Tomorrow should see around 15,000 to 20,000 construction workers get back on site. Opening up part of the construction sector will be very welcome for those firms and workers directly involved in building residential homes.
Presumably, the decision is on the basis that construction sites are safe and are not major spreaders of Covid-19. And in fact all of the data supports that reality.
So if we can all be assured that it is safe to have construction workers get back to building vitally needed houses, two questions arise.
Firstly, did they really need to be stopped from building homes in the first place? And secondly, what about the remaining 20,000 constructions workers involved in non-residential and industrial buildings who are not allowed back to work for almost another month?
The cost of having all of those extra workers remain at home on the PUP for another month is significant. If they are all on PUP it would amount to €7m per week excluding the lost income to the exchequer from having them back at work. Every €1m spent in construction generates €680,000 in wages and profits, along with 12 jobs, and adding €1.8m to the economy.
So based on a purely economic basis, the decision to hold back tens of thousands of workers from important construction work for another month makes no sense.
Why not have the sector back as a whole, as quickly as possible?
Analyses of HSE data showed that of the 158,000 confirmed cases of Covid-19 in Ireland since January – during a period when 40,000 construction workers have been on site – just 145 cases were linked to construction.
A previous HSE steering committee analysed 8,000 cases which were derived from employment and while 750 came from meat plants, just 30 were traced directly to construction sites.
The other argument around all of this is movement of people. The public health perspective is that certain work should be shut down not because the workplace spreads Covid-19 but to prevent the general movement of people.
Again, what difference is it going to make to have 20,000 additional workers spread across the entire country travelling to and from a safe work environment?
If they are going to transmit the virus in the queue for a breakfast roll in the Spar, then how come construction sites are not major spreaders?
Construction Industry Federation chief executive Tom Parlon is pretty clear on the decision to delay full re-opening.
“This decision is a complete own-goal,” he said.
“The industry has shown that it can operate at full capacity with minimal cases on-site. This decision extends the misery of unemployment on 20,000 workers unnecessarily in addition to costing the exchequer millions. Now Ireland is the only country in the world to partially extend its partial lockdown.”
Based on current case levels on site, the decision to shut down a multi-billion-euro sector of the economy could theoretically prevent 40 Covid-19 cases with near zero chance of a hospitalisation.
For Parlon there appears to be a hesitancy to accept the efficacy of antigen testing. “Antigen testing has the potential to help reopen sectors of the economy,” he said. “The UK government is providing companies with free antigen tests to help them reopen. Reopening housing is positive and safe but equally so is reopening non-residential.”
It is hard to argue, even on the public health side of things, with these figures.
The cost of our overall construction lockdowns has been dramatic. Data from the Irish Home Builders Association suggests the industry will lose 8,000 housing units in 2021 due to the lockdown, when compared to the expected 24,000 units originally projected for the year.
Opening up residential but not industrial results in a quite bizarre situation. It is difficult to explain to a major multinational business investing here, that we can build your data centre but not your new office block. That will have to wait.
The decision by Rupert Murdoch’s Fox Corporation to launch legal proceedings against Flutter, owner of Paddy Power, is very surprising. The action is all about the price that Fox should pay to exercise an option to buy an 18.6pc stake in the rapid-growth FanDuel business.
The surprising thing about the action is that one would imagine the precise pricing mechanisms would be unambiguously tied down in their legal agreement.
Flutter merged its US business with FanDuel in 2018 and later raised its stake in Fanduel to 95pc before Christmas 2020 in a deal that valued the American betting operation at $11.2bn.
Fox believes that its option to buy an 18.6pc stake in FanDuel should be at the same valuation as the Flutter deal. Flutter on the other hand is arguing that the option price, which applies in July of this year, would be set at the market value at the time.
The legal action has been filed with New York’s Judicial Arbitration and Mediation Services, and Flutter says it is “without merit”.
In an update Flutter said during the week that under the terms of Flutter’s agreement with Fox Corporation, an arbitration mechanism was put in place at the time of The Stars Group merger announcement to be conducted in the event of a disagreement between the two parties relating to the option. That now being the case, such a process has been initiated by Fox.”
Deciding the market value of an unlisted share can be a tricky business. Perhaps a disagreement over valuations could be expected. But the Fox case seems to be suggesting a different pricing model altogether.
One stockbroking analyst, Alistair Johnson of Redburn, estimated that if Fox was successful, it would pay $1bn less for the stake when exercising the option because FanDuel is so much more valuable now, even just a few months later.
The legal agreement between both parties on such a significant transaction would be crystal clear.
In Flutter’s circular to shareholders of December 10, last year, announcing its purchase of an increased stake in FanDuel, the company refers to the Fox option in the following way.
“Flutter intends to offer to Fox Sports the option to purchase 18.5pc of FanDuel at fair market value in July 2021, with substantively the same terms and valuation mechanism that Fox Sports and Flutter previously agreed would have applied to the Fastball put and call options. No assurances can be provided on whether and on what terms any such transaction with FOX would take place.”
Use of the word “intends” is interesting but equally it is not definitive either way.
I haven’t seen any Paddy Power odds on the outcome of this court case.