay.

"From a valuation perspective - and this is where sports clubs are interesting, but in particular with an organisation such as Western Sydney Wanderers - you're in a market where it's not really a rational market, generally speaking.”

Hagger says wealthy people that buy sports clubs such as actor Russell Crowe or Russian tycoon Roman Abramovich and many generally motivated by either their love of the sporting club or a desire for self-promotion.

“Crowe and his stake in South Sydney in the NRL is a good example of someone driven by a love or passion for the sporting team they follow,” he says.

“On the other hand, a buyer might want to put themselves out there and their ownership then becomes a statement - they can take their name and their image and attach it to a sporting club.

“It’s a bit of an ego trip, a status symbol, like having a boat or a Porsche. You know, you've really made it when you've got your own football club.”

Hagger said the dubious honour for this type of acquisition belonged to Nathan Tinkler, whose business exploits were featured recently on the ABC’s investigative current affairs flagship, Four Corners.

“The Tinkler path seemed to be that he owned the coal so he might as well own the rest of Newcastle,” he explains.
Reports the Wanderers posted a $1-1.5 million operational loss last year as effectively a start-up business, meant any capital a buyer would need to inject into the club equated to a high-risk investment.

"The valuation principles that would hold true if you were going to buy a property or commercial business are not the same as those that would be applied here,” he says. That's probably true in terms of how any deal would be funded."

In the absence of the seemingly-unlimited resources of Chelsea FC owner Abramovich, sports entrepreneurs know their enterprises must make money and that’s reinforced by a trend among sport’s global decision-makers to ensure member bodies and clubs are fiscally sound.

Last year, after decades of reckless spending, Scottish giants Glasgow Rangers spiralled into financial crisis which led to the club being put into administration, then relegated to the bottom tier of the Scottish Football League while its custodians contemplated how to rebuild the club from scratch.

“That’s how the administrators of major sporting competitions see things - if clubs run up such big deficits and people don't step in with equity, then it's a risk to the league,” Hagger says.

He says the Wanderers were now pursuing a more profitable operating model by boosting match day revenue by increasing attendances, maximising ticket prices for regular fans and season membership sales, expanding corporate box hospitality and developing media rights income.

“Media is very important and the Asian Champions League exposure next year will be very good for the Wanderers. That gives them a bit extra in terms of media revenue and additional matches,” he says.

Hagger says the Wanderers haven’t yet had a chance to develop the more commercial revenue achievable on the back of the sporting club.

"But there's got to be a temptation, at some point, to go to ANZ Stadium, for the Sydney derby,” he said.

“Things are presently being run to harness the passion of the supporters. If a more commercial operation takes hold… they’ll want to try and make as much money as they can, including running some of the bigger games out of a bigger stadium.”

Rumoured potential buyers for the Wanderers include Sydney businessmen Paul Lederer and Bob Ingham and even Westfield billionaire and FFA chairman Frank Lowy.

"The FFA has got a motive which is greater than just financial return, they want the success of football in western Sydney,” Hagger says.


Michael Walls
0407 783 413

Western Sydney Business Access (WSBA) covers the business and community issues of the Greater Western Sydney region of Australia. WSBA is the popular media source for connecting with the pulse of the region and tapping into it's vast opportunities and networks.