What has Newcastle United ever done for Mike Ashley (and Sports Direct)?

[PaddockLad 14638]

From nufcblog:

 

 

 

 

What has Newcastle United ever done for Mike Ashley (and Sports Direct)?

 

 

 

Cheap and nasty.There has been something of a rehabiltation of the reputation of Mike Ashley at Newcastle United recently.

 

This, of course, has been due largely to the club’s generally upward trajectory in terms of it’s League position in recent seasons under Chris Hughton and Alan Pardew, as well as some successes in the transfer market since Ashley and Llambias cast their their three casino aquaintances adrift and let Chris Hughton bring in a proper chief scout, a move which has been highly beneficial for the club so far.

 

Less obviously, perhaps, there has also been a relentless PR campaign run through the media on all levels. Like the current coalition government, much has been said to demonise the previous administration, presenting Ashley as some kind of messiah type figure who made tough choices to save the club from certain liquidation as a great benevolent gesture to the people of Tyneside. But, according to the narrative, this has been a thankless task, with Geordie ingrates not showing the suitable appreciation of his selfless largesse. Admittedly, this isn’t the most difficult thing to do when the targets are the likes of Freddy Shepherd and Douglas Hall. According to a peculiar logic, much has also been made of what Ashley’s alleged financial “backing” of the club in terms of making a £140 million loan to himself, which is repayable on demand by the club, to save himself from paying high interest rates on his own Newcastle United debts. The term “clearing” the club’s debts has been used so often that many fans are still oblivious to the fact that the club is now actually far more in debt than it was when Ashley assumed control of the club in 2007.

 

However, although all who have been to the stadium formerly known as St James’ Park, as well as those who have seen it on television, have noticed the relentless encroachment of Sports Direct on the fabric of the once proud edifice, with no camera angle left uncovered (including the sky); one question which has been asked less often is: What has Newcastle United done for Mike Ashley and his most important business interest, Sports Direct International PLC?

 

It started with a single sign on the top of the Gallowgate end of the stadium, eventually spreading like a tumour over the roof of the Gallowgate for TV helicopter shots, and eventually all around the stadium, inside, outside, in post match interviews and so on. Then of course, there was the renaming of stadium itself in two stages, the first of which added Sports Direct to the stadium’s original name in November, 2009. Despite a promise to fans from Derek Llambias to always keep the St James’ Park name, Ashley inevitably reneged on this, eventually discarding the original name entirely two years later in November, 2011.

 

I was originally inspired to write this piece quite some time ago with the news that Ashley will almost certainly be awarded an ever increasing bonus (which currently stands at almost £24 million) by Sports Direct. It is based on the company meeting a series of “EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), however the large sums involved have also been justified on a platform of providing extensive free publicity for the company through his other business interest, Newcastle United Football Club. I also noticed some time ago that Sports Direct was, and still is undercutting Newcastle United’s own club shop, and other outlets, by almost 20% on replica shirts, a conflict of interest which, along with the extensive free publicity for Sports Direct, is damaging the club’s merchandising revenue.

 

Whilst the parameters for Ashley’s so called “Super Stretch” bonus scheme have been based on profit targets, Ashley has already benefitted hugely from Sports Direct’s radically improved figures. At the point in time (November 2009) when the first rename of St James’ Park was announced to the consternation of fans, when the Sports Directification of Newcastle United really started in earnest, Sports Direct’s share price was a lowly £1 and flatlining (see illustration). At the time, Newcastle United were in the Championship, and still in the shadows relatively speaking, so the price kept fairly steady for a while. However, as we all know, the club eventually acheived promotion at the first attempt that season under then manager, Chris Hughton. As soon as Newcastle United made their home return against Aston Villa, an incredible 6-0 victory in front of the cameras of ESPN, the share price proceeded to rise markedly, and has hardly stopped since, rising in line with the club’s fortunes. On the close of trading as of Friday, June 22nd, 2012, it was £3.05, over three times as much. This means that in November, 2009, Ashley’s holding in Sports Direct International PLC was worth around £425 million according to the market. At the time, his total net worth was estimated to be as low as a mere £700 million. Ashley’s holding in Sports Direct is now around £1.3 billion, a rise of around £875 million, and his total net worth is now estimated to be worth around £1.7 billion, a rise of as much as £1 billion. Of course, this is many times what the whole of Newcastle United is worth at it’s current valuation, especially so with Ashley’s £140 million debt hanging over it.

 

 

Sports Direct’s share price ticker.

 

However, Mike Ashley has acknowledged none of the considerable benefits the ownership of Newcastle United has brought to him, with his cipher at the club, Derek Llambias, frequently berating fans for not showing due deference and gratitude for his great charitable gesture in buying the club as a promotional vehicle for his sportswear company. With a breathaking effrontery, the club’s Managing Director has made made statements such as:

“This club can’t support itself without the financial backing of Mike Ashley; we still rely heavily on the owner. To date Mike has invested over £280m into the club, including £140m in interest-free loans. For him to continue to support the club, he has to be interested and enthused to do so. He deserves credit for his financial support but a section of supporters don’t make him feel welcome at St James’ Park, or when he attends away games.”

Of course, I am NOT saying that the Sports Direct’s fortunes rising along with those of Newcastle United’s is a bad thing on it’s own, far from it. I am also not silly enough to credit all, or even most of this rise to the extensive publicity Sports Direct have received through Ashley’s Newcastle United vehicle. Other factors such as Sports Direct share bonus incentive scheme for it’s Oberkapos, more highly ranked employees on real employment contracts rather than the hard pressed drones on minimum wage zero hour contracts, have undoubtedly played a major part. However, the huge exposure through the worldwide media of Premiership TV must have helped significantly. After all, if it didn’t, why has Ashley and his cipher at the club, Llambias, been so aggressive in pushing it through against such vociferous opposition? As for the strange idea that this is some kind of “showcase” to attract another sponsor, virtually everyone in the marketing industry, except for the one employed by Ashley, immediately saw through Llambias’ claims that this was a “showcase” for to attract outside sponsorship what it was, a sham:

 

“Arguably the most bizarre decision made by the club, however, is to brand the stadium as the S_____ D_____ A____ (named after Mike Ashley’s sports goods company) for a year to showcase the opportunity. What it has showcased to date is the sheer naivety of the club’s board. First, naming rights deals work over a long-term. They are not used for short-term tactical marketing or generating brand awareness but for long-term relationships and brand building.

 

Look at naming rights deals around the globe and it is very rare to find any that run for less than five years and most significant examples run for 10 years at minimum. It’s difficult to see how the Sports Direct Arena name can be activated to create a ‘showcase’. There is little time to do anything significant to bring the new name to life, especially with such universal derision among the football, media and marketing communities.”

IMR sports marketing & sponsorship intelligence.

 

No, it is a long term relationship with Sports Direct, with no gain whatsover for the club. On the contrary, the complete Sports Directification of the club is almost certainly a massive turn off to potential outside sponsorship, who don’t want to be drowned out by the ridiculously excessive and tacky SD rebranding of the club. Despite the undoubted advances made in factors such as the wages to turnover ratio of the club and so on, much of this has been cancelled out by the clubs very low commercial revenues, which are amongst the lowest in the Premiership, a ridiculous situation for a club the size of Newcastle United when you look at other clubs on a similar level. To put things into some kind of perspective, Liverpool FC receive £45 million per year in shirt sponsorship revenue alone from American shirt company, Under Armour, and Standard Chartered bank. Newcastle United’s loss is Sports Direct’s gain, but this is no loss to Ashley bearing in mind the great advantage it gives to his primary business interest.

 

Now the club finds itself in European competition, it’s time for some payback from Ashley in terms of reinforcing the squad, and an end to the almost constant chicanery would go amiss either.

Edited June 29, 2012 by Happy Face
Tidied

[Christmas Tree 3997]

Same old same old tbf.

[LeazesMag 0]

see my sig, and what I've said for years.

 

By fuck, there are some stupid cunts around who are taken in by a few results and this man, and that's all I'm saying.

[Howmanheyman 26974]

ASH!!!!!

 

AHAAAAA!!!!

