Bell Pottinger buyout proceeds – despite veto from top Chime shareholder WPP

March 8, 2012

Summing up a satisfactory set of annual results, which had seen Chime pre-tax-profits climb 16%, chairman Lord Bell concluded: “The group is well positioned for the future with a very positive year ahead for sports marketing in particular.”

But not with me on board, he might have added sotto voce, and not with my deputy Piers Pottinger either. Nor, come to think of it, quite a few others in Chime’s PR division.

Bizarrely, despite the naked glare of publicity and overt hostility from Chime’s biggest shareholder WPP, Bell is forging ahead with his buyout proposals, which I flagged earlier.

On that subject, more specific information has come to light. Bell and Pottinger are planning to take with them the whole of Bell Pottinger, including public affairs, Sans Frontières (transborder reputational issues) and Pelham BP (financial and corporate), of which Chime owns 60%. What triggered the talks is the prospect of losing the remaining US government business at BP, which would cause a profit plunge in the Chime PR division as a whole.

Both sides at the negotiating table are rather hoping that Stakhanovite growth in sports marketing will paper over any divisions and, more to the point perhaps, make Chime’s necessary “repositioning” after a Bell buyout more palatable to shareholders. At the moment, PR is the biggest element in the group’s operations – accounting for 44% of its revenue. But it is already on a downward trend: operating income slid 7% to £69.2m in 2011. Sports marketing, on the other hand – accounting for 25% of total revenues – soared 64% to £83m. And with a number of acquisitions under the belt in such places as Brazil, that makes Chime look well set for the World Cup in 2014 and the 2016 Rio Olympics.

When and if buyout negotiations are finalised, Chime senior non-executive director Rodger Hughes is expected to sound out Fidelity (7% shareholder) and possibly JP Morgan (7%) about the proposals. How Chime will square WPP (nearly 18%) remains to be seen.

Here’s what WPP chief executive Sir Martin Sorrell recently had to say on the matter:

“I think it sets a terrible precedent. It isn’t logical, and if you start to dismember the management of it [Chime], where does that begin and where does that end? As an investor in the company, one would rather it stayed together than split asunder.”

I await the outcome with interest.


FIFA sponsors are the only ones who can splatter Blatter

November 20, 2011

Well, what a week of wasted moral outrage that was, even if it did produce one of The Sun’s finest headlines for a very long time.

Make no mistake. “Splatter Blatter” may have sold extra copies of the red-top, but will do nothing to remove the Teflon Man, whose life’s achievement has been to carve himself an impregnable position as world football’s supremo.

In a way, you’ve got to admire him. Like Bernie Ecclestone, whom he resembles in a variety of ways, Blatter is a master tactician at the top of his own, very particular, game: not the administration of Formula One or FIFA, but the administration of power.

The secret of their supremacy is the same. It lies not (or very little) in formal status, but in a second-to-none understanding of how to manipulate an opaque global system that has no loyalty beyond its self-perpetuation.

To be sure, FIFA and F1 are, or have, venerable governing bodies guided by what appear to be democratically elected representatives acting in accordance with a constitution. In reality, the election of these officials is manipulated to suit insiders; and the workings of the institutions they represent are so complex and well-defended that they defy almost any outside attempt to hold them to account.

If there is any parallel to representative government, it is the quaint Rotten Borough system that existed in Britain before 1832. Boiled down to essentials, it involved the King and his chosen First Minister fixing a parliamentary majority by procuring the election of their chosen placemen in all the seats that actually mattered. For placemen read “men in blazers”, and you get the picture.

Corruption was the indispensable lubricant of this system. It involved greasing people’s palms, and not just at election time. The disbursement and retraction of patronage – primarily offices of state awarded on the basis of interest rather than merit – was key to successful management.

Recognise the parallel? Allegations of corruption have plagued Blatter’s 4 consecutive terms of office, culminating in the 2018 World Cup scandal that broke earlier this year. As for F1 scandals, need I enumerate them?

