Tugger Posted November 27, 2007 Share Posted November 27, 2007 The government should have negotiated a better deal from the Racket (just as it should have insisted on the retention of the Heathrow slots when BA took over Manx Airlines - I know for a fact that they were SPECIFICALLY warned that BA would discontinue the Heathrow service). But they didn't, so now we are stuck in a position with (effectively) a monopoly service provider and a user agreement that is designed to synthesize competition but doesn't, really. With that user agreement (and the effective monopoly) Macquarie valued the Racket at £225 million. They are required to deliver a minimum service standard, which they currently exceed. WITHOUT the effective monopoly (basically, another linkspan so that another shipping company could compete for the (very) profitable freight services), the Racket would be worth £225-x ("x" being the value attributed to the monopoly by someone who knows how to value these things). Let's call the cost of providing the Liverpool day trip "y". The government can threaten the creation of another linkspan unless the sailings are increased. As long as x>y, it's in the Racket's interest to do so, otherwise it runs the risk of its PROFITABLE income streams being hollowed out, by a competitor who has no need to compete in the UNPROFITABLE passenger services market. This assumes, of course, that Macquarie believe that the government isn't bluffing. If you were the bean counter, and these were your alternatives, what would you do to ensure that your £225 million investment wasn't ready for the scrap heap in 18 months? Link to comment Share on other sites More sharing options...
manxman8180 Posted November 27, 2007 Share Posted November 27, 2007 The government should have negotiated a better deal from the Racket That is the key to the whole debacle. The Government only re-negotiated the agreement a couple of years ago and still we have found ourselves in this situation. I'm interested to see what the investment (as stipulated in the agreement) brings about in the next year or two. Now, has Government the 'cojones' to admit it has dropped one? Link to comment Share on other sites More sharing options...
triskelion Posted November 27, 2007 Share Posted November 27, 2007 The government should have negotiated a better deal from the Racket (just as it should have insisted on the retention of the Heathrow slots when BA took over Manx Airlines - I know for a fact that they were SPECIFICALLY warned that BA would discontinue the Heathrow service). But they didn't, so now we are stuck in a position with (effectively) a monopoly service provider and a user agreement that is designed to synthesize competition but doesn't, really. With that user agreement (and the effective monopoly) Macquarie valued the Racket at £225 million. They are required to deliver a minimum service standard, which they currently exceed. WITHOUT the effective monopoly (basically, another linkspan so that another shipping company could compete for the (very) profitable freight services), the Racket would be worth £225-x ("x" being the value attributed to the monopoly by someone who knows how to value these things). Let's call the cost of providing the Liverpool day trip "y". The government can threaten the creation of another linkspan unless the sailings are increased. As long as x>y, it's in the Racket's interest to do so, otherwise it runs the risk of its PROFITABLE income streams being hollowed out, by a competitor who has no need to compete in the UNPROFITABLE passenger services market. This assumes, of course, that Macquarie believe that the government isn't bluffing. If you were the bean counter, and these were your alternatives, what would you do to ensure that your £225 million investment wasn't ready for the scrap heap in 18 months? This is ridiculous, we are simply going round in circles. Every page someone new comes in with the same 'argument' based in fantasy land where they get everything they want. Well I want a ferry service that gets me to Liverpool within the hour in perfect comfort and luxury whenever I want with complimentary onward helicopter connection to wherever I want to go. For a tenner. Though at least I accept that my demands are unlikely. All this talk of threatening to build another linkspan is hysterical. Here is how it would play out: Tynwald: We demand you charter a second ship in order to run a winter service to Liverpool even though you know you will lose a lot of money and that hardly anyone uses it except at weekends. If you do not comply we will build another linkspan not subject to our current agreement. Steam Packet: Bullshit. Constructing another linkspan would take years and cost tens of millions of pounds with no actual material gain for the Manx people. So in fact the Manx people would be much worse off than they are now, which is to say with a winter service that rivals or surpasses that of other small Islands. Tynwald: Look, we know. But there are guys on the interweb that want us to wave our penis about to show we agree with them, even though their ideas are completely unrealistic. As you know, many of them still pretend that it is 1964. Also they like to complain a lot. Steam Packet: So they expect you to shaft us with sharp stick; to blackmail us into running an under-used service under threat of essentially being put out of business? Tynwald: Yes. Steam Packet: You realise of course, that it is impossible for you to do so and that these people are full of bollocks? Tynwald: Totally. ------------------------ Also, what is so important about flying out of Heathrow? Most major destinations can now be reached via Manchester, which is much closer and a much less terrible airport. Link to comment Share on other sites More sharing options...
