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The Failure of Challenger
The recent announcement that Challenger Syndicates had called in the receivers is, of course, very bad news for all those connected with the company. It is not good for those in their employ, the proprietors, the customers and, of course, those who find themselves owed money by the company and, presumably now will not be paid. I guess that the exact breakdown of these figures will come out in the end, but right now I would suggest it runs in to many thousands of pounds.
If one takes a step back from the make-up of the personalities involved one can only say that Ed and Gill Rimmer tried, and tried very hard with their business. They were regulars at more or less every national trade show within the waterways industry manning one stand or another. The cost of appearing at these shows is considerable, and I would suspect on occasions the return was negligible, nevertheless they always came back for more. Also they had their own open days which were generally held outside, often in quite inhospitable weather and, having done similar events, I can tell you that when you are freezing to death and looking at a handful of visitors it can be most soul destroying. Yet, you dust yourself down (or warm yourself up) (or, in the case of Gill Rimmer, who was unfortunate to fall in the canal at one such event, dry yourself off (the rumours that for months she was called Gill Swimmer were never founded)) and get up and go back to fight the good fight again.
Then of course there were their glossy brochures, and their mailings and their adverts in the magazines. All of these have costs that need to be paid, all of these show a level of commitment. A full page in most of the Waterways magazines is around £600.00 per month.
So, whilst one might now look back and say they got it wrong, they certainly showed a level of commitment that perhaps cannot be faulted.
Of course there were those, myself included, that felt that the way they tried to hold their cards very close to their chest regarding their company was close to paranoia. Stories about of people being told to remove web sites they had written, and not post to any message boards for fear of recriminations, abound. I guess if they (the Rimmers) themselves felt more comfortable with that and that was their way then so be it. Of course as an outsider, after seeing the way it was run, you did not have to join, but then I guess that was not always made apparent until you had handed over you money.
If one looks at the business as a whole, there would have been two forms of income. The first would be the income from managing the boats. Lets say this was £250 per share over 12.5 owners per boat times 27 boats, or say £84,000 per year. Out of this comes all the overheads in running the business. Items such as post, telephone, staff costs, web sites (they did not write their own) heating, advertising, general office overheads, lighting etc. etc. etc, (and I appreciate they ran it from their home) Quite simply it probably was not enough.
BUT there is another side to this business, the sales of the shares. THAT is where you CAN make some money and use the profit from that to keep the other side going (and growing) until it breaks even. Lets make no mistake about it, the mark up on Challenger’s shares was substantial, and let me also be the first to say that I do not see anything necessarily wrong in that, if the customers were prepared to pay it then so be it. The customers, at the end of the day, DID have a choice.
My guess is that the sale of shares slowed down to such an extent that the revenue it generated dwindled away and as such the company ceased to be solvent anymore. Equally I would suspect that certain boats may well not have been paid for (or at least the purchase was funded by third parties who needed to be paid), and the company could not meet its commitments.
But, all of the above is my reading between various lines, and NONE of it should be considered as fact.
And so to the future. First of all I have to confess I can offer no advice or suggestions to those who have boats based abroad, for which I apologise.
For those owning narrow boat shares I would offer the following advice.
First and foremost I would suggest you TRY to find another management company to take on your boat, if only for 12 months until the dust settles and you can decide if you want to go it alone, or stay as a managed boat.
I guess the obvious ones to try are OwnerShips or Carefree Cruising who may well be interested, but there are others to ask. Equally there are rumours that a former employee of Challenger is hoping to put together some sort of package for existing owners and that may well be worth considering. BUT, my advice is whatever you do, do NOT sign any agreement with anyone for a period of longer than 12 months. Of course the first 12 months MIGHT well be a horrendous one for a management company to take on, so they might refuse such an agreement, or, equally, charge you over and above the “going rate” for sorting out the mess. It could be money well spent.
I would suggest that each group of owners take a vote as soon as possible as to what way forward they opt to take. Also I would suggest that each group of owners appoint an overall “leader” at least during this interim period. Somebody who can make decisions for all the owners within that group.
