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Missing faces at the World Cup.

The World Cup is well underway and whilst football fans around the world are enjoying a feast of top football there are a number of “missing faces”.

By “missing faces” I’m not referring to players who aren’t at the World Cup but instead I’m referring to some top global companies.

Johnson & Johnson, Sony, Continental and Castrol were leading sponsors of the World Cup but decided not to renew their contracts when the corruption scandal at FIFA (the governing body of the various football associations around the world and the body that organises the World Cup) hit the headlines a few years ago.

The money that FIFA gets from sponsorship is significant. It’s believed that a 4-year top tier sponsorship costs in the region of $150 million.

Previously, Johnson & Johnson, Sony, Continental and Castrol had no doubt spent that type of money in the expectation that it raised their profile and increased their sales

Their hope was that football fans around the world would be watching the games and then be exposed to, for example, the Sony brand and as a result somewhere down the line would end up buying a new Sony television or other electrical product from Sony.

The new sponsors for the current World Cup are a bit different though. They include major state backed companies such as Gazprom (Russia’s oil giant), Qatar Airways and Wanda (the Chinese conglomerate).

Wanda calls itself the world’s biggest property developer and Gazprom has a virtual monopoly.

It’s difficult to see how their sales would receive a boost from the World Cup exposure.

It’s not just sales though that are in the mind of sponsors. With the World Cup being held in Russia there’s an obvious link to sponsorship. Qatar are hosting the next finals in 2022 and the presence of Wanda will help increase the exposure of football in China where it’s been reported that President Xi has ambitions to make China a great footballing nation.

Either way, I’m sure the supporters of the team that ends up winning the World Cup won’t really care too much over who sponsors the World Cup – It’s the winning the tournament that counts as far as they are concerned…

Grab your goat and let’s go…

Creativity and innovation in any organisation should always be welcome and whilst technology is often at the forefront of innovation it is sometimes the really simple ideas that can create benefits.

Unfortunately, in this particular situation it didn’t quite go according to plan.

The initial idea was good. Officials in charge of the 1,200 acre Minto-Brown Island Park in Oregon in America were concerned that several invasive plants were taking over the park and killing off a number of the native flora including maple and hazelnut trees.

The solution put forward was to create a crack team of 75 goats who would eat the invasive plants such as the Armenian blackberry and the English Ivy which would then mean that the native flora would thrive.

75 goats were duly obtained from a company called Yoder Goat Rentals (as an interesting aside I wonder how many of you were aware that you could rent a team of goats. I certainly wasn’t.)

The goats got down to work but 6 weeks later the project was cancelled.

There were a number of issues.

Firstly, the goats were fairly relaxed about what they ate. In terms of the invasive Armenian blackberry for example they decided to eat the tasty blackberry leaves but left the prickly bramble. This resulted in the plant carrying on growing.

Secondly, they didn’t show any distinction between the (tasty) maple and hazelnut trees which they were supposed to be helping and the invasive plants.

Thirdly, the total cost of the 6-week pilot programme was $20,719 which was nearly 5 times the $4,245 cost for a normal parks maintenance man supported by a prison inmate work crew.

Finally, according to a report to the city council the goats “had a barnyard aroma”.

In summary, a nice try but it didn’t quite work. Still, as any successful business person will surely agree, you don’t progress unless you try. Better luck next time and at least the goats had a nice 6-week holiday in a lovely park…

1-0 to the Premier League

If you’re a premier league footballer it’s kind of obvious that you’re going to make a lot of money.

Deloitte, the Big 4 accounting company, prepare annual reviews of the Premier League’s finances and has just released some figures from the 2016/17 season.

In total, Premier League footballers took home £2.5bn in wages. This was the highest figure on record and showed an increase of 9% on the previous season.

The increase in wages though was quite a bit lower than the increase in the clubs’ revenue.

Total revenue increased by nearly £1bn to £4.5bn in the 2016/17 season and this was also a new record.

Although revenue increased by a higher percentage than wages, the proportion of revenue spent on wages is still pretty significant with the wage to revenue ratio being 55%.

Collective pre-tax profit was also a new record high being £0.5bn. This was almost three times the previous record of £0.2bn from back in 2013/14.

Deloitte partner Dan Jones said “As predicted last year, the Premier League’s three year broadcast deals which came into effect in the 2016/17 season helped drive revenue to record levels.

“Despite wages increasing by 9% to £2.5bn, this increase is nowhere near the level of revenue growth noted. This relative restraint from Premier League clubs reflects both the extent of their financial advantage over other leagues and the impact of domestic and European cost control measures.”

The financial success was spread across all clubs with all 20 Premier League teams making an operating profit.

Deloitte’s full report on the Premier Leagues finances will be available in June.