 

HE SAVED EVERYONE OF US!!!!!

 

 

 

 

 

 

Sportsdirect get a fucking canny ride from NUFC and all but the blind can see it.

[Happy Face 29]

Spot on in terms of the branding exercise.

 

...but it's a sneaky working of the facts to take the share price of Sports Direct when we were in the Championship (at it's lowest following the crash rather than when he bought the club), then paint any growth since then as profit built on the back of NUFC. Why not from when he bought the club?

 

 

Correlation isn't causation. In 2007 the stock price was comparable to what it is now, so you could argue that NUFC dragged his Sports Direct stock down with it's poor performance. Obviously that would be silly. The opposite is also just as silly.

[LeazesMag 0]

shame that sometimes the best and most debateable topics attract so few replies.

[Gemmill 34628]

It's been done to death. That's why it's received very little response.

[acrossthepond 707]

About time somebody stuck the boot in regarding the breathtakingly arrogant demands by Dekka for appreciation of Mike. We owe him absolutely nothing, tbh, and one great year (during which Fat Mike tried to rename a piece of Newcastle history, not only meaningful to the club but also to the city) does not wipe out the previous four years of piss-taking, insults, and abysmal treatment of club legends and club history. Actually, it doesn't even come close.

 

The best he can hope for is the current state of ambivalence towards him. Maybe in time, if he continues on this relatively improved course of spending money and not rampantly taking the piss, he might get the fans on his side. Certainly he won't do it by ordering us to love him.

[PaddockLad 14638]

According to a peculiar logic, much has also been made of what Ashley’s alleged financial “backing” of the club in terms of making a £140 million loan to himself, which is repayable on demand by the club, to save himself from paying high interest rates on his own Newcastle United debts. The term “clearing” the club’s debts has been used so often that many fans are still oblivious to the fact that the club is now actually far more in debt than it was when Ashley assumed control of the club in 2007.

 

I thought this was the interesting bit..... if this is right, and I've no reason to beleive its anything other than the author's own take/spin on things, should Ashley come to sell the club, is there still likely to be a huge residual debt that the club will be left with?...obviously a lot of that was accrued by the previous regime, but still.....its not exactly being "debt free" is it, as is being bandied about by Derek in particular....revenues and turnover aren't what they were, so what sort of ability will we have to service a possibly huge debt, should Mike not fancy paying for the previous regime's extravagance, as well as some of his own. We may well now, as the business stands, "wipe our own mouth" as Derek is fond of saying, but what is actually lying in wait for us?

 

I know its very unlikely that hes going to get a decent offer anyway, but I just dont like the feeling thst theyre continuing to bullshit us.... I know Gemmil is fond of saying the SD branding is a sort of "quit pro quo" for Ashley taking the debt on himself to prevent the club from laying out huge fees to banks in interest, but if the debt is still there the club is only gaining anything while he is in charge.

[ChezGiven 0]

'Narrative'

[Tom 13883]

Why would you want your brand to be associated with a shit football club?

 

You wouldn't, therefore I imagine his goal will be some kind of austeric success within reach of our capabilities. I.e Man City can spend £100m on one player, we can't.

 

The simple fact is the better that Newcastle do, the better his brand will look. It's not like ''survival'' will sell him shirts is it?

[trophyshy 6434]

The notion he doesn't want Newcastle to be successful is beyond daft.

 

He's made a load of cock ups and tried a few different approaches, like anyone buying a going concern and making it their business.

 

We are beyond 'a few good results' too.

 

We'll see/indeed/get your sheds out for the lads.

[Baggio 0]

According to a peculiar logic, much has also been made of what Ashley’s alleged financial “backing” of the club in terms of making a £140 million loan to himself, which is repayable on demand by the club, to save himself from paying high interest rates on his own Newcastle United debts. The term “clearing” the club’s debts has been used so often that many fans are still oblivious to the fact that the club is now actually far more in debt than it was when Ashley assumed control of the club in 2007.