But what do Blatter or Ecclestone care about that? The same opacity which protects these organisations from outside investigation also insulates their ringmasters from public criticism – and any punitive measure that might result from it. Hence the stream of crass remarks that regularly issues from their mouths. For Bernie, Hitler was an OK bloke who built excellent roads even if he did later succumb to a power complex. For Blatter, racism on the pitch is a non-issue which can be settled with a handshake at the end of the match. Out of touch, clearly. But then, so what? They’re also out of reach, and they know it.

Blatter has deftly deflected calls for his departure from the likes of David Cameron, David Beckham and The Sun by portraying the outcry as a case of sour grapes. Only Britain has worked itself up into a national lather over racism on the pitch. Why? Because England lost out in the contest to become 2018 World Cup host, and is now conducting a vendetta against the man perceived to be its nemesis.

So, can he now blow the final whistle and move on? Not quite. If there’s one chink in Blatter’s armour, it’s money – or rather its threatened withdrawal. What if the sponsors – household brand names, with household reputations to maintain – deem he has gone too far and pull the plug on the hundreds of millions of pounds a year that FIFA depends upon for its survival?

Ordinarily, that simply wouldn’t happen. However much they may privately tut-tut about Bernie’s ex-wife spending £12m on their daughter’s nuptials, Max Mosley’s grubby sexual antics or Blatter’s moral insensitivity, the last thing they are going to do is scupper a strategic investment with a noble gesture. Their investment is, after all, in the global game, not the administating organisation and the people who lead it. And their justification for inaction the not unreasonable conjecture that most football and motor-racing aficionados have little knowledge and less interest in the shenanigans of sports administrators.

One sponsor’s uncharacteristic response to Blatter’s racism episode is what, in fact, makes this furore so interesting. True, most of FIFA’s six official partners have played entirely true to form. Coca-Cola has categorically rejected a review of its sponsorship; while Visa, Hyundai/Kia, Sony and Adidas have contented themselves with more or less bland statements condemning racism in sport. But Emirates has broken ranks by taking the almost unprecedented step of reviewing its sponsorship.

Whatever next? Not Blatter’s resignation, for sure. But perhaps the beginning of the end of his reign.


FIFA’s Sepp Blatter and Max Mosley are two of a kind

June 1, 2011

Will the sky fall in on Sepp Blatter, much reviled president of FIFA, just because Coca-Cola and Adidas, Visa and Emirates Airline – 4 of football’s 6 biggest sponsors – have fired a shot across his bows?

Will the English and Scottish football associations’ vociferous appeals for a postponement to FIFA’s presidential election – which currently leaves Blatter dribbling up to an open goal – make an iota of difference?

No and no. The contest between FIFA and its critics is asymmetrical precisely because, unlike Coca-Cola and its fellow sponsors, FIFA is not a brand. It is not vulnerable, in the first degree, to public criticism – however merited or angry that criticism may be.

Indeed, as Matthew Patten recently pointed out, FIFA resembles nothing so much as a medieval guild. It owes allegiance to no one other than the 208 merchant adventurers who make up its membership. Nothing, culturally speaking, could be more removed from the modern corporation. There is no transparency in its business dealings, because the daylight of accountability is not an element in its constitution. The anonymous men in blazers ply their trade in a way that is endemic to all closed mercantile organisations: through mutual back-slapping, nepotism and, let’s face it, financially lubricated manila envelopes – if they think can get away with it. And lording it over them are the merchant prince oligarchs: men (they are always men) like Sepp Blatter and Mohamed Bin Hamman.

FIFA is part of a pattern which, if not peculiar to the administration of world sport, is certainly highly characteristic of it. Remember the cleansing of the Augean Stables at the International Olympic Committee (IOC), after the corruption scandal that was the Salt Lake City Winter Olympics bid came to light in 1998? That was a relatively benign outcome. Less satisfactory have been the consequences of the more recent shenanigans at Formula One. Despite the engulfing stench of scandal, and the twittering of vocal criticism, its twin ringmasters Max Mosley and Bernie Ecclestone managed to protect the integrity of their power base. Admittedly Mosley eventually went, but it was at a time of his own choosing and on his own terms. Ecclestone, meanwhile, continues to crack the whip without let or hindrance. He is currently said to be negotiating an exit deal with Rupert Murdoch.

