The US still needs foreign savings.In any case, the US equity market feels “toppy”. I do not think we are seeing a financial mania, one of those grand splurges when everyone acknowledges that prices are absurd but while they keep rising no one wants to be left behind But there is danger and disappointment ahead. If the market spins on upwards for a few more months then things really will look precarious. Great economy; but even great economies can become overvalued by enthusiastic investors who have forgotten the scent of a bear.. DOWN a dimly lit street, opposite a caravan site in the middle of an industrial wasteland dotted with derelict warehouses, silhouetted figures stare as a bonfire rages
It could be a scene straight out of Blade Runner. But this is the approach road to Hackney Greyhound Stadium, one of the most famous landmarks in London’s run-down East End.
Inside Hackney’s new, pounds 10m East Stand, however, a more relaxed atmosphere prevails.
In a three-tiered, glass-fronted restaurant running the length of the home straight, diners sample a meal of pheasant and lentil soup, foie gras and sorbet served up by a Michelin star-winning chef.Greyhounds flash past the winning-post, a few cheers go up, but there is not a cloth cap in sight. This could be the future of greyhound racing, a brave new world of shiny suits and mobile phones where liveried waiters take bets at your table.Unfortunately, the biggest race now on is to find a buyer for the state- of-the-art stadium itself. Three weeks ago, on the very night of the grandstand’s official gala opening, Hackney went into receivership after banks, led by the Bank of Scotland, and institutional shareholders refused to provide more money to keep the operation ticking over.A for sale advertisement duly appeared in the Financial Times highlighting Hackney’s 63 years in the greyhound racing business.According to Alan Barrett of receivers Price Waterhouse, almost 100 inquiries have been received. He hopes to conclude a sale, and secure the stadium’s 200 jobs, by Christmas.But commentators say the receivers will be lucky to get pounds 5m-pounds 6m for the stadium – a fraction of the estimated pounds 20m spent since Fleetfoot Racing bought Hackney from the Brent Walker leisure conglomerate two years ago.The idea for transforming Hackney into a super-stadium comes from Robert Parker, a greyhound bloodstock agent and former racing journalist. He was removed from his position as managing director of Fleetfoot last year just weeks before work on the new stand began.Further boardroom upheaval followed; in the month before the new stand opened, both Hackney’s finance director and and its operations controller resigned.”Hackney had very big ideas,” says a rival track operator.
“The stadium materialised but the cash flow hasn’t.”Hackney is one of several dog tracks currently on the market, the latest victim of the National Lottery scratchcard craze and of a local economy where property prices are still in free-fall. It is also in direct competition with two nearby tracks, Walthamstow and Romford.But Hackney’s problems go far deeper than that. Apart from the doubtful economic viability of staging evening meetings four times a week, prospective buyers are concerned about the commercial wisdom of charging pounds 40 a head for cordon bleu cuisine at a dog track in a bleak post-industrial wilderness.”What is the primary motivation for going to Hackney?” asks Paul Austin, a spokesman for Ladbroke, one of several bookmakers interested in acquiring Hackney. “If it is to watch greyhound racing, then the new stand looks like a white elephant.”Hackney now has a capacity of 11,000, yet average attendances total 750, including restaurant-goers.Having lost pounds 2m in the year to last December – admittedly when Hackney was little more than a building site – the directors are predicting a turnaround.In a promotional brochure, they reckon sales in the first year of the new stand’s operation could almost quadruple to pounds 7.5m and make an operating profit of pounds 1.5m, rising to pounds 2.5m on turnover of pounds 8.5m the following year.But such projections are no more than optimistic guesswork. “Nobody knows how much the new stadium is capable of generating,” says Price Waterhouse’s Alan Barrett. “It has only been trading for six weeks.”Others have already decided against making a leap into the dark. “We did look into Hackney,” says Mike Raper, director of Wembley-owned GRA, which operates six of Britain’s 36 dog tracks.
“But we didn’t think it would generate the return on capital required for our business. It was not a viable proposition at the asking price.”There are rumours that the new stand might be mothballed or the site bulldozed completely unless a buyer is found soon.Such apocalyptic talk somehow seems appropriate amid the rubble of the Hackney hinterland.. SELLING life insurance to smokers would not, you would have thought, be a sure fire way to make money. BAT Industries, though, on course for pounds 2.5bn pre-tax profits this year, literally makes a packet out of it – as well as selling life, pensions and other insurance to millions of non-smokers in Britain and America and 1.8 billion of cigarettes a day worldwide. But through a quirk of history, it hardly sells a “stick”, the tradeterm for cigarettes, in Britain. That makes BAT the world’s second-biggest tobacco company behind Marlboro owner Philip Morris and the biggest UK-based insurance firm. In its figures for the first nine months of 1995, announced last week, net premium income at Eagle Star and Allied Dunbar in the UK and BAT’s Farmers insurance in the US totalled pounds 6.99bn against the Prudential’s pounds 3.55bn.
Like all insurers, BAT is finding life and pensions business tough at the moment, and low consumer confidence has not been helped by Britain’s pensions mis-selling scandal.
Still, it managed to push total financial services profits up 19 per cent, assisted by Eagle Star Direct, its belated entry into telephone sales that now has more than 500,000 customers.The star performer, though, is still tobacco, where a 34 per cent leap in profits propelled the nine-month figures to pounds 1.81bn, prompting a clutch of forecast upgrades.BAT shares closed the week 18p up at 544p as a result, a remarkable turnaround from a three-year low of 381p in mid-1994, at the height of fears of US tobacco lawsuits and penal health taxation, as well as the tail end of a vicious price war Those worries have taken a firm backseat, however. And with more growth to come, a progressive dividend policy and a prospective yield of 6 per cent, the shares still have further to go.”If you’re looking at the big yield stocks in the market place, BAT has always looked cheap,” says analyst Jonathan Sheehan at broker Credit Lyonnais Laing. “It does look cheap when you look around at international tobacco ratings.”BAT’s uniqueness may partly explain the lag. Now that Rothmans has been taken private, it is the UK’s only proper quoted tobacco stock. Hanson, which owns Imperial Tobacco, is simply too diverse for comparison.
