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Today: Ian De Cotta
Fernandes keeps faith in QPR and Caterham
Unlike
the AirAsia success story, Tony Fernandes’ Midas touch appears to have
deserted him when it comes to investing in sports teams. But the
Malaysian entrepreneur disagrees. In an exclusive interview, he tells
Ian De Cotta (ian@mediacorp.com.sg) about his belief that English
football club Queens Park Rangers and the Caterham F1 racing team will
eventually live up to their potential.
SINGAPORE — He paid more
than £30 million (S$60.3 million) in 2010 to start the Lotus F1 racing
team and another £35 million the following year to take over the
majority ownership of English Premier League (EPL) club Queens Park
Rangers (QPR).
But, so far, Tony Fernandes’ forays into sports
through his Malaysia-based Tune Group have not panned out the same way
his storied acquisition of AirAsia 12 years ago has.
Two years after their return to the Premiership under Tune’s ownership, QPR were relegated to the second-tier Championship.
The
London club’s financial statements covering the 2011-2012 season
announced in March this year also revealed losses of £22.6 million and
debts of £89 million.
Lotus, which was renamed Caterham last year
after the team bought the British sports car maker of the same name in
2011, are also having their worst Formula 1 season. They are currently
in last spot with two races to go, ahead of this morning’s United States
Grand Prix.
But Fernandes told TODAY the stories of both
QPR and Caterham have yet to play out the way he envisioned. He pointed
out that QPR are currently third in the Championship and poised to earn
automatic promotion to the EPL if they finish in the top two.
“You buy a team for its potential, and both QPR and Caterham have amazing potential,” said the Malaysian entrepreneur.
“QPR
are doing well in the Championship. Relegation was the hard reset we
needed. It gave us the opportunity to rebuild the club into something
better. If we return to the EPL, it will be different.”
After
their new car with new technical inputs struggled last year, the
Group’s F1 team, which run on an annual budget of £60 million, are
beginning to recover lost ground, he added. They have also strengthened
the technical department with key appointments, and he is confident
there will be a boost in their performance next season, which will see
major rule changes that will affect car design.
Said Fernandes:
“For Caterham, we got a little too clever last season and paid the
price. But we have made some modifications and got much closer to
midfield. Next season will definitely be one to watch.”
The
performance of Fernandes’ two sports teams is unlike that of budget
carrier AirAsia, which was weighed down under RM40 million (S$15.6
million) of debt when he bought it for RM1 from Malaysian
government-linked company DRB-Hicom in 2001.
Within a year, he
turned debt and losses into profit and it started his meteoric rise in
the corridors of power in the corporate world. In just more than a
decade at the close of the 2012 financial year, AirAsia also reported
revenue of RM5 billion and assets worth more than RM16 billion.
Fernandes’
successes also include quick profits in the roll-out of the group’s
Tune Hotel in 2009 and Tune Insurance two years later.
But
despite QPR and Caterham’s less-than-ideal performance on and off the
sports arenas, Fernandes said they are playing key roles in the Tune
Group.
Their biggest value is the captive audiences
they deliver at a fraction of the price they would otherwise have to
pay sports teams they do not own.
For one, it costs AirAsia only
£2.5 million and £1.2 million a season to have its brand splashed
respectively across QPR players’ shirts and Caterham F1 cars.
But
their power to reach eyeballs instantly is priceless to Fernandes. He
said: “F1 and the English league are phenomenally successful sports
watched around the world. That’s a huge captive market. Having AirAsia
and Tune Hotels beamed straight into people’s homes is more powerful
than putting out a print ad.”
“Sport helps to put the Tune out
there. Branding impacts the bottom line, even if you can’t measure it.
The aura of our brand has attracted a lot of partnerships and sports is a
large part of that aura.”
Today
|
MAIL - Nick Harris
£80m LOSS £60m FINE! QPR face record-breaking punishment
for wildly overspending on dozens of players in failed battle to stay
in Premier League
Queens
Park Rangers are on course to be hit with the biggest fine in British
football history, which, in a worse-case scenario, could top
£60 million.
Ironically, it will be imposed because of the amount
of money they are losing — believed to be a huge £80m for last season —
and will compound their financial troubles, perhaps sparking meltdown.
They
have racked up big debts and massive annual losses largely through
signing dozens of players on huge contracts in recent seasons, including
Chris Samba, Park Ji-Sung, Julio Cesar, Jermaine Jenas, Loic Remy and
others, most of whom remain on the club’s books, draining their
resources with contracts worth up to £100,000 a week.
Big money
signing: Jermaine Jenas signed by Harry Redknapp in January 2013 from
Tottenham on 18-month contract worth £50,000 a week
Big money
signing: Jermaine Jenas signed by Harry Redknapp in January 2013 from
Tottenham on 18-month contract worth £50,000 a week
If QPR are
promoted this season, the fine will be levied in January 2015 by the
Football League under their new Financial Fair Play (FFP) rules, which
will see overspending clubs ‘taxed’ on their losses. Rangers are
currently favourites to go up to the Premier League from the
Championship this season. They could avoid a fine — or at least postpone
it — if they fail to get promoted. In that case, they will be hit with a
lengthy transfer embargo.
The mathematics are complicated, but
in broad terms, Championship clubs will pay a £1 fine for every £1 they
lose over £18m in the 2013-14 financial year.
Short stay: Chris Samba Spent six months at QPR to July 2013 on £100,000 a week. His 10 Premier League games cost £2.5m in wages
Short stay: Chris Samba Spent six months at QPR to July 2013 on £100,000 a week. His 10 Premier League games cost £2.5m in wages
Sources
familiar with QPR’s financial situation have told The Mail on Sunday
that the club will post losses for 2012-13 of about £80m. The club are
not obliged to publish those accounts until next spring and have
declined to comment.
Rangers are two-thirds owned by Malaysian
businessman Tony Fernandes and one-third by the Mittal family.
Fernandes’s majority shareholding gives him ultimate power and it is he
who sanctioned the hiring of Mark Hughes and then Harry Redknapp,
allowing both to sign large groups of players.
It is expected
that the club will record another massive deficit for the current
season, and it is the losses in 2013-14 that will be measured to
calculate any fine.
If QPR’s losses for the season are £80m, the
fine will be about £62m. That would equate to roughly all of QPR’s
Premier League income (if they are promoted) for next season. Even if
2013-14 losses are as ‘low’ as £60m, a fine of more than £40m would
follow.
‘This is the first season in which clubs will ultimately
face sanctions [for over-spending],’ a Football League spokesman told
The Mail on Sunday. ‘Clubs have to submit their accounts for 2013-14 to
us by December 1, 2014, with sanctions levied early in 2015. If a club
being sanctioned are in the Premier League by then, the fine will need
to be paid.’
QPR’s accounts for 2012-13, in which they were
relegated from the Premier League, have not been made public, nor will
the club confirm when they will be. Asked to comment on their expected
losses last season and this season, and on the potentially destructive
fines, a Loftus Road spokesman said: ‘The club will be making no comment
on [these] matters at this time.’
Expensive hands: Julio Cesar
signed from Inter Milan on four-year deal in summer 2012. Out of favour
now, but earning £90,000 a week
Expensive hands: Julio Cesar
signed from Inter Milan on four-year deal in summer 2012. Out of favour
now, but earning £90,000 a week
The Mail on Sunday can reveal
that the Football League plan to donate fines levied under their FFP
rules to charity. It had previously been expected that fines paid by
overspending clubs would be shared among clubs who stayed within the
rules and did not lose huge amounts while trying to ‘buy’ success. But a
senior FL source says giving the fines to charity is now the preferred
option ‘for a number of political reasons’.
The last publicly
available accounts for QPR relate to the 2011-12 season, when they made a
loss of £22.6m, had debts of £89m and a wage bill that had almost
doubled year-on-year from £29.7m to £58.4m.
Park Ji-Sung moved from
Manchester United in July 2012 for £2m. Now on loan at PSV with QPR
paying most of his £70,000-a-week wage
Park Ji-Sung moved from
Manchester United in July 2012 for £2m. Now on loan at PSV with QPR
paying most of his £70,000-a-week wage
That huge wage bill was
before they signed high-earning players like Samba, Park, Rob Green,
Junior Hoilett, Ryan Nelsen, Jose Bosingwa, Julio Cesar, Stephane Mbia,
Remy and Jenas.
The wage bill for QPR’s relegation season is
expected to be about £90m, or, by itself, about 150 per cent of the
club’s total income of about £65m. A ‘sensible’ wage ratio is closer to
50 per cent of turnover. They have cut some costs since last season,
releasing or selling 11 players in the summer including Samba, Bosingwa
and Anton Ferdinand.
But they also signed eight new players on
permanent deals and loaned three others including Benoit Assou-Ekotto
from Tottenham and Niko Kranjcar from Dynamo Kiev.
QPR’s income
will also have plunged between last season in the Premier League and
this season in the Championship, largely through reduction in TV money. Mail on Sunday
Tony Fernandes responded with a couple of Tweets
Extended Tweet - QPR fans please ignore Article. Shows how big our brand
has become that people need to write stories that are just not accurate
Stay focused on getting back to the premier league.
Please check the definition of brand. QPR IS A FOOTBALL club but it's becoming globally know club and brand.