Blatter, a man who once fronted an organisation dedicated to stopping women exchanging their suspender belts for pantyhoses, is more likely to draw his inspiration from Mosley than the aftermath of the Salt Lake City scandal. He will brazen the “crisis” out.

And there is little, in the last analysis, the sponsors can or will do about it. On the surface, that might seem a strange thing to say. After all, they are bankers to the organisation and provide its marketing pot. Each contributes between £100m and £300m to a FIFA revenue estimated at £2.4bn in the 4 years up to and including World Cup 2010. Surely that gives them more clout than most stakeholders in the struggle to wring reform from the World Cup organiser? Only up to a point. Let’s not forget that FIFA is less dependent upon sponsors these days to the extent that it can dip into billions of dollars worth of syndicated worldwide TV rights. Moreover, rather than presenting themselves as a united front, the sponsors perceive themselves as embattled and vulnerable competitors (rather like the constructors in the F1 equation). Blatter, like Ecclestone, is a supreme tactician in exploiting such weaknesses. There’s always someone else, he will say, to take their place if they don’t want to play ball. A Pepsi for a Coke, a Nike for an Adidas, a Delta for an Emirates, a Mastercard for a Visa.

And do you know what? He’s right. The only chance the sponsors have of effecting change is if they stand united. My suggestion is not that they threaten to defect, merely that they withhold some of their funding until tangible reforms, prime among them greater transparency and accountability, are in place.


Hugh Curly-Whirly’s TV campaign single-handedly triples Sainsbury’s sales of Colin

January 18, 2011

Oh, the awesome power of celebrity endorsement, especially when it is attached to a good cause. Our local fish-lady (stockist, not mermaid) reckons that Hugh Curly-Whirly, as she insists on calling the eminent TV chef, is now revered as a latter-day saint by fisherman at the Cinque Port of Hythe.

Fearnley-Whittingstall recently devised and fronted Channel 4’s three-parter Fish Fight campaign, which appears to have had a galvanic impact on national fish-consumption.

Curly-Whirly’s purpose was to highlight our over-dependence on certain edible fish, namely cod, tuna and salmon. That and the inanity of current EU regulations which, in seeking to inhibit over-fishing, actively promote “discards” (dead and dying fish thrown back into the sea) on a biblical scale – playing no small part in the destruction of our marine fishing industry while they’re at it.

The net result (if you’ll forgive the pun) has been shoals of consumers shimmying around all our best known supermarkets, in a desperate effort to buy up every available “alternative” fish and seafood species. Words rarely heard outside angling circles, such as “coley”, “whiting” and “dab”, have now become the common currency of over-the-counter exchanges with baffled in-store fishmongers.

What Sainsbury’s persists in calling “colin” (that’s pollack to you, with a French accent) is now going out of its doors three times faster than last week, when the programmes were aired. And Tesco, the country’s biggest fish retailer, claims that sales of fresh sardines, coley, brown crab, sprats and whiting have grown between 25% and 45% over the same period.

Mind you, one of the things you won’t hear Tesco trumpeting is sales of its tuna. The saintly Hugh used one of his programmes to excoriate the supermarket’s antediluvian attitude towards netting its own-brand stuff. Whereupon – Hey Presto! – Tesco instantly dropped its attachment to the wasteful but cut-price “purse seining” technique of slaughtering millions of innocent fish. It was a move cynical enough to leave Princes stranded at the bottom of the tuna eco-league table but, in the event, did not elevate Tesco further than fifth place.

So, nice one Mr Curly-Whirly. Just a single piece of advice from our local fish-lady and the good fishermen of Hythe, if I may. Before you direct consumers on an indiscriminate trawl for every available alternative edible fish species, do you think you could do something to educate them on their seasonal availability? All this demand at once – it’s simply unsustainable.


