With a little over two weeks now until the North and Standard Club votes are counted, the number one item on almost every other International Group (IG) club’s agenda is how this proposed merger will impact upon the other clubs and what the ramifications will be on the IG.
The very proud independent histories of most clubs, in many cases going back 150 years or more, are being threatened by the merger fever going around the market with almost all clubs now frantically wondering how they may be able to compete with the possibility of further consolidation and the number of IG clubs reducing down, as some predict, to as few as six or seven mega clubs.
Members of each club are scheduled to vote on the proposed merger with results to be revealed at a meeting in Athens on May 27. If approved by the members and the relevant authorities, the new entity, NorthStandard, will be working together in time for renewals on February 20 next year.
The proposed merger, which most people feel is now certain to go ahead, will almost inevitably lead in time to much reduced competition and a greater number of conflict cases and clearly the position will be exacerbated if and when more mergers take place. This in turn could lead to possible problems with the competition authorities and the regulators.
There are already known to have been tentative discussions taking place between other clubs with a view to possible mergers such is the state of panic amongst the clubs to try and find the right or preferred partner rather than get left behind in the consolidation race and find themselves jilted as it would appear that the West of England has been.
There is undoubtedly a perception in the market that this is really a North of England takeover by stealth and that in time its management team will play a more dominant role in the newly merged club and it is expected that a number of the members of the senior management team in the Standard will depart in a relatively short time frame, no doubt taking a hefty pay off thereby enabling the ambitious North executives the opportunity to take more overall control. Likewise, I’d give that tentative NorthStandard new name a maximum of two years before dropping the last two syllables.
Financially, whilst this is very much being portrayed as a merger of equals there are many who believe that the reserving policies of both clubs are very different. North’s reserving policy is undoubtedly more cautious.
All in all, the proposed merger is already shaking up the IG. No matter what the result of the vote there will very likely be far reaching implications for all the members. For big owners this could ultimately be like turkeys voting for Christmas as large owners already have entries in multiple clubs and the more the consolidation bandwagon rolls on the larger members will run out of alternatives, so much for competition.
The IG was established for the benefit of all shipowners no matter what their size, the fear is that the way that the IG may be heading, the chances are that bigger clubs will be dominated by bigger members and that the interests of the smaller and medium-sized owners will become less relevant.