Comment by Adamu

September 28, 2007 @ 1:52 am

Off the top of my head - lots of station front real estate? But then why not just wait until the company just goes under anyway to avoid assuming any of that debt. NOVA is done for it looks like and good riddance!

Comment by Matt Dioguardi

September 28, 2007 @ 4:23 am

Anything is possible, so it could be. But what kind of assets does Nova hold that would make this an attractive investment? I would guess all they have is their patented “teaching method” and textbooks. Is that worth $13 million? I doubt it. I would guess it would be a pretty dubious investment.

This all sounds like an alternative version of Nova is just too big to go under. When Bilinigual went under there were many rumors like this, up to and including the day before they faxed the message to the office staff that they were closing the doors.

Let’s hope the Nova staff and teachers get lucky and this incredibly unlikely rumor turns out to be true.

Comment by DeOrio

September 28, 2007 @ 1:20 pm

The parallels to previous English-school failures are strong. As I understand it, Anders Lundqvist told AAMs to keep it under their hats, but they were going to be paid today (Friday) thanks to a ten billion yen cash injection from an investor. Rumors immediately began flying that this was a hostile takeover.

To be honest, I think that’s hope speaking over reason. That’s not how hostile takeovers occur. On top of that, who is going to carry out his hostile takeover by giving a publicly-traded company 3 1/3 times the value of the company and almost seven times what he’d have to pay to get control of the company?
When you take over a company, you don’t give a big wad of cash to the current directors for them to pay the current rank-and-file. It just doesn’t make sense.

Even if it were true, there would be a couple fo problems: First, this investor would have given a huge wad of cash (a few times the value of the company) to a publicly-traded company.
Second, it looks like Nova is around 60 billion yen in debt. What’s ten billion going to do?

The “cash injection” story was propagated by NCB’s management before it went under, too. I don’t knwo for sure, but I’d bet something similar happened at ABC and Lado as well.

As for assests, Adamu, as far as I know, those nice station-front locations are leased or rented, not owned by Nova - they’re an expense, not an asset.

There are rumors going around of a walkout at Osaka head office, led by the Japanese staff (Glory Hallelujah!), but there are also rumors that titled instructors were paid (Glory, Glory Hallelujah! Being broke truly sucks, it’s not about money.) Any combination of truth or falsity could occur with those two rumors.

Comment by Matt Dioguardi

September 30, 2007 @ 5:01 am

It looks like you’ve revised this entry.

Looking at what you’ve laid out, it’s looks to me that someone buying Nova would get the following:

1. Lots of debt.
2. A brand images that’s been beaten into the ground.

I’d take my money and just start a whole new school, or wait for Nova to collapse then invest it in a smaller, more successful competitor and help them expand to fill the vacated space.

If Nova is failing its for a reason, and not just lack of market share. Are people really learning English at Nova? Are teachers seasoned and well trained? Etc.

Comment by WG

September 30, 2007 @ 6:46 am

wait for Nova to collapse then

…get their locations directly from the real estate agency, at a nice discount to get rent paid quickly. When N– approached N–b– about a buyout their management just laughed and said something along the lines of “We can’t take your debt but once you’re bankrupt we’ll take these locations.”

Comment by DeOrio

September 30, 2007 @ 5:51 pm

If Nova is failing its for a reason, and not just lack of market share. Are people really learning English at Nova? Are teachers seasoned and well trained? Etc.

I think you’re on to something here, Matt. Not so much that customers are worried about lesson quality or teacher qualifications (although many may be), or even that Nova’s reputation has taken a hit (although that is also true), but the trend in the growing eikaiwa gakko business seems to be toward boutique schools that do fewer things, but do them better and are also able to cultivate better relationships with their customers. On top of that, I haven’t seen numbers, but I would not be at all surprised to see that smaller schools, with more experienced, longer-term instructors and staff, were better able to keep customers coming back.

Even if you think the lessons were great, you’re not going to want to re-sign with a company that you feel overcharged or cheated you. It’s hard to make people feel good about parting with large sums of money, unless you’re providing them with something really special and that’s simply beyond the abilities of a large, catch-all school that primarily employs inexperienced people and a one-size-fits all approach to do a job in which there are actual skills that take longer than three days to learn and nuances that time and flexibility to accomodate.