Arts Council prepares to give Tweedy’s business sponsorship body the heave-ho

September 28, 2010

Doyen of business sponsorship of the arts Colin Tweedy is in rueful mood these days, and for good reason. He’s waiting on tenterhooks to find out whether Arts & Business – the organisation he has built up over 27 years to champion commercial participation in the arts – has become the victim of a stitch-up hatched by his host body, the Arts Council.

The Arts Council, like every other quango, is under intense pressure to make deep cuts in its budget. And the suspicion is growing that, in order to save its own hide, it’s quite prepared to sacrifice A&B – which depends on the Arts Council for over half of its funding.

Naturally enough, that’s not going to be the way the proposal is presented to culture secretary Jeremy Hunt. The pitch is more like this: [Much wringing of hands] “…so, Secretary of State, unfortunate sacrifices have had to be made for the greater good of the arts community and we feel Colin’s organisation… well, it does receive quite a lot of private funding, and it’s about time it stood on its own two feet…” Or words to that effect.

Actually, it does receive quite a lot of public money – about £4m a year – which for obscure reasons is within the remit of the wholly subsidised Arts Council rather than being funded directly by the DCMS (the case before 1999 with the then Department of Heritage). Pulling the plug of public finance, however, would not be the best calculated method of ensuring it stood on its own two feet. In fact, quite the contrary. Much of the 45% private funding might disappear if it is not matched by a pledge of public money. And even if it did not, A&B would be crippled by the drastic restructuring that would have to take place to ensure some pale ghost of an afterlife.

It says a lot about the arts world that some would greet this outcome with ill-disguised glee. To them, commerce is a grubby word contaminating the purity of the artistic dialogue. And, let’s face it, Tweedy – tireless champion of commercial support of the arts over nearly three decades – has made a few enemies on this account along the way.

But he’s not without friends, either. And one of them is George Osborne, Chancellor of the Exchequer. It is a peculiar irony that Osborne, in whose name these swingeing cuts are being made, was – until his present elevation – a passionate advocate of the engagement of art with commerce. As you would expect, given he sat on the board of A&B.

Maybe the Arts Council should have a rethink. Not just because of Osborne either. The whole idea of doing away with our best-known and most successful arts sponsorship body seems daft, given that public subsidy of the arts is about to crater.

More about this in my magazine column this week.


Watch out sponsors, more sleaze is about to hit the fan

September 15, 2010

I do hope “Roo” has no more skeletons in his closet – or rather tarts in the boudoir. Because something really terrible has happened. No, not Mrs Rooney filing for divorce, though that would be terrible enough for Wayne’s remaining sponsorship deals with EA and Nike.

This is much worse, and has implications not just for adulterous Premier League footballers seeking to protect their sponsorship deals, but celebrities everywhere with peccadilloes to hide from the roving eye of the tabloid press.

And it is? Mr Justice Eady, the high court judge who has done such sterling work in shaping our libel and privacy laws these past few years, is relinquishing responsibility for defamation and privacy from next month. Oh come on, of course you’ve heard of him! The man whose judgements have put such asinine resonance into the phrase the Law is an Ass? Who makes Paul Dacre’s criticisms of him as “arrogant and amoral” seem wise and judicious? Who thought F1’s Max Moseley was perfectly entitled to carry out Kampf-themed flagellation in the privacy of his own sex parlour? Come on, where have you been? It’s all chronicled here, in an earlier post.

The point is this. Eady, whose political views evidently veer just to the left of Judge Jeffreys’, has been the celebrity’s constant friend, interceding with a sympathetic gagging order or superinjunction (can’t say a thing, anywhere, about anything) whenever their, er, vital commercial interests are threatened by the frivolous exposure of some “momentary” lapse of personal judgement.

Eady’s successor, Mr Justice Tugendhat, promises to be much less of a pushover in his interpretation of the Human Rights Act. Tugendhat it was who lifted the superinjunction brought by then Chelsea captain John Terry to muzzle media speculation about an affair with his former team mate’s ex-partner (for God’s sake). Tugendhat has raised the bar much higher for plaintiffs by insisting they prove that media coverage has affected them “substantially” before they can proceed. Watch out sponsors, lots more sleaze may be about to hit the fan.


%d bloggers like this: