*An alternate view on Mike Ashley’s failure to sell so far from Mike Smithers – a Newcastle fan and businessmen based in Durban, South Africa*
Mike Ashley bought Newcastle United Football Club in 2007 and, according to a section of fans, the club has been going downhill ever since
But is that true?
The first thing we have to settle is Newcastle United a football club or a business…or both.
As a club there is a consistent ring about us being a mid table side, apart from the 4 or 5 glory years. As a business it is successful. I suspect that it is both, with the emphasis on the business side of the club
When NUFC got relegated under Alan Shearer, Ashley put the club up for sale for about 100 million pounds – which is roughly what he had put into the club. There were no takers, Shearer left and the club brought in Chris Hughton, who got us promoted, leading to Ashley taking the club back off the market.
My understanding is that Ashley is a businessman first and a football club owner second and the question “does it make good business sense” guides all his decisions. Yes there is money for the club to use and some of his footballing decisions are hard to swallow, but it makes good business sense.
So to my headline “Why would Mike Ashley sell Newcastle United?”
One reason and one reason only it makes good business sense. Lets unpack Newcastle from a business point of view
- The club has no debt
- The club is making a profit – One of only 6 in the Premier League to do so.
- The club is well run – no tax issues etc
- Most of the players bar one or two could be sold for a profit
- Sports Direct has a captive market for its advertising both to supporters and via TV broadcasts
- The day to day running of the club has no direct impact on the holding company so the club is financially solvent
- The club is the 17th-highest revenue producing club in the world in terms of annual revenue, generating €169.3 million in 2015
From a business point of view the club is doing well, but with every business there is a figure that you will sell your business for. That is why Ashley has placed a valuation of upward of £340m for the club – and he won’t sell for less.
Sports Direct and his other business ventures are all succeeding and in a business environment that, to be honest, is very challenging. So why would he sell for less that he values the business at. Would you?
From a football point of view there are some strange decisions (some might even call them diabolical decisions) and although Ashley is a football supporter of sorts, he is first and foremost a very hard nosed and successful businessman. He dint become successful by being a Wally.
Personally, I don’t believe that the stories floating around about the buyout have any credence at all for one reason – it’s in the media.
When I sold my 2 businesses, no one other than the buyers and immediate family knew about it until it was done – and we all signed NCND agreements before we started talking. I suspect that Ashley, who is light years ahead of me in business success, has a much tighter NCND!
So to my original question – Why would Mike Ashley sell NUFC?
Newcastle fan? Sounds more like a mackem wind up merchant. Why would he sell, well lets see, how about a recession on par with the great depression just around the corner, a probable lack of liquidity after his high street buy up, and consequently an urgent need for someone who’s business is retail, which is hard hit at times of recession, to be cash rich. And as far as I’m aware the HRMC probe has yet to decide how much, if at all, we’ll have to pay in a fine for our apparent book cooking. So well run, ah no, it’s run as cheaply as possible which rarely if ever correlates to well run. Mr. Smithers is clueless on a number of levels.
Kevin(Quote)
The sale has a chance this time due to the financial crisis. Ashley has long hated the fact that he has to answer to shareholders at Sports Direct – this crisis allows him to buy back control cheaply, as the share price is low due to bad publicity, add to that he has 30% stake in Debenhams and will now pick up the rest from the administration for little or no real outlay. The £300m ready cash on offer looks attractive whilst giving him the 2 things he really wants – control of Sports Direct (with no responsibility to anyone else) and control of Debenhams.
JD(Quote)
Kevin – You also omit the fact that he is being reviled all over the football world by Government Ministers, players, media. managers and fans of all clubs for his corporate greed in the face of the Coronavirus pandemic. Throw in the fact that that the fans have stopped attending the ground in their thousands (likely to be even more next year) and his Sports Direct brand has become a noxious name.
Suggest Mr Smithers stick to his own business in South Africa.
taken4mugs(Quote)
Yeah but Ashley doesn’t care what people think about him as long as it doesn’t affect his bottom line. Admittedly it probably has started now with the build up of bad publicity, but I thought it was more relevant to point out the main financial reason he would sell up now.
Kevin(Quote)
What an utter load of b——- you talk
1. Shearer didn’t get them relegated
2. Shearer didn’t leave the club.
3. Were your business ventures you sold high vis entertainment
4. I could go on and on about your one sided Ashley apologist blog , but I think its so obvious for anyone with a hint of intellect to see that I need not bother.
MRJ(Quote)
This reminds me of the bores in the local WMC who make a big show of taking a copy of the Annual Financial Report, then sit nodding sagely while explaining the ‘interesting bits’ to their little dumb sidekicks. NUFC may well be a business in this day and age, but businesses have to satisfy customers (would anyone buy Greggs sausage rolls if they tasted of soap and they knew the MD was sniggering behind the door as he watched them eat it?).
As for “lets unpack Newcastle from a business point of view”? Let’s not – particularly as the points you make only serve to underline the fact that the ‘financial success’ of the club should be reflected in the progress of the club on the field. I want to see that ‘ team that tries’ that the rest off us have been talking about for the last ten years (while the likes of you have been cooing about the lack of debt, this or that spreadsheet etc).
Rob Black(Quote)
Man his facts are wrong 120m to buy the club there is no debt as Ashley has 120m loan.That is 240m.
There are tax issues. Furlough only one of 2 clubs to do so is shocking.
The value of players has dropped.
No income in this shutdown and a chance that if the season does not restart 40m will not be paid next season to each PL club.
Gabriel(Quote)
One of the funniest articles I’ve read in a long time.
Nobody knew you were selling your businesses? Did you have 52,000 people turn up to watch you ply your trade with hundreds of thousands interested in every move you made?
It’s being played out in the media because the details, by law, have been registered with Companies House.
Where did you get the information that Ashley was selling for 100 million?
No wonder you sold your businesses if you think that figures from 2015 are at all relevant now, following a relegation .
The club has no debt? Apart from 110 million owed to Ashey, and if that counts as “no debt” there are 11 other clubs in the prem with “no debt”.
Most players could be sold for a profit – errrrr, no. Maybe less than half the first team.
Apart from that – spot on article
Bring back Charlie Bennet
JFA127(Quote)