Would you donate?

Reed Hastings has always been very good at wording things in just the right way where investors don't get spooked and the media will pick up the positives thus reinforcing investors belief. Especially as he needs to be able to get these people to buy more 'junk' bonds every year

It's like their subscriber number announcements. They were happy to highlight the 8mill new customers they added from international markets last quarter and it sounds a lot but when you break the numbers down its looks less impressive. Supposedly 20% of that figure (so 1.6mill) came from two markets those being the UK and Canada. That means the other 6.4mill came from the other 187 regions they are in, that's just an average of 34k per country.

In comparison the US which is a market they have not only largely saturated but they have increased competition in they added 600k so only just below the average that the UK and Canada added and they haven't saturated either market as much.

I always feel Netflix's big mistake was focusing on originals (and full rights package ones at that) and pushing the international expansion. Focusing on the US and then Canada, UK and a couple of others and just selling the rights to local services everywhere else while also doing home media releases in those countries would have had the company being more financially stable. You need other revenue streams like most of the other services have to allow the streaming business to run at a loss until the market is happy paying way more for the services

I actually think we will end up with a bigger version of what Disney offer in the US, you can pay just for Disney+ or you can get a package deal where you get Disney+. Hulu and ESPN+ at a discounted rate. I feel we will get firms that do deals with all the streaming services where you can just buy a bundle of all the streaming service in one. The streaming services will cut much of their marketing budget as the bundling company will do much of that for you, they will get subscribers that they wouldn't otherwise get while the customer will get more of the services for less than doing it directly. You kind of see Sky starting that already, you can sub to Netflix via sky and you pay less per month than going directly (I pay £6 extra ontop of my Sky bill for Netflix, as I already the UHD Sky service I get UHD/4 Screen Netflix package that I was paying £11.99 a month so it saves me about £6 a month). If they get more of these streaming services onboard they could offer an almost everything service for a fee less than or equal to subscribing to the ones we consider essential individually (For example I don't sub to Britbox but there are a few things on there that you can't get elsewhere that if I had I would watch. I also currently have Appletv+ and have enjoyed a couple of shows but I only have it as I got a year free when I bought a new apple device. I doubt I will renew it when it expires but if it was all bundled in for what I would pay individually for Netflix, Amazon and Disney+ a month then I would sub to the bundle and get these extra services)

 

The thing is the clubs been losing money and Rupp has had to put his hand in his own pocket. If he sells shares to fans you then can’t expect him to keep doing that unless these new shareholders were also on he hook for an equivalent amount.

 

I suspect that the companies you have shares in already create sufficient cash to fund their further development without recourse to their shareholders. They're run with a proper business philosophy of making profits and reinvesting those profits to develop the business. Occasionally you might find even in the best run companies that they have to seek further investment to grow the business. Typically that would come from commercial or investment banks but just occasionally shareholders are asked to dip into their own pockets to subscribe for a rights issue of further shares at a discount to the prevailing price to raise the extra cash. That's completely voluntary and if an individual shareholder chooses not to do so then their existing shareholding is slightly diluted because of all of the new rights issued shares. So far, it looks as though your companies haven't had to do this.

Lower league football is very different. Despite most being limited companies and most saying they are run on business like terms, the reality is very different. The vast majority do not make sustainable profits and its the profits which generate the cash to improve the club's infrastructure; buy players; relay the pitch; have a better academy and so on. That's why owners have to dip into their own pockets to do these things or occasionally go cap in hand to the bank for a loan or rely on windfalls from cup runs and sell-ons from the sale of players.

You mention Portsmouth and yes for several years they were owned by fans - collectively through their own supporters trust together with a handful of individual wealthy fans. They all invested a lot of their own money to get Pompey back on its feet but it all came to a crunch. About 3 years ago, they realised that to get Pompey out of the khazi division and hopefully to get back to the Championship and to refurbish Fratton Park would require a load of cash. They estimated over £10 mill in the next 3-4 years. And if they were successful in geting back to the Championship an even bigger load of cash would be required to establish them in that league. Nobody sensible was willing to loan them the money (who would given their recent financial history?) and the fans couldn't get enough support from themselves to raise that kind of money to advance the club. And they were therefore forced to put the club up for sale if it were to move forward. They were quite smart in their thinking and included legal commitments from the new owner to invest in the ground and in the players to give themselves a good chance of becoming a Championship club again. Their new billionaire owner agreed to these commitments and the fans's shares were sold to Eisner. And so far it appears to be working. Fratton Park is being refurbished and they've made the first step in getting promotion to Div 1.

Imo, it was a good outcome for the club and the fans. But it illustrates that if fans wish to take a shareholding in our club, it doesn't end there. If further investment is required to develop the club both on and off the pitch and there aren't profits being generated to fund that, the fan-shareholders would be expected to dip into their own pockets for the cash as some already expect the current owner to do. That's what shareholders, ie the owners of the club, are expected to do unless they simply want to tread water.

 

I suspect the experience of your parents' neighbour isn't that unusual. I bought shares in City when BFG was trying to raise extra money on top of all of the loans, leasing deals etc which the club had already negotiated. There were several hundred other fans who also did the same. We even received a dividend from the shares (as of course did the Richmond and Rhodes families) which imo was too good to be true and too high to be sustainable. I ran into GR (we lived quite close to him at the time) and I said what I believed. He told me I was wrong (in less polite terms). Three years later we were in Administration and the shareholders lost their 'investment'.

I don't believe fan ownership is a workable solution. There aren't many such arrangements around the world. Even in Germany where people believe there is more fan ownership of clubs, it isn't really true. Yes, most Bundesliga clubs have a club membership scheme which gives the fans some control over the direction of the club but they aren't shareholders in our terms. Ownership outside of Bundesliga 1 still resides with family groups, local banks and major sponsors.