Owning a football team is a classic way to lose money. Owning one in a recession can be an even better way to haemorrhage cash. "Which is why I'm jolly delighted that we've already sold 12,000 season tickets," says John Madejski, the 67-year-old owner of Reading FC. "In another few months time, we mightn't be so lucky." Now in the Championship (first division), if anyone can take them back to the Premiership, he can. After all, he rescued the third-division team from receivers in 1990.
The Berkshire-bred millionaire has come a long way since his early days selling advertising space in the Reading Evening Post. It was a holiday in Tampa in Florida in 1976 that set him on the road to success. He found a local magazine selling cars, complete with pictures of each model for sale. "I just said wow. This is dynamite." Polaroid photographs had just hit the market, "filthy, dirty, mucky things", he says. "But they were revolutionary. You could take a photo and just develop it in front of your eyes the beauty of it was that you could take a picture of your car and put it in the magazine. There was nothing like that in the UK."
Madejski returned to Reading, where he courted two business partners, and raised £2,000 to launch Thames Valley Trader in January 1977. "We went to hell and back in the first two years," he says, delivering the magazines, selling the advertising and "making a lot of mistakes" in the process. "The marketing is probably the most important part of your venture," says Madejski. "You might have something that looks very good, but how are you going to tell the maximum number of people about your idea or service?" Thames Valley Trader did look good. But after sending out 10,000 poorly targeted brochures, the response was disappointing. "So what we did, which was terribly clever, was we canvassed."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The Trader served an area covered by 20 different newspapers. "We'd go to them, turn straight to the back pages where the classified advertising was, put in a call and say, Hey, Mr Jones. Have you sold that Ford Cortina yet? No? Well, we're from Auto Trader, and what we do is'" Each advertising slot cost £5, with a guarantee of a further week free if the car didn't sell in the first week. "Getting the cash up front before you even printed a page meant cashflow was very good."
By 1981, they had launched Southern Auto Trader in Southampton. A partnership with Guardian Media Group (who'd launched Auto Mart magazine in the northwest) followed in 1983. In joining forces, both groups gained national exposure and avoided a circulation war. By 1988 all the titles were labelled Auto Trader, and by 1998 the group had 52 titles with a UK-wide circulation of 700,000. That was when private equity group BC Partners approached the group. Madejski sold out for £260m, bagging £174m for himself in the process.
He's ploughed his time and energy into Reading FC, and has no plans to sell up just yet. Football is the "ambrosia of the masses", he says. "I've been highly successful here, and I want to give something back."
