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Entering the Dragons' Den
by Dave Green - 02/12/2005

The Dragons

It's always momentarily shocking when someone you know from one context pops up in another. It's happened to me on a number of occasions, most notably when an old school friend reappeared, after twenty years, in the guise of the groom at a wedding I was attending. The bride was a colleague of my wife's and I had no idea who her intended was until I saw him in his morning suit at the altar. It took me totally by surprise and for a few seconds I was in a state of mild shock.

I experienced the same feeling as recently as Tuesday evening. On that night I was watching 'The Dragons Den' on BBC Television, a business programme that's one of the very best shows on the box at the moment, suddenly - as if by magic - the shopkeeper appeared..sorry that was a different programme.suddenly - as if by magic - Sam Ermolenko appeared. That he appeared suddenly was strangely appropriate given his long-standing moniker.

Some explanation is probably required for those of you who have not yet discovered the show. A panel of five successful business people - Peter Jones, Theo Paphitis, Duncan Bannatyne, Rachel Elnaugh and Doug Richard - are offered the opportunity to invest in fledgling business projects by would be entrepreneurs who have a bright idea but don't have the resources to see it through. In return for an investment they offer the investors an equity share in their business. Some ideas are inspired, others jaw-droppingly ill-conceived and the panel don't mince their words. The voyeuristic appeal is similar to the audition rounds of 'Pop Idol', 'X-Factor' and the likes.

Sam's brief cameo came as part of a pitch for a product that reduced the amount of fuel used by a combustion engine. Little detail of the product was given but it bombed with the investors. In order to give his pitch a boost the 'pitcher' called on a man described only as 'an expert' to provide some further information. That man, as you've probably guessed, was none other than the 1993 World Champion - Sam Ermolenko.

Sadly, Sam's testimony that the invention was good was rather undermined when he admitted it had failed after ten minutes of use. No investment was forthcoming and it was back to the drawing board for his mate.

It set me thinking about how the business experts would react to a pitch by a prospective speedway promoter. If I approached them would they supply me with a hundred grand to get the show on the road?

The costs involved in opening a new track would be massive so I'll assume I'm taking over an existing track - Aaron Lanney at Oxford will be my inspiration. That 100K I'm after will cover the costs of acquiring the licence, a few assets and give me some working capital to keep me going.

So, what kind of return can I offer to Peter, Doug et al? I'm going to attract around a thousand people to my track once a week and they're going to pay me a tenner on average. If I run from March to October then that's a lot of income! These guys will be falling over themselves to invest in my vision!

It's just a pity that I have some outgoings to meet as well. I need to pay seven riders enough money to allow them to buy and maintain expensive machines, as well as allowing them to earn 12 months salary for 8 months work. That can't be cheap!

I suppose my landlord will also want to be paid for making their facilities available to me. It must be a hassle to accommodate a speedway track, it must be worth their while financially to put up with it. Looks like another chunk of my 'profit' will go into someone else's pocket!

So what else is going to impact on the profitability of my business? Well, how about: signing-on fees; air-fares; travel money; rain-offs; buying shale; track staff costs; depreciation of assets - and probably another thousand things that would never occur to me.

In the absence of any other business interests I'll also need to draw a salary from the business - starvation being the only, frankly not particularly attractive, alternative.

All things considered I can't see how it's possible for me, or anyone else, to run a profitable speedway track. Maybe I'll ask the Dragons for a bit more cash upfront and explain it's to cover the losses I expect to make in my first year? I can then go back on future series to ask them to cover the losses I make in every subsequent year of promotion. Can't see the Dragons being very impressed with that proposal!

I think I'll leave it to others to put their financial necks on the line. Thankfully there seems to be a never-ending line of people more than willing to do so. Most of them doing so through a love of the sport rather than the prospect of making a quick buck. It's lucky that people like them exist, if we ever had to rely on hard-nosed businessmen to run our tracks then the sport as we know it would cease to exist.

Dragons' Den can be seen on BBC2 - Tuesday 8pm

 

This article was first published on 24rd December 2005

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