I look at it this way: If I seriously wanted to learn English, at a highly functional or professional level even, and I was prepared to put effort into it, Nova and its ilk would not be for me. Likewise, Nova has never been for serious students, who either know that and never sign up or figure it out quickly and don’t re-sign.

On the other hand, if I just wanted to meet Westerners, get a few pointers, and meet other people who were also interested in English, casual, flexible, undirected classes at Nova might be great, but why would I go to a big chain with high turnover in untrained teachers or a low likelihood of beng able to get to know my classmates if I could go to a smaller school, with more experienced teachers that stuck around longer, management that might even be in the school itself, more affordable up-front packages (even if the per-lesson rate were higher), and maybe even a curriculum that the teacher or I could control or that was targeted to my needs or interests. If I am businessman and I want to be able to discuss business matters with my English-speaking counterparts, it stands to reason that I’d want a teacher who understood what the terminology meant and how finance worked and other related matters, maybe even someone who had actually been in business at one time himself.

Of all the (mostly spurious, prejudiced, and unfair) criticisms of Nova teachers I see floating around the Net, the only one I think is valid is that they’re generally, however bright and talented, young and inexperienced and, as a result, tend to chat with students, never having been trained in actual English-teaching. Heck, they work for a company that insists that mere proximity to native speakers is going to help people learn English.

All of that out of the way, I think that Nova’s reckless expansion, lack of a sound business plan, and failure to take its customers’ pecuniary concerns seriously were far bigger contributors to its downfall than the greenness of its instructors or the uselessness of its textbooks.

My first job in Japan was with Nova, back when I was a lad of 22, not long out of college, and I never heard any student even mention the teachers, lessons, methodology, or materials as being so much as a minor factor in their decision to sign up with Nova. Location was by far the main reason students chose Nova, followed by knowing the name, and relative price coming a distant third - if there were other reasons, I never heard them. Just like a McDonald’s next to Bob’s Burger Shack is going to do more business even if Bob is a great guy with the world’s greatest burgers, only unlike McDonald’s, Nova was not good at the business side of things and would have refused to give you a refund for your Big Mac if it was cold.

Comment by Matt Dioguardi

October 1, 2007 @ 5:32 am

Garrett,

I can’t find anything to disagree with in your comments. I also think they’re really helpful.

At some point in the past, (the 1980s? 70s?) this really simple model was developed for marketing eikaiwa. The most important thing to note is no one was teaching eigo! None of these schools teach eigo, they all teaching eikaiwa.

This basically means sitting a student down in front of a foreigner for about an hour and just getting them to talk a little bit.

Young, inexperienced teachers, hopefully with little Japanese ability, were preferred because that’s good for teaching eikaiwa (not eigo). Fresh college graduates were chosen because:

1. It was the minimal requirement by law.
2. Young people are more compliant. (less likely to question the system)
3. Handsome, more beautiful, more attractive as an eikaiwa partner. Also less intimidating.
4. They’re temporary. (Basically a kind of commodity.) Young people accept the one or two year limit most these companies expect out of the employee.

When you think about it, this is a business that requires very, very little overhead (advertising and brand image for the most part). It’s almost like soda pop in that it’s the marketing of sugared water.

Nova was also successful as you note, because they have locations close to the station. However, how many of those locations do they own? And as the shift gradually continues away from eikaiwa to eigo, convenience will be less and less of a major factor in deciding to attend or not.

Basically, as you have a kind of commodity trader here facing difficulties, what are the assets that they possess that would make them a good investment:

1. Good ability at procuring the commodity. (Some genuine experience in this area)
2. Good ability at managing young compliant foreigners. (Some genuine experience here too)
3. Brand image (now destroyed)
4. Locations near station (but none owned)

In short, Nova would be a god-awful investment even at cut rate prices. You’re just not getting much for your money.

Comment by ken

October 1, 2007 @ 8:30 am

Back a few months ago, it was reported that LDP member Yasuhide Nakayama, “accompanied…president [Nozomu Saruhashi] of language school chain Nova Corp. to a meeting with Osaka Mayor Junichi Seki amid a court battle over the company’s refund system.”