Tugger Posted November 27, 2007 Share Posted November 27, 2007 It isn't impossible at all. What YOU are demanding is that the Steam Packet have an unlimited right to fuck over a captive client base. If you think this government shies away from underutilised capital projects you need to open your eyes a bit. The monopoly is worth the best part of £225 million, certainly more than the cost of another linkspan. This wouldn't be a zero sum game for Macquarie Link to comment Share on other sites More sharing options...
triskelion Posted November 28, 2007 Share Posted November 28, 2007 No, that is not what I am demanding. The current linkspan agreement commits the Steam Packet to provide a minimum service, which it exceeds. Its winter service is perfectly reasonable. As Lost Login said on the previous page, stamping your foot and shouting is not the way to proceed. The Island does not need more sailings than it currently receives. If there was sufficient demand for the Liverpool service in winter then they would be running it as there would be money to be made. You idea seems to be aimed much more at 'getting back' at Macquarie (who have done nothing wrong) than in promoting the interests of the Manx people. Just because the Government may have over-spent on previous big capital projects does not justify doing so to satisfy the hysterical vendetta of some residents. If it were to spent huge (huge) amounts on another linkspan (which would require the construction of another deep water harbour), it would never get that money back. Whilst the costs may come in at under £225 million, that does not make it a worthwhile investment of taxpayers money, as the Manx people do not stand to make a net gain. Even if the Steam Packet were to add extra (non-profit making) sailings 'under duress' (something of dubious legality), they would have to raise ticket prices in order to compensate. There are not enough people with a genuine, vital need to use the Liverpool service to justify this burden being placed on other passengers. Link to comment Share on other sites More sharing options...
Tugger Posted November 28, 2007 Share Posted November 28, 2007 You idea seems to be aimed much more at 'getting back' at Macquarie Nope, it's about coercing Macquarie to make a choice between two unappealing options, one of which benefits the Manx people Link to comment Share on other sites More sharing options...
samsungman Posted November 28, 2007 Share Posted November 28, 2007 Really mad with the steam packet. If I go on a day trip I will be off island for 26 hours! Link to comment Share on other sites More sharing options...
Frances Posted November 28, 2007 Share Posted November 28, 2007 since triskelion is a self-appointed ? spokesperson for the new owners can they please explain what made the Aussies value the company (owing one boat, an unusitable fast craft, a fixed term lease on another and little land based assets) at £225M if it wasn't the monopoly - that should be revoked as it obviously makes a fantastic difference to the paper value of the Racket and is in effect an indirect tax on every Manx household. Link to comment Share on other sites More sharing options...
Laxeyman Posted November 28, 2007 Share Posted November 28, 2007 I took it upon myself to do some research as we are all running around and not going to the horses mouth for vital information. This situation is now even worse as MACQUARIE GROUP does now not totally own our future. If as this lady says Macquarie does not own where does the ultimate decision lie? I think this is very very serious as I can see a lot of “pension funds” thinking they have there nose in the trough and not wanting any expenditure at all So friends, how about hitting the e-mail and telling the nice lady what Steam Packet is up to I bet they don’t know This ownership now looks like “sooty the nude” Who are we dealing with now? Does the Govm’t know whom they are dealing with, I bet not Have a read below: Thanks for your email regarding the Isle of Man Steam Packet Company. IOMSP is owned by a consortium of long-term investors which includes the Macquarie Group along with major pension funds. Macquarie is responsible for overseeing the investment on behalf of the other shareholders through a long-term advisory agreement. The Macquarie Group's stake in the company is 10 per cent. IOMSP was originally acquired by Macquarie Bank in October 2005. The co-investment partnership was subsequently established and, as reflected in the Bank's accounts via the link below, the investment was transferred to the co-investment partnership. The details of our investment partners are not public, however we can disclose that they are major pension funds. I hope this clarifies things for you. if you have any further questions or need additional information please let me know. Kind regards, Alison Alison Jefferis Division Director , Corporate Communications MACQUARIE GROUP tel: +44 (0)20 7065 2335 fx: +44 (0)20 7065 2017 m: +44 (0)79 1938 2958 alison.jefferis@macquarie.com www.macquarie.com/eu Link to comment Share on other sites More sharing options...