Popcorn and profits

Despite the growth of online streaming services such as Netflix and Amazon Prime it seems that we are still going to the cinema to watch movies.

Cineworld is the 2nd largest cinema chain in the world with 9,500 screens in 10 countries and they have just reported their latest financial results.

Sales increased by 12% to £891 million in 2017 and profits showed a healthy jump of 23% to reach £121 million.

It’s probably stating the obvious but the success of a cinema chain is largely driven by how good the films are. Cineworld said that their 2017 box office performance had been “underpinned by a strong film slate”.

In 2017 the top 3 films they showed were Beauty and the Beast, Star Wars: The Last Jedi, and Dunkirk. Together, these 3 films grossed £197.4m for Cineworld.

If you compare this with their top three films in 2016 (Star Wars: Rogue One, Fantastic Beasts and Where to Find Them, and Bridget Jones’s Baby) the figure was £149.4m.

A difference of nearly £50 million.

It’s not just the ticket price that brings in revenue for them though as movie goers buy a lot of popcorn and fizzy drink on their night out.

Almost 25% of their revenue in 2017 was from refreshments and this showed an increase of 11% on the previous year as it rose to £220 million.

I guess a key question for the business is whether the blockbuster films will continue in 2018 and whether people will still be filling themselves with popcorn and coke.

The company seems positive and are expecting the strong results to continue. With films such as Solo: A Star Wars Story and Jurassic World scheduled for this year and Minecraft: The Movie and Frozen 2 due in 2019 who would bet against them.

A great recovery

We’ve all made mistakes but the key thing is how you recover from those mistakes. ASOS, the global internet clothing company recently made a mistake but recovered from it really well.

ASOS is an incredibly successful company. They sell over 80,000 products on their website and last year had over 15 million active customers and sales of nearly £2 billion.

One thing they are not that good at though is using the spell check function as they printed 17,000 packaging bags with the slogan “discover fashion online” spelt using “onilne” instead of “online”.

Now, what would you have done in that situation?

Would you have ignored it and hoped that no one noticed or cared about it?

Would you have scrapped the bags?

ASOS did neither of those and recovered brilliantly by tweeting:

“Ok, so we *may* have printed 17,000 bags with a typo. We’re calling it a limited edition”.

So, depending on how you look at it you’ve either got a bag with a typo on it or a limited edition collector’s item.

A brilliant recovery by ASOS. Turning a typo into some great publicity.

More Change Please

Homelessness is a growing problem in a lot of countries but coffee company “Change Please” has come up with a brilliant business model that could help.

They’ve brought together the problem of homelessness with people’s love of coffee and have created a radically different coffee company that is now looking to expand around the globe.

Their whole focus is on helping people whilst at the same time providing an excellent cup of coffee to the end customer at a fair market price.

When it comes to suppliers, the coffee beans they use are from farms that support local communities. For example, one of their suppliers from Peru helps victims of domestic abuse and a supplier from Tanzania helps people injured by landmines.

Once the coffee beans arrive in the UK, the people who roast them and serve them are people who have been homeless and sleeping on the streets. They are trained as baristas and work at one of the company’s locations. They are paid the Living Wage of £10.20 per hour and are given help in terms of opening bank accounts and finding housing.

Whilst the big coffee chains such as Starbucks and Costa Coffee are discussing introducing recyclable cups, Change Please has beaten them to it as all of their cups are 100% recyclable.

All profits are being invested in helping reduce the level of homelessness.

Things are going well for the organisation and they are planning on expanding the number of locations they operate from in the UK. They are also in talks to open in Australia and America with the same ethos of helping homeless people get back on their feet via a well and truly ethical cup of coffee.

They have also signed agreements with 2 big supermarkets, Sainsburys and Ocado, to stock packets of Change Please coffee beans.

It’s a common sound on the streets of cities in the UK to hear people asking if you have any “Change please”. With this fantastic business model for a coffee company, hopefully it will soon be a common sight to see the request for “Change please” replaced by coffee outlets called “Change Please”.

A clean start…

I guess a lot of us have been there – we stagger out of bed in the morning half asleep and get in the shower. Suddenly we start to have some great business ideas and wish we had a pen and piece of paper.

Now, if I’m entirely honest with you this has never happened to me and I doubt it ever will.

The thought usually going through my mind is more of wouldn’t it be nice to have a bit longer in bed rather than be in the shower getting ready for work.

It seems though that not everyone shares my lack of business enthusiasm in the shower.

Marriott hotels in the US undertook research which indicated that half of business travellers felt that their best ideas came whilst showering.

So why all this talk about showers and ideas?

Well, Marriott have turned some of their shower doors into digital notepads.

