Friday 22 June 2018

The Art of the Deal

I honestly can’t remember a time since starting this blog when I’ve had so many times of starting to scribble only for something to get in the way, or just to realise that whatever the motivation for starting I’m going to end up with the same conclusion: back in March I was looking forward to a return to London at the start of April coinciding with confirmation of a takeover and a return to The Valley; we’re now in June, World Cup in full flow, close to pre-season gearing up, I’m back in Lyon, and it still hasn’t happened. For a Belgian and a bunch of Australians not to be able to organise the proverbial piss-up in a brewery has to be seen as a reflection of serious shortcomings.  

Along with everyone else I’ve been trying to keep up to date with the comments from those in the know (of which I am not one). We were warned not to expect anything dramatic from the statement and in that sense were not disappointed. True to form, even something so bland managed to sound confused. “The current ownership would like to assure the club’s supporters that the running of the club will remain its priority throughout this process.” Come again? ‘This process’ has been going on for at least six months, while the ‘current ownership’ was previously happy to remind us that our club is only a small percentage of his business interests and cannot be expected to take up much of his time. Add in that we are happiest when he isn’t actively involved in the running of our club, given his unerring ability to screw things up, and the only sensible response from Addicks is ‘please don’t get involved in running the club, sell as quickly as possible, and in the interim keep paying the bills with money you will never see again’.

It would have been out of keeping with the regime’s ownership of our club were it not to end in farce. I can’t say to what extent the actions and possible shortcomings of the Australian consortium might have contributed to this, if at all – the latest suggestions that they don’t have the money to buy the club lock, stock and barrel would, if true, put them in the dock alongside a seller asking a daft price. And the process hasn’t smelt right from the time that Richard Murray was pressed into commenting on it. No potential purchaser of a business would embark on due diligence if there was another buyer, one which apparently had also agreed a price, doing the same. And if you have agreement on a price in February and no deal has been done in June either there is gross incompetence involved – not brinkmanship - or one or both parties is not acting in good faith. Complexities? All deals are complex, with various interested parties; it’s only when there is bad faith involved that complexities actually scupper deals. If agreement can’t be reached, if say one side has promised something it cannot deliver, you walk away.

There’s a lot of nonsense said and written about making deals. Donald Trump apparently considers himself to be a gifted deal-maker (that is of course an understatement, he evidently considers himself to be a brilliant deal-maker). Only problem is if you look at his track record it’s obvious he is a lousy deal-maker. He can’t accept this because of his absurd arrogance: he believes that making good deals requires high levels of intelligence (which is true): ergo he must be a good deal maker because if he is not (which is true) he is not intelligent (also true).

As for deals being like poker, utter nonsense. In a game of poker you are playing the odds when knowledge can never be complete, you don’t know for sure what your opponent has in his/her hand, or exactly how he/she will play it; you are playing the odds and sometimes bluffing. One person will walk away with the other’s money, there is a winner and a loser, nothing else (when it comes to each hand). It is a game to be won or lost. Any corporate or bilateral deal on such terms would have no chance of being concluded unless one side had just lost a war – and even then it would prove a recipe for later disaster, as history has demonstrated all too often.

Poker requires certain skills, not ones which are required to cut good deals (plainly daft to suggest that deal-making involves ‘balls’; it doesn’t). If you are bluffing in poker, that may be the best course of action. But how do you bluff when your ‘opponent’ has been allowed to go through the books and knows all that there is to know about what is being bought or sold? In that context ‘bluffing’ is to negotiate in bad faith and to run close to fraud by concealing certain facts. When a deal is done, just as when we might buy a house, clauses in the agreement are included to cover certain unpredictable or unforeseen eventualities, other information coming to light etc. Now there wouldn’t be much point in playing poker if you win a hand by bluffing only to have your opponent ask for his/her money back because they were misled.

Some people can’t cut deals because they fear that if the other party is agreeing to their terms/price they must be ripping them off. So they try to squeeze (or perhaps sell a part of the business or one of its assets and hope to get away with it) or to bluff (perhaps suggest that there is another buyer willing to agree to his/her terms). Usually any such efforts prove counter-productive. After all, if an asset is worth say £1m, based on its full potential being realised over the next 10 years, why on earth would anyone want to pay £1m for it? There would be no upside, no profit motive. So the seller either accepts a lower price or has provisions in the deal which mean that he/she will also benefit if the value of the asset rises in the years following a deal.

The only good corporate/bilateral/multilateral etc deals are those which involve all parties benefiting, depending on their interests (of course if there is a seller in desperate need of quick money there is scope to beat him/her down in price – but that’s not a bluff, just taking advantage of information to hand). It’s (one reason) why Brexit negotiations are especially difficult as the sides are discussing how to limit the damage from something with no upside (over the medium and long term as well as the short term), which is a much more difficult calculation than agreeing a division of future benefits. Add in that in our case it’s even possible that Duchatelet is so twisted that he would want us to fail under new owners; after all, a sale now and promotion next season would leave nobody in any doubt (except Duchatelet himself) who was to blame.

Where does this leave us? In a truly absurd position whereby a caretaker manager – and Lee Bowyer certainly deserves our thanks and appreciation for taking on the task – is looking to shape a squad in the most testing of circumstances. We wish him well and in the interim try to enjoy the World Cup and hope we are in a better position by the time it ends.


Confidential Rick said...

Well said BA..Every day there's no deal makes it more likely that there won't be one. For it to take this long, must indicate somethings seriously wrong either with cash or with trust. Either way it doesn't bode well for the future of the club.

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a2c said...

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