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Table of Contents:
What I Watched Last Week
What I Am Watching This Week
Deep Dive: Derby County
What I am Reading
What I Watched This Week
MLB
Hitter of the Week: Juan Soto
Stuck on a horrific team, Juan Soto’s fantastic second half has flown under the radar. His play has catapulted him into the MVP race. His patented plate discipline is buoyed by his ability to stay off high fastballs — a pitcher’s go-to pitch in challenging situations. Soto’s take-chart illustrates his unique ability to stay away from those pitches and prolong plate appearances.
I wanted to finish Soto’s write-up with a snapshot of his stats for September.
Pitcher of the Week: Max Fried
Max Fried’s two performances this week, against the Giants and Padres, were spotless. In 16 combined innings, he gave up zero earned runs and only allowed six hits and a single walk. Speaking of second halves, check out Fried’s numbers since the All-Star game:
The Braves are poised to secure the NL East later this week. Their performance in the second half is a testament to a front office that acquired multiple players at the deadline despite star player Ronald Acuña Jr. suffering a season-ending injury. It is refreshing to see a team not give up in the wake of a massive injury and, instead, pursue postseason success.
Ryder Cup
Admittedly, I am not the biggest golf fan. But, I could not pass up watching the U.S. utterly dominate Europe in the Ryder Cup over the weekend. The United States is a far more talented side, so the win was expected. The overwhelming scoreline of 19-9 was the widest margin of recent history. In addition to the victory, it is highly encouraging to note the youthfulness of this American side with rookies including Collin Morikawa, Xander Schauffele, Patrick Cantlay, and Scottie Scheffler. The United States is set to control the Ryder Cup for the next several years.
NFL
Chargers 30
Chiefs 24
The Chargers followed the playbook in their win over the Chiefs. They pushed the envelope on multiple occasions, limiting Patrick Mahomes’ time on the ball. With a minute left, the Chargers faced a pivotal fourth-and-five and could either kick a field goal or go for it. Coach Brandon Staley opted for the latter, but the Chargers incurred a delay-of-game penalty. Again, Staley decided to go for it, and Justin Herbert rewarded his faith with a clutch pass interference penalty. Subsequently, Herbert connected with Mike Williams to score the deciding touchdown with 32 seconds left.
We wanted to leave the ball in Justin's hands. We wanted him to be the game decider. — Brandon Staley
The loss dropped the Chiefs to the bottom of the AFC West — something we all saw coming.
Ravens 19
Lions 17
For all of the pain and suffering the Detroit faithful have endured, this heartbreaking loss may top the list. Justin Tucker nailed an NFL-record 66-yard field goal to win the game. However, the referees missed a crucial delay-of-game call that would have required a game-ending ten-second runoff.
Buccaneers 24
Rams 34
America’s Game of the Week was less competitive than the scoreline suggests. The Buccaneers’ defense failed to stop Sean McVay’s high-flying offense. Matthew Stafford is proving week after week that he is a substantial upgrade over Jared Goff. The first half lacked the scoring that many expected. However, Stafford opened the second half with a 75-yard touchdown pass to DeSean Jackson, taking a 21-7 lead. The Rams held onto the lead for the remainder of the game.
Deep Dive: Derby County
“It’s 50/50 they get liquidated,” said one source, while another said: “I can’t see how they get out of this — they’re f***ed.”1
In America, it is rare for a sports team to file for chapter 11. The last example was the Texas Rangers, who in 2010 defaulted on a loan. The owners used the bankruptcy to ease an impending sale, but the “filing call[ed] for creditors to be paid in full, and had the support of Major League Baseball.”2 Across the pond, a soccer club filing for administration is far grimmer. Clubs frequently issue loans to one another; therefore, any club defaulting can have a domino effect. With the news of Derby County teetering off the edge, many were worried about the potential ramifications across the soccer pyramid. In this week’s deep dive, I will provide some background on the club and examine its future after undergoing administration.
Derby County is based in Derbyshire, England. Famous for being one of the 12 founding members of the English Football League in 1888, Derby has competed in the Championship and Premier League for all but four years of its existence.
How does a club of Derby’s stature find itself undergoing administration? The coupling of outlandish spending and COVID-19. The current owner, Mel Morris, made his fortune through his investments in King — the maker of Candy Crush Saga. Activision’s purchase of King netted Morris “£450 million.” After buying the club in 2014, Morris injected over “£200 million into Derby.”3 The funds went towards purchasing players in hopes of returning the club to the Premiership.
A helpful financial metric for measuring soccer clubs’ solvency is the wages to turnover ratio: used to evaluate the efficiency of players as a generator of income as a function of the club’s revenue.4 Amongst clubs, the consensus is that a “ratio of less than 70% can be managed, but anything above that is dangerous and needs to be monitored.”5 In Derby’s last public filing, their wage bill rose to £47.8 million for 2017-18, equal to 161% of the club’s turnover.6
Additionally, the club loses between £15-20 million pounds a year. Therefore, Morris sought out significant debt to maintain the club’s expenses: £120 million of total loans, with MSD Partners providing £20 million. If you are a regular reader of the Lukas Review, MSD Partners is the group that partly funded Burnley’s leveraged buyout. MSD regularly issues secured debt to soccer clubs. In this case, Morris secured the debt against Derby’s stadium and training ground.