Yes, after the door steams up, guests can write their business ideas on it (or for that matter draw a rude picture of their boss if they wanted to) and then their completed creation will be emailed through to them.

In the words of Marriott, so that “their brilliance doesn’t wash away”.

I’m not convinced that I have too many moments of business brilliance in the shower but fair play to Marriott for coming up with a clever use of the shower door.

How much do Big 4 partners get paid?

KPMG UK released their results last month for their most recent accounting period and they showed a fall of 10% in pay for the KPMG partners when compared to the previous year.

Although the firm’s revenue rose by 5% to £2.2 billion, it’s profit fell to £301 million.

The firm wrote off a number of technology investments.

KPMG, like the rest of the Big 4, have invested heavily in technology companies in an attempt to stay at the forefront of technology.

Unfortunately for KPMG, not all of their investments were successful. Bill Michael, the Chairman of KPMG, highlighted one investment that hadn’t done so well – KPMG had committed £3 million to Flexeye, a tech company that analyses large amounts of data and it hadn’t proved to be the wisest investment.

Whilst profits fell, it hasn’t all been bad news for KPMG as their audit practice grew by 10%.

Back to the average pay of the KPMG partners though and although their average pay fell by 10% I’m sure that the partners will still be able to afford to buy a sandwich for lunch.

The average pay for the KPMG partners was £519,000 each.

That’s not too bad is it?

But how does it compare with the average pay from the partners of the remaining Big 4.

The most recent reported results show the following average pay per partner:

Deloitte – £865,000

EY – £677,000

pwc – £652,000

It looks like Deloitte partners will be having the more expensive sandwiches for lunch.

Things are changing…

There’s an interesting movement in the types of planes which the large airlines are demanding.

10 years ago, the Airbus A380 or the “Super Jumbo” as it’s known, was launched with the aim to transform the airline industry by enabling up to 868 people to fly in one plane.

But things are changing and the anticipated demand for the superjumbos hasn’t materialised. Airlines are instead preferring smaller but more efficient twin-engine planes.

The most number of A380s that Airbus produced in a year was 30 but the order book has collapsed. Last week it was reported in Euronews that Airbus are exploring plans to cut A380 production to 6 aircraft per year.

Another company that has been affected by the drop in demand for A380s is the leasing company Amedeo.

Amedeo’s business model involves them buying aircraft from the likes of Airbus and Boeing and then leasing those aircraft to airlines.

Amedeo for example has purchased four A380s from Airbus and leased them on to Emirates.

The challenge for Amedeo though is that they have eight A380s in their portfolio and have another twenty on order from Airbus. Given that the demand for A380s from airlines has dried up, that’s not particularly good news for them.

However, they have come out fighting and announced that they will be launching their own airline.

Instead of simply leasing the plane out, the new business model will involve them running things as an airline. They will offer seats to existing carriers who will provide the ticketing service but Amedeo will operate the flight using their own cabin crew.

As well as offering the flights to existing airlines, Mark Lapidus the chief executive of Amedeo raised the prospect of providing flights for potential partners such as Airbnb.

Time will tell how successful this will be but it certainly is a novel approach to trying to find a solution to what to do to address the fall in demand.

It will be a pleasure to go shopping with you…

It may be stating the obvious but if you’re a retailer in a shopping centre you’ve more chance of making a sale if people are in the shop.

Retailers in shopping centres face a number of threats. Some of these are a more recent phenomenon (e.g. the rise of internet shopping) whilst others have been around for a number of years.

One of these threats which has been around for a while is something which I’m sure a number of our male readers can sympathise with.

Let me ask the male readers out there who are married a question – have you ever gone shopping with your wife and at the start of the shopping trip things were going well but it soon descended into a long and windy journey through shops which to the male eye looked very similar but to the female eye were all different and offered new and exciting opportunities to try new items of clothes?

With the wife enjoying every moment but the husband getting more and more frustrated it is only a matter of time until stress levels rise, an argument ensues and the shopping trip is cut short.

A number of shops have chairs for the men to sit on and magazines to read but over in China, Shanghai’s largest shopping centre has come up with a novel way of keeping men occupied so that the wives are free to shop without the husbands getting bored.

Global Harbour shopping centre has introduced “Video Caves”. These are glass booths with a comfortable chair, a games console and a large screen. Men can be left to play computer games free of charge whilst their partners can shop to their heart’s content. The booths are soundproof so the computer games won’t disturb the other shoppers.

All in all, a great idea to keep the both the “lady shopper” and the “dragged behind man” happy but is there a potential problem?

After all, if you ask a lady how easy it is to get her other half off of a computer game when he’s nearly reached his top score, will we start to see women looking bored whilst waiting for the husband to finish his video game…