One very important thing is to ensure that there is money available to cover costs on the boat due to be paid NOW and to ensure that the boat is insured and licensed and thus can be used by its owners. Boat yards who have carried out winter maintenance MIGHT be prepared to wait for the dust to settle before being paid, but BW and the insurers will not, it might be a case of the owners chipping in to pay now, in the hope that there is money of theirs somewhere safe in a clients account within Challenger and the receivers will release it. Maybe the appointed temporary “leader” could also be a temporary treasurer???
Of course owners might decide to bite the bullet now and “go private”. It means appointing somebody to “run” the money and “run” the boat, with bookings, servicing, moorings etc. It is not really that hard, just turning a handle. The difficult bit comes when major things either need doing, or go wrong. That is where a management company earns its keep.
Whatever DOING NOTHING IS CERTAINLY NOT AN OPTION
I would suggest if you own a share in a Challenger boat you contact your fellow owners (if you know who they are!?) and put together an action plan, be that to call a meeting, appoint a “leader” or whatever, and move it forward as quickly as possible. Also talk to the boatyard where your boat is moored and see how they feel about the boat being there and when, from their point of view, something needs to be done? Is work still going ahead that might be urgent notwithstanding the company going in to receivership, a boat that is half painted, or has a half re-built engine is no good to anyone!! Some things CAN wait, but once we are at the point where owners are starting to use the boat things need to have happened……
Now, looking at the shared ownership market as a whole how does this affect things? Well whilst the other shared ownership players might be rubbing their hands with glee I would just stop and think for a moment. I can categorically tell you all this is very bad news for the shared ownership market.
Firstly anyone looking at buying in to a managed shared boat will now be wary of doing so. Of course the other companies will hold their hands up and say that it has absolutely nothing to do with them, and to some extent they are right, right now it does have nothing to do with them, but mark my words it will. Liken it to Marks and Spencer saying they had a bad Xmas, shares in all similar retailers fall. Next, or BHS may have had a brilliant Xmas, but confidence generally gets dented.
There are now another 27 shared ownership boats on the canals that were previously “hidden” due to Challenger’s policy of keeping things “out of sight”. If one takes a typical OwnerShips boat (other companies do not show figures) at any given time there are, on average, probably one or two shares for sale on each one of them, so over 100 boats lets be generous and say they have 120 shares for sale, it could well be more.
My understanding is that Challenger operated a “waiting list” to sell your share, meaning that if you wanted to sell your share on your boat and nobody else did all was well, your share was offered on the open market, but if somebody else already wanted to sell then you had to wait until that share had sold first, so how many shares were actually “for sale” is unknown. Also the “new” hire fleet was “acquired” I believe from ex-shared ownership boats, so by buying back shares in existing boats and moving the boat to the hire fleet, the “waiting list” and thus number of shares for sale could be reduced. I gather some owners were shuffled from boat to boat where they did not want to sell, so they kept their share, albeit maybe in a different boat to the one they were on to start with. Such a system now cannot, obviously, operate.
So, without a doubt there are owners within Challenger who had shares that were up for sale, and still are. Probably quite a few of them! Plus no doubt the collapse of the company may well prompt a few others think about selling (if they can find a buyer!).
Also, by virtue of the failure of Challenger the general public will have a tainted perception of the concept so whilst the share numbers have grown, the market for these shares has, perhaps, shrunk. Also Challenger had a high presence at boat shows and may well have introduced customers to the concept of shared ownership and when those people looked in to it they found other players, so indirectly introducing customers to other organisations. This will no longer occur. Finally, of course, the overall general market for the selling of shares is in decline, you only need to look at how many boats OwnerShips put on the water in 2007 and compare that to 2006 and 2005 to see that the market may have reached saturation point. A point now totally diluted by the onrush of the Challenger boats previously “out of sight”.
Of course from here it gets worse, not only do we have all the Challenger shares that are for sale coming out of the “steelwork” but who will want them? Well nobody in the very short term, but they will get sold in the medium term, but at what price? The answer to that is at a heavily discounted price, where this then depresses who whole market, and then you come full circle, why buy a share in a brand new boat when you can snap up a heavily discounted one that is but a year or so old? Thus the sale of new shares gets depressed even further, and the circle gets completed. Finally, if you refer to my comments above you will see that it is my opinion that the failure to sell shares in new boats is the reason Challenger failed…….
Any customers of Challenger who want advice, or who want to offer their share for sale on this site are invited to contact me
Some people have made comments about my views and these may be found here