In a press conference, the appointed administrators stated that the debts were “substantial,” but a new owner could negotiate a significant “discount.”7 The marked-down debt is used to incentivize potential buyers as liquidation is viewed as a last resort. However, sources argue that any prospective buyer would need to spend £50 million clearing Derby’s debt before rebuilding the club.
Any buyer would also recognize that the club will presumably be relegated at the season’s end due to a 12-point penalty levied by the EFL. The deduction aims to discourage other clubs from entering a similar situation. Thus, any owner would need to spend significant sums to pay off the club’s debt to obtain a League 2 side. Still, there are rumors of numerous potential buyers.
Time and time again, wealthy individuals buy a club with the quixotic notion that they can restore them to their former glory. When they realize owning a club is nothing more than a vanity project, they sell in the wake of mounting losses. In cases like Derby, Morris has saddled the club with enormous debt, reaching a nadir in their 133-year history. The biggest losers are undoubtedly the Derby fans, who desperately want the club to return to its peaks. With this week’s unfortunate news, any hopes of returning to the Premier League have been squashed. In the future, the EFL should better screen potential buyers and ascertain whether that individual is comfortable (and financially capable) of losing millions of pounds a year.
What I’m Watching This Week
Monday
Eagles vs Cowboys at 8:15 PM on ESPN
Tuesday
PSG vs Man City at 3:00 PM on Paramount +
Porto vs Liverpool at 3:00 PM on Paramount +
Milan vs Atletico Madrid at 3:00 PM on Paramount +
Yankees vs Blue Jays at 7:07 PM on MLB.TV
Wednesday
Juventus vs Chelsea at 3:00 PM on Paramount +
Man United vs Villareal at 3:00 PM on Paramount +
Yankees vs Blue Jays at 7:07 PM on MLB.TV
Thursday
Yankees vs Blue Jays at 7:07 PM on MLB.TV
Friday
Yankees vs Rays at 7:05 PM on MLB Network
Saturday
Man United vs Villareal at 7:30 AM on Peacock
Arkansas vs Georgia at 12:00 PM on ESPN
Michigan vs Wisconsin at 12:00 PM on FOX
Brighton vs Arsenal at 12:30 PM on Peacock
Cincinnati vs Notre Dame at 2:30 PM on NBC
Ole Miss vs Alabama at 3:30 PM on CBS
Oklahoma vs Kansas State at 3:30 PM on FOX
Sunday
Liverpool vs Man City at 11:30 AM on NBC
Browns vs Vikings at 1:00 PM on CBS **
Chiefs vs Eagles at 1:00 PM on CBS **
Panthers vs Cowboys at 1:00 PM on FOX **
Atalanta vs AC Milan at 2:45 PM on ESPN+
Cardinals vs Rams at 4:05 PM on FOX **
Seahawks vs 49ers at 4:05 PM on FOX **
Ravens vs Broncos at 4:25 PM on CBS **
Steelers vs Packers at 4:25 PM on CBS **
Buccaneers vs Patriots at 8:20 PM on NBC
** = Check Local Listings
*All times are EST*
What I’m Reading
Sports
What’s behind Josh Allen’s early-season struggles? A deep dive into the Bills QB’s advanced stats**
Where do the Miami Dolphins go from here? **
Inside the Manny Machado, Fernando Tatis Jr. confrontation and what it revealed about the Padres **
Denver Broncos likely for sale in ’22, but high price will test strict NFL owner rules **
From the Ravens’ upset to Kyler Murray’s magic, 15 developments from Week 2 that will matter*
Explaining robot technique and how it helps NFL linebackers recover into pass responsibilities **
Sarris: Is this the golden age of the old(er) starting pitcher? **
Laviska Shenault Jr. sees the light **
Jets’ C.J. Mosley is slimmer, speedier and committed to big year at linebacker **
Business
Startup Firms Help Home Buyers Win Bidding Wars With All-Cash Offers **
BlackRock and HSBC funds boosted Evergrande holdings as crisis loomed **
Mystique of Elliott Management at issue in challenge from Twitter shareholder **
How Accounting Giants Craft Favorable Tax Rules From Inside Government **
Price Comparison Websites: Go Compare **
Belize leans on coral reefs to drive bargain with bondholders *
Who Owns Your Life Insurance Policy? It Might Be a Private-Equity Firm *
LinkedIn may be the nerdiest social network — but its strategy is working **
DraftKings makes bid to acquire UK rival gambling group Entain *
Credit Suisse charges investors to prop up Greensill Capital *
Is This Public? (or...Why I’m leaving TradFi for Crypto) **
IEA urges Russia to ramp up gas supply to Europe *
*** Must Read
** Very Good
* Recommended
https://theathletic.com/2841896/2021/09/23/what-happens-when-a-club-enters-administration/?article_source=search&search_query=Derby
https://www.reuters.com/article/us-texasrangers-bankruptcy/texas-rangers-file-for-bankruptcy-protection-idUSTRE64N41N20100525
https://theathletic.com/2846677/2021/09/24/they-must-be-mad-why-derbys-administrators-have-a-mammoth-task-on-their-hands/
https://www.statista.com/statistics/327340/uk-football-league-wages-turnover/
https://www.footballcritic.com/news/revealed-the-teams-with-the-most-dangerous-wages-to-revenue-ratio/1048
https://find-and-update.company-information.service.gov.uk/company/00049139/filing-history
https://theathletic.com/2846677/2021/09/24/they-must-be-mad-why-derbys-administrators-have-a-mammoth-task-on-their-hands/