 

I thought this was the interesting bit..... if this is right, and I've no reason to beleive its anything other than the author's own take/spin on things, should Ashley come to sell the club, is there still likely to be a huge residual debt that the club will be left with?...obviously a lot of that was accrued by the previous regime, but still.....its not exactly being "debt free" is it, as is being bandied about by Derek in particular....revenues and turnover aren't what they were, so what sort of ability will we have to service a possibly huge debt, should Mike not fancy paying for the previous regime's extravagance, as well as some of his own. We may well now, as the business stands, "wipe our own mouth" as Derek is fond of saying, but what is actually lying in wait for us?

 

I know its very unlikely that hes going to get a decent offer anyway, but I just dont like the feeling thst theyre continuing to bullshit us.... I know Gemmil is fond of saying the SD branding is a sort of "quit pro quo" for Ashley taking the debt on himself to prevent the club from laying out huge fees to banks in interest, but if the debt is still there the club is only gaining anything while he is in charge.

 

I'd say the chances of the situation happening are slim to none to be honest, unless the club was bought on the cheap while in administration.

 

 

[Toonpack 6889]

According to a peculiar logic, much has also been made of what Ashley’s alleged financial “backing” of the club in terms of making a £140 million loan to himself, which is repayable on demand by the club, to save himself from paying high interest rates on his own Newcastle United debts. The term “clearing” the club’s debts has been used so often that many fans are still oblivious to the fact that the club is now actually far more in debt than it was when Ashley assumed control of the club in 2007.

 

I thought this was the interesting bit..... if this is right, and I've no reason to beleive its anything other than the author's own take/spin on things, should Ashley come to sell the club, is there still likely to be a huge residual debt that the club will be left with?...obviously a lot of that was accrued by the previous regime, but still.....its not exactly being "debt free" is it, as is being bandied about by Derek in particular....revenues and turnover aren't what they were, so what sort of ability will we have to service a possibly huge debt, should Mike not fancy paying for the previous regime's extravagance, as well as some of his own. We may well now, as the business stands, "wipe our own mouth" as Derek is fond of saying, but what is actually lying in wait for us?

 

I know its very unlikely that hes going to get a decent offer anyway, but I just dont like the feeling thst theyre continuing to bullshit us.... I know Gemmil is fond of saying the SD branding is a sort of "quit pro quo" for Ashley taking the debt on himself to prevent the club from laying out huge fees to banks in interest, but if the debt is still there the club is only gaining anything while he is in charge.

 

The fundamental point that the blog/opinion, that you bolded, misses, is that the "debt" is owed to the 100% owner, not to a third party (banks). The only way that debt stays with the club after a sale is if that the purchase was leveraged a'la Man U. For that to happen we'd have to be pretty damn good and generating significant cash because whoever funded the leverage would want to know they'd make their money back.

 

The "debt" (although it's not a proper debt IMO) amount is greater because we were overburning by about £20Mill a year, that had to be covered somehow, otherwise bad things would happen. That "debt" could go up to £500 Million for all I care because it poses no danger to the club, there's only one person can foreclose on that money, and that's the owner, he'd be foreclosing on himself.

 

Tom's post above is also spot on.

 

Off the field the club is absolutely rock solid and in an excellent position, on the field is the variable, but the signs are good.

Edited June 30, 2012 by Toonpack

[PaddockLad 14638]

The fundamental point that the blog/opinion, that you bolded, misses, is that the "debt" is owed to the 100% owner, not to a third party (banks). The only way that debt stays with the club after a sale is if that the purchase was leveraged a'la Man U. For that to happen we'd have to be pretty damn good and generating significant cash because whoever funded the leverage would want to know they'd make their money back.

 

The "debt" (although it's not a proper debt IMO) amount is greater because we were overburning by about £20Mill a year, that had to be covered somehow, otherwise bad things would happen. That "debt" could go up to £500 Million for all I care because it poses no danger to the club, there's only one person can foreclose on that money, and that's the owner, he'd be foreclosing on himself.

 

Tom's post above is also spot on.

 

Off the field the club is absolutely rock solid and in an excellent position, on the field is the variable, but the signs are good.