The story was covered by the Asahi here: http://www.asahi.com/english/Herald-asahi/TKY200706120415.html

Here’s info on Nakayama: http://www.iloveosaka.jp/profile/index02.html

中山康秀 is Nakayama Yasuhide

Googing around after hearing a rumor that Nova has sold the patents relating to its video lesson delivery system, I see that the President of Ginganet, the firm that supplies Nova with its video equipment, is a Hideki Nakayama.

Here’s the page from Ginganet: http://www.ginganet.co.jp/annai.html

中山秀樹 is Nakayama Hideki.

And that’s where I’m going cold right now. I know that Nakayama Yasuhide is 37 years old, and I think that he replaced his father, Nakayama Masaaki, as a diet member from Osaka. Just thought it to be a relatively big connection if possible and worth exploring further.

Comment by Demon

October 1, 2007 @ 10:18 am

Hi Ken,

I used to be a titled instructor with Nova a couple of years ago. I got a lot out of the experience *good and bad and I dont regret the time spent. The information you have provided and the genuine care that you exhibit is appreciated. I have a lot of friends still in Nova and I am pointing them to all the information you and others have provided as a reality check for them. Keep up the good work.

Regards,

Comment by Demon

October 1, 2007 @ 2:57 pm

Just heard that Okachi-machi branch in Tokyo is closing on October 16th. This school used to have around 800 students but over time declined to around 400+.

This is by no means a small branch NOR is it in a provincial area.

Comment by DeOrio

October 1, 2007 @ 3:28 pm

That’d be a story - the school in the heart of the black market diamond-laundering center goes under. Plenty of atmosphere.

Demon, did that come from Nova?

We’re starting to hear quite a few rumors of closures. Trying to check them out. If anyone has confirmation of closures, let us know.

Comment by Demon

October 1, 2007 @ 3:56 pm

Yes i heard that from a student who is still a friend of mine. I mentioned that some Nova schools were going under and he said ohhh Okachi-machi will be fine. A week later he tells me it will close October the 16th.

Also heard that Chiba Honko has some issues where staff and teachers didnt turn up. The minute I know of anything NON-Gossip I will post. 4 teachers I know applied for jobs elsewhere last week and found new employment. 8 others have left japan within as many days. Everybody that I know said that MonkeyBridge should have stepped down a long time ago.

Comment by Demon

October 2, 2007 @ 5:19 pm

There is an expected announcement from MonkeyBridge this Friday 5th. I wonder what he has to say ))

I noticed that the share price is down to 38yen. How long can they keep playing with figures. After reading most of the blogs and forums I wonder how many schools are really open and functioning. I have had reports that there are lots of EMPTY lessons in BIG schools. All the AAMs and BT are hitting the road.

Why arent the Japanese press all over this ?
Will it be another case of #after the horse has bolted#

They should check to see how many schools are operational NOW. How many businesses and individuals are effected by this. If current teachers knew how many schools and what schools are closed it may give a better insight to the recent damage. Anyone have any idea ?

Pingback by Nova Nova Nova, geez. « The Poetist

October 3, 2007 @ 12:58 am

[…] Insolvency.  Bankruptcy.  Collapse.  Since Sept. 15 these words have entered - and quite violently at that - my personal vernacular.  So what is going on with Nova anyway?  The question of assets is key.  Most Nova teachers can be divided into two groups: those who think Nova has assets and those who don’t.  I used to be in the first group until recently when I spoke to Ken Worsley (from Trans-Pacific Radio) about the issue.  Because he’s more or less familiar with Nova’s official financial situation he was able to tell me that the company sold all of its assets between April and June of 2006.  There have been countless rumors of buyouts and financial injections, and Ken does a great job of assessing those possibilities in his TPR blog. […]

Comment by A

October 13, 2007 @ 2:26 am

http://translate.google.com/translate?u=http%3A//www.mofa.go.jp/mofaj/annai/shocho/koeki/ibunka_meibo.html&hl=en&langpair=ja|en&tbb=1&ie=Shift_JIS

This page shows the roster for the Institute for Internation Communication Foundation.

Sahashi tops the list and Nakayam Hideki clocks in at number 10.