AlexMcC Posted November 28, 2007 Share Posted November 28, 2007 I took it upon myself to do some research as we are all running around and not going to the horses mouth for vital information. This situation is now even worse as MACQUARIE GROUP does now not totally own our future. If as this lady says Macquarie does not own where does the ultimate decision lie? I think this is very very serious as I can see a lot of “pension funds” thinking they have there nose in the trough and not wanting any expenditure at all So friends, how about hitting the e-mail and telling the nice lady what Steam Packet is up to I bet they don’t know This ownership now looks like “sooty the nude” Who are we dealing with now? Does the Govm’t know whom they are dealing with, I bet not Have a read below: Thanks for your email regarding the Isle of Man Steam Packet Company. IOMSP is owned by a consortium of long-term investors which includes the Macquarie Group along with major pension funds. Macquarie is responsible for overseeing the investment on behalf of the other shareholders through a long-term advisory agreement. The Macquarie Group's stake in the company is 10 per cent. IOMSP was originally acquired by Macquarie Bank in October 2005. The co-investment partnership was subsequently established and, as reflected in the Bank's accounts via the link below, the investment was transferred to the co-investment partnership. The details of our investment partners are not public, however we can disclose that they are major pension funds. I hope this clarifies things for you. if you have any further questions or need additional information please let me know. Kind regards, Alison Alison Jefferis Division Director , Corporate Communications MACQUARIE GROUP tel: +44 (0)20 7065 2335 fx: +44 (0)20 7065 2017 m: +44 (0)79 1938 2958 alison.jefferis@macquarie.com www.macquarie.com/eu This happened several years ago, I don't remember the details though I do remember the ownership of the Sea Express 1 for example was transferred to one of these companies...... Link to comment Share on other sites More sharing options...
Frances Posted November 28, 2007 Share Posted November 28, 2007 I believe the technical term for such transfers is 'asset stripping' Link to comment Share on other sites More sharing options...
Laxeyman Posted November 28, 2007 Share Posted November 28, 2007 I believe the technical term for such transfers is 'asset stripping' Yes your right it is a faceless entity now, one wonders where it will end, if the new time table is out right up to 2009 I wonder what other things can be cut to keep the "investors" in profit and happy Link to comment Share on other sites More sharing options...
"V" Posted November 29, 2007 Share Posted November 29, 2007 What you have found out Laxeyman makes matters even worse. So we now have a "vital service" to the Isle of Man which is owned by a number of "pension funds". Obviously none of these funds have any interest in IOM or IOMSP other than profit. This brings me back to Triskelion's points. I have to agree that IF we were operating in a free market economy then supply and demand would dicate the level of service, price and routes the ferry company/companies operated. However thats a BIG IF. We are not operating in a free market economy. The IOMSP have a de facto state sponsored monoply, guaranteed by the IOM Government. I believe that this situation is unique in Europe (if not the World). Nowhere else will you find a private company with a goverment guaranteed exclusivity of service for a period of at least 20 years. (Manx Telecom had a similar situation). This is what made IOMSP so attractive to venture capitalists - cheap company + guaranteed protected market = licence to print money. For all of Triskelion's well argued points about how the market dicates the service he is wrong. What dicates the service is the User Agreement. Provided the IOMSP sticks to the minimum levels of service their profits are protected. It wouldn't matter if there was a market of 1,000 people wanting to go to Liverpool everyday in the winter - if they don't want to offer the service they don't have to. In the "real world" if the IOMSP pull out or reduced a service/route another provider could assess the potential and step in. We have seen this in practise at the airport, Aer Arran pull out of Luton flights as not viable but the route is taken up by Flybe, Emerald go bust on the Liverpool route but the capacity is taken up by Euromanx. Sea Links are different, because of the User agreement WE as the "market" can't influence the service WE want. Effectively the IOMSP dicates what service (subject to the minimum) they want to provide and at what cost and WE can take it or leave it - Market Forces are powerless in this case. I will reiterate my previous point - our Government got us into this mess and they need to get us out of it!!! Link to comment Share on other sites More sharing options...
immortalpuppet Posted November 29, 2007 Share Posted November 29, 2007 I am writing to the King, maybe he can strike a deal. Link to comment Share on other sites More sharing options...
jaybs Posted November 29, 2007 Share Posted November 29, 2007 Interesting announcement this morning "Radio UK Holdings" (company owned by Macquarie Bank Limited) - has given back the licence they won to serve Plymouth, which was due to open next year as Diamond FM, they must have realised it was not a "licence to print money" like the IOMSPC Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.