Racing & Stade - Le Merger
September 15 2008, Bank of America agree a deal to acquire Merrill Lynch. A deal which came as a mighty relief to US Treasury Secretary, Hank Paulson, and the then Chair of the Federal Reserve, Ben Bernanke.
Don't worry, I'll get to the rugby bit shortly.
Paulson and Bernanke had watched on, as Investment Banking giant, Lehman Brothers filed for bankruptcy earlier that day. They were frantically aware that the aforementioned merger played an important role in stopping the next Domino from walloping Wall Street.
The credit bubble had burst. Financial meltdown and that.
To put it in a scenario with which we were all familiar, Merrill were Mufassa dangling on the rock edge. Fortunately, Bank of America had a more friendly outlook on matters than Scar, and saved them from falling into the on coming stampede. Rare that the moral compass of an Investment Bank will be given the thumbs up but Scar really was a bad bloke.
This was a deal driven by preservation.
And this financial chatter is relevant to Rugby, how?
Well, the shock merger of Parisian Rugby giants Stade Francais and Racing 92 (nee Metro) on Monday chucked up one main question - Why?
The official line goes that the clubs are "pooling their resources to better cope with challenges of performance and learning."
Just like Merrill Lynch, the Paris rugby clubs are foregoing their organisational identitiy, culture and ego for survival. That said, Stade Francais captain and all round rugby talisman, Sergio Parisse made it clear via Twitter that he saw a merger as the death of his club.
But why would the Top 14 Champions of 2015 (Stade) and 2016 (Racing) need to focus on preservation?
My answer, they operate in Le Bubble.
The online investment encyclopedia, aptly named investopedia asserts that financial bubbles are created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behaviour.
In the example of French Rugby the surge is in the wage bills that clubs are taking on in order to establish supremacy or in some cases just to compete. Top 14 clubs are often deemed fortunate by their cross channel rivals for having a hefty salary cap that gives them the edge when recruiting global superstars. The signing of current All Black half back, Tawera Kerr-Barlow by Top 14 front runners, La Rochelle, being the most recent reminder of the pulling power that the French clubs possess.
But what of the financial fundamentals that underpin the wedge of euro that fly around the French domestic game? Admittedly there is a fairly chunky TV deal, which is reputedly worth double that of England's Aviva Premiership, which is in turn healthier than ARUs deal for Super Rugby. Then of course you have tickets, merchandise etc.
On top of these revenue streams there are the wealthy owners - and perhaps this is where the volatility creeps in. The most notorious of whom is Toulon's, Mourad Boudjellal who has piled plenty of his personal fortune into transforming Toulon from Div 2 into European Champions. Is the exuberant behaviour of these benefactors, their blind passion and deep pockets, causing the bubble to inflate? If they zip up their pockets, would this be the pin in balloon moment? I accept that fellas with mega wealth probably don't indulge in garments with zip pockets, but you get what I mean.
Sure, the context in which the Merrill merger occurred differs in that the bubble had already burst. But one property of a bubble is constant, and it is how an entity positions for the pop that will determine it's ability to do a non dodo. Note that non dodo is not the latest French- Fijian wing, it's a term created by the author for not being extinct.
On that basis, perhaps we should applaud, Stade and Racing for their line speed in fronting up to the challenges that lie ahead for French Rugby.
On a personal note, looking forward to the hybrid jersey. Baby blue and pink - proper gourmet.
Don't worry, I'll get to the rugby bit shortly.
Paulson and Bernanke had watched on, as Investment Banking giant, Lehman Brothers filed for bankruptcy earlier that day. They were frantically aware that the aforementioned merger played an important role in stopping the next Domino from walloping Wall Street.
The credit bubble had burst. Financial meltdown and that.
To put it in a scenario with which we were all familiar, Merrill were Mufassa dangling on the rock edge. Fortunately, Bank of America had a more friendly outlook on matters than Scar, and saved them from falling into the on coming stampede. Rare that the moral compass of an Investment Bank will be given the thumbs up but Scar really was a bad bloke.
This was a deal driven by preservation.
And this financial chatter is relevant to Rugby, how?Well, the shock merger of Parisian Rugby giants Stade Francais and Racing 92 (nee Metro) on Monday chucked up one main question - Why?
The official line goes that the clubs are "pooling their resources to better cope with challenges of performance and learning."
Just like Merrill Lynch, the Paris rugby clubs are foregoing their organisational identitiy, culture and ego for survival. That said, Stade Francais captain and all round rugby talisman, Sergio Parisse made it clear via Twitter that he saw a merger as the death of his club.
But why would the Top 14 Champions of 2015 (Stade) and 2016 (Racing) need to focus on preservation?
My answer, they operate in Le Bubble.
The online investment encyclopedia, aptly named investopedia asserts that financial bubbles are created by a surge in asset prices unwarranted by the fundamentals of the asset and driven by exuberant market behaviour.
In the example of French Rugby the surge is in the wage bills that clubs are taking on in order to establish supremacy or in some cases just to compete. Top 14 clubs are often deemed fortunate by their cross channel rivals for having a hefty salary cap that gives them the edge when recruiting global superstars. The signing of current All Black half back, Tawera Kerr-Barlow by Top 14 front runners, La Rochelle, being the most recent reminder of the pulling power that the French clubs possess.
But what of the financial fundamentals that underpin the wedge of euro that fly around the French domestic game? Admittedly there is a fairly chunky TV deal, which is reputedly worth double that of England's Aviva Premiership, which is in turn healthier than ARUs deal for Super Rugby. Then of course you have tickets, merchandise etc.
On top of these revenue streams there are the wealthy owners - and perhaps this is where the volatility creeps in. The most notorious of whom is Toulon's, Mourad Boudjellal who has piled plenty of his personal fortune into transforming Toulon from Div 2 into European Champions. Is the exuberant behaviour of these benefactors, their blind passion and deep pockets, causing the bubble to inflate? If they zip up their pockets, would this be the pin in balloon moment? I accept that fellas with mega wealth probably don't indulge in garments with zip pockets, but you get what I mean.
Sure, the context in which the Merrill merger occurred differs in that the bubble had already burst. But one property of a bubble is constant, and it is how an entity positions for the pop that will determine it's ability to do a non dodo. Note that non dodo is not the latest French- Fijian wing, it's a term created by the author for not being extinct.
On that basis, perhaps we should applaud, Stade and Racing for their line speed in fronting up to the challenges that lie ahead for French Rugby.
On a personal note, looking forward to the hybrid jersey. Baby blue and pink - proper gourmet.
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