City Talk: The fever pitch has passed for football investors

AS THE football season builds to a climax - the FA Cup, Coca-Cola Cup and the run-up to the championship - excitement off the pitch seems to be dwindling.

Take Chelsea. After beating Arsenal to secure its second appearance in a cup final in two years, the shares have barely budged. On Friday, they languished at 97p - a far cry from the 160p they stood at a year ago.

Further good news from an investment point of view may be the departure of Ruud Gullit, if only because of the reduction in the wage bill. But the response off the terraces has been muted.

Meanwhile, Manchester United's share price has trundled along for the past year and is currently an uninspiring 147.5p.

Tottenham Hotspur, hovering perilously over the drop zone, has fallen from 120p in the past year to 69p. Whatever the fans may think of Christian Gross as coach, it is clear he has yet to win much support from investors. Which is a roundabout way of saying that football has taken on an entirely different investment perspective over the past year. Over-ambitious valuations look to be a thing of the past - which is no bad thing, in the longer run.

Shareholders in GoshawK Insurance Holdings will receive pleasant news tomorrow when the group releases results for its non-marine syndicate 2021, set up last June. Syndicate 2021 underwrites reinsurance for orphan syndicates at Lloyd's - those syndicates which are in run-off. With a capacity of pounds 29m, it has already secured eight contracts for a total premium income of pounds 17.8m. It has generated pounds 20.1m in premiums since it began taking business. The broad-based marine syndicate 102, in which GoshawK has a 27 per cent interest, will report premium income of pounds 64.2m for the past year.

Tomorrow also sees the annual general meeting of Deltron Electronics, where chairman Paul Gourmand will disclose excellent progress in the first four months of the year. The specialist electronics components supplier will show that trading in the first four months "continues to perform ahead of our expectations" and is more than 50 per cent ahead in January on the previous year. That suggests brokers' forecasts of pounds 3.3m in pre- tax profits for the year to September 1998 already look in need of upward tweaking. The shares were at 132p on Friday.

Clearly, the news that Bass is lining up a $2.8bn (pounds 1.7bn) deal to buy the Inter-Continental Hotels & Resorts chain from the Seibu Saison Group of Japan has alarmed the markets. Shares in the brewing to hotels group fell 26.5p to 960p on Friday. Financing is understood to have been lined up with a consortium of half-a-dozen banks. The chief concern is that Bass is overpaying for the privilege. A source at a rival bidder said it was a surprised that Marriott International had failed to pull off the deal. "Marriott had prepared carefully. It's a surprise if they have been scooped."

While $2.8bn is seen as a reasonable ball-park figure, it also raises other doubts about the strategy adopted by the group. Granada's purchase of Forte is widely seen as having called the cycle as close to perfection as possible. Bass's move, by contrast, comes when the international hotel cycle is widely seen as having peaked. Asset valuations have more than caught up with the upswing in economic cycles - Inter-Continental, a global brand, will suffer from the fall-out in Asia, while there is a general consensus that worldwide growth is set to slow.

Finally, Bass has been exiting from businesses where it cannot see the prospect of annual earnings growth of more than 10 per cent. Yet purchasers of Bass assets have been pleasantly surprised by the return on capital the purchase price represents. And as assets where investment has been limited, the earnings upside is considerable. One interpretation, perhaps unjustly negative, is that chairman Sir Ian Prosser has been caught in a trap of seeking exciting new growth prospects, while overlooking the potential closer to home.