Manchester United, Arsenal, Liverpool, Aston Villa. And now Derby. Americans coming over here, calling the shots, mixing it up at much-loved institutions.
They looked like good ol’ boys when they came, but the reality has been different. Whatever the attraction of investing in such institutions, self is the interest that most appeals to these investors.
Unlike four of our great but vastly underperforming football clubs, there is no takeover (yet) at the Derby home of Rolls-Royce, but the way in which the red carpet has been rolled out for ValueAct’s Bradley Singer, right into the boardroom to his new seat as a director, does make you wonder who is calling the shots at Rolls, the Man U of British engineering.
Mr Singer’s presence in Rolls’ decision-making process will be, at first, like that extraordinary couple of months before the 2010 general election, when no politician could open his or her mouth without saying “I agree with Nick”. Everyone at Rolls will agree with Brad because he’s the chap brought in with a whole bunch of skills and contacts (according to the chairman) to help to get Rolls back up the table.
Yet what happens when Brad starts tiring of the way these funny Brits do business and starts kicking up a fuss, wanting to replace David Moyes with Louis van Gaal, or, in Rolls’ case, plucky new chief executive Warren East with whichever kickass international boss happens to be flavour of the month? It could all get a little awkward.
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This is precisely why some City institutions think representational directors are, at best, never a good idea and, at worst, a corruption of the relationship that a board is meant to have with all shareholders. The City also hates that Rolls has set a precedent. How many more stakebuilding investors will now demand seats on boards?
Of course, the massed ranks of institutional investors that have sat on their hands and done little to prompt change at Rolls could be the ones in wrong.
Investing in companies is so often about backing the management. Mr East and the chairman Ian Davis may count their time at Rolls in only a handful of years, compared with the centuries of accumulated expertise at present being let go in a mass cull of senior management, but they are supposed to be the ones in charge. Now we’re not so sure.
Man with no plan
Industrial strategies can be a bit overblown. In the hands of ministers, they conjure up images of factory closures, working to rule and lost industries. Vince Cable wasn’t allowed one because he was a minority party member in a coalition government with no money. Before that Peter Mandelson didn’t have one, either: travelling round the country like a Bourbon monarch scattering cash to Labour marginals does not count, nor does his hopelessly mis-targeted car scrappage scheme, which did little for British carworkers and much for cheap Korean brands.
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Sajid Javid has no more money than Dr Cable and way less inclination to conjure up an industrial strategy. Speaking recently, the first Conservative business secretary in two decades lampooned Dr Cable for “picking winners” in helping to get the automotive and aerospace industries get organised. How can you have an industrial policy, he reasoned, in a world in which industry leaders like Uber own no taxis, Airbnb own no hotels and Facebook creates no content? A smart man, Mr Javid is either deliberately missing the point or throwing up chaff to cover his own emasculation.
Uber, Airbnb and Facebook all rely on physical assets like vehicle production, housing construction and, most importantly, digital infrastructure. These are just three of the sectors in which industrial strategies are worth pursuing.
Costly missed call
This time next year, the water industry will finally follow the railways and energy utilities in splitting infrastructure from retail supplier to promote better customer service. Corporates will be able to procure water and waste services from a company that isn’t their regional monopoly provider.
Which leaves Ofcom looking very analogue in ruling not to split the dominant internet retailer from the monopoly internet infrastructure provider; that is, it won’t prise BT apart from its Openreach subsidiary.
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BT’s market hegemony has made it complacent and arrogant. It is an organisation that, unable to see the deep irony, tells consumers there is no point changing internet service provider because the internet connection will still be hopeless.
Splitting BT and Openreach would be, financially and legally, fiercely complicated, but not impossible. Ofgem and Ofwat are scarred by failures to rein in powerful companies. Ofcom’s failure to regulate fails us all.
Off the rails
The latest inquiry into the future of Network Rail is likely to recommend new railway investment be at least part-funded by businesses and communities that benefit. For example, plans to rebuild the Varsity Line between Oxford and Cambridge should be funded by their two fantastically endowed ancient institutions and the leafy towns between that could be transformed.
But what of the northern cities that have waited generations for proper rail links? While London is about to get its shiny, government-subsidised Crossrail, the trans-Pennine Northern Powerhouse promised by George Osborne would have to be funded by local business and council tax payers. That’s what you call a North-South divide.