So Ashley has paid all the debts ran up by the previous regime and there is no trace of them on the latest (or previous) balance sheet/set of accounts, apart from perhaps a copy of the receipts or other proof of payment?.....or does it not work like that? Bottom line is the club isn't worth what he's ploughed into it, and I can't see a successful businessman like him just taking the hit on it. Doesn't make sense to my obviously non financially-savvy mind.

[Toonpack 6889]

So Ashley has paid all the debts ran up by the previous regime and there is no trace of them on the latest (or previous) balance sheet/set of accounts, apart from perhaps a copy of the receipts or other proof of payment?.....or does it not work like that? Bottom line is the club isn't worth what he's ploughed into it, and I can't see a successful businessman like him just taking the hit on it. Doesn't make sense to my obviously non financially-savvy mind.

 

They are there, in the holding company, and he absolutely won't want to "take a hit" but if he want's to call the loans in, he has to have that conversation with himself. It's not like a third party calling in the money with no concern over consequence or where the money comes from.

 

IF we were indebted to a bank they'd want their repayments (with interest) come what may,whether the club could afford it or not, in the current scenario Ashley would have to pay Ashley the repayment if the club was to continue to trade.

 

The debt has inflated any prospective selling price of the club, there's only two ways he gets his money back really, through a sale where the club either has to rocket in value (the only way to make that happen is to be succesfull) or the club has to be succesfull enough to be able to pay him back over time, the "easy" way for him to cover his position would be to charge interest, or simply take periodic sums out as repayments. So far as we know as yet, he's done neither.

[PaddockLad 14638]

So its pretty much as I said?....and Derek saying we're "debt free" is, being charitable, a load of fuckin wank?

 

I understand we're in a better posistion then we were before relegation, and I understand completly the financial model the owner is working to, its pretty much the only game in town available to him and the club, and he's proving to be a canny player, but I just hate being fuckin lied to and this issue for me is a cloud hanging over the whole club that will not go away.

[McFaul 35]

ASH!!!!!

 

AHAAAAA!!!!

 

HE SAVED EVERYONE OF US!!!!!

 

 

 

 

 

 

Sportsdirect get a fucking canny ride from NUFC and all but the blind can see it.

He owes us £20m already in unpaid sponsorship revenue, but we have to sit there and take it because he's doing such a good job and we fluked 5th don't we?

 

I'm as anti-Ashley as I was 3 years ago, I don't see any point in going on about it all the time, seeing as though small improvements have been made on the pitch and it does nee good, it's just sad to see the masses taken in by it, and club legends like Beardsley so far up his arse all you can see is the whites of his socks.

[Toonpack 6889]

So its pretty much as I said?....and Derek saying we're "debt free" is, being charitable, a load of fuckin wank?

 

I understand we're in a better posistion then we were before relegation, and I understand completly the financial model the owner is working to, its pretty much the only game in town available to him and the club, and he's proving to be a canny player, but I just hate being fuckin lied to and this issue for me is a cloud hanging over the whole club that will not go away.

 

We're in debt as much as your left pocket can owe your right pocket.

 

Different animal completely.

[Toonpack 6889]

He owes us £20m already in unpaid sponsorship revenue, but we have to sit there and take it because he's doing such a good job and we fluked 5th don't we?

 

I'm as anti-Ashley as I was 3 years ago, I don't see any point in going on about it all the time, seeing as though small improvements have been made on the pitch and it does nee good, it's just sad to see the masses taken in by it, and club legends like Beardsley so far up his arse all you can see is the whites of his socks.

 

Preposterous, not just the bold bit.

 

Only owner we have EVER had who's chucked a penny of his own money in at any stage.

[Besty 4]

[LeazesMag 0]

He owes us £20m already in unpaid sponsorship revenue, but we have to sit there and take it because he's doing such a good job and we fluked 5th don't we?

 

I'm as anti-Ashley as I was 3 years ago, I don't see any point in going on about it all the time, seeing as though small improvements have been made on the pitch and it does nee good, it's just sad to see the masses taken in by it, and club legends like Beardsley so far up his arse all you can see is the whites of his socks.

 

that is correct, and as for Peter Beardsley, he has always been a yes man. I think after what happened to Keegan, his supposed mate/playing colleague/manager/and managerial colleague on his England staff, his arