Posts Tagged ‘finance’

Spain Wins the World Cup

Tuesday, July 20th, 2010

Global success starts at homeSpain’s extraordinary win in the 2010 World Cup means the country now joins a rarefied group of soccer royalty - Brazil, Germany, Argentina, Italy and France - as one of the handful of countries to win the game’s highest honor.  The defining features of the Spanish team were their midfield dominance — Iniesta, Xavi, Fabregas  and Alonso– and their close passing game (that and the emergence of David Villa as a Paoli Rossi-like figure scoring goals against some of the most impenetrable defenses in recent history). Some of us older fans were even reminded of the French teams of the 1980’s that comprised Tigana, Fernandez, Girresse and the incomparable Michel Platini.  What’s curious is they actually lost their first group match to Switzerland 1-0. The Spanish coach, Vincente Del Bosque, to his credit, didn’t panic and refused to go back on his strategy of attractive, attacking football. Once the Spanish midfield took control of the midfield in a game, it was difficult for their opponents to have a look-in. The mighty Germans, for example, who easily dispatched England and Argentina with their counterattacks, came unstuck against Spain as the Spanish team denied them space and used their short passing game to press their offense.

Spain’s euphoria over its World Cup win is a signal of the profound impact that soccer (and by extension sports) can have on a national psyche.  Hundreds of thousands jammed Madrid’s avenues as an open air bus conveyed the national team past a sea of red and yellow, the colors of the Spanish flag. The celebration in Madrid, where national unity is at its strongest, was expected. But there was support from other places: The Catalonia region, which has long sought greater autonomy, and the separatist Basque region, where anything pro-Spain is often anathema. For a country that emerged from 40 years of brutal fascist rule under Franco and that now struggles with 20% unemployment, the victory couldn’t have come at a better time.  Spanish Finance and Economy Minister Elena Salgado told reporters Monday that winning the World Cup “generates confidence in our country, here and abroad, and that will also be good for GDP,” she added. An ABN Amro Bank study into the macro-economic effects of the tournament suggested a World Cup provided a GDP gain of 0.7 percentage points, a figure that some economists dispute. There is no question: Spain deserves the World Cup.  Let us hope it helps to boost the country’s fortunes, from its  anemic growth of 0.1 percent of GDP over the first quarter of this year and its projected 0.3 percent contraction over 2010.

Rodrigo Silva is AlterNow’s soccer correspondent.  Based in Malaysia, he teaches business and marketing at the MBA level at Segi College in Kuala Lumpur.

Michael Jackson’s Finances Illustrate Investor Over-exuberance

Wednesday, July 1st, 2009

The tragic death of the “King of Pop” provides an interesting insight into how hedge funds and private equity groups buy loans  in anticipation of future earnings. Michael Jackson made real money during his 40 years as an entertainer; unfortunately, he also lost a lot of money, especially over the last 10 years.1df5e0555199fd3d53bd84a1e6ab4

Reports are that Jackson died $500 million in debt.  The crushing debt-service payments - combined with losses totaling millions, due to bad investments and money spent to finance his lifestyle - wiped out his fortune and he ended up in hot water with private equity creditors (it should be noted that Jackson was an extraordinary philanthropist, donating $300 million to a multitude of charities during his career.)

In 2003, Fortress Investment Group purchased some of Jackson’s loans from the Bank of America.  Jackson’s failure to repay caused Fortress to threaten to call in the loans.  Citigroup rode to the rescue and refinanced $300 million of Jackson’s debt.  After he fell behind on payments, Fortress moved to foreclose on the Neverland Ranch.  Yet another potential savior - Colony Capital - purchased his loans from Fortress and created a joint venture with Jackson to purchase Neverland for $22 million and renovate it for sale.  Colony was also backing Jackson’s 50-concert London comeback which had $85 million in sold-out ticket sales at the time of his death.  Clearly, Jackson’s brand was perceived to be so valuable (he sold 750 million albums during his career) that the assumption of risk was deemed to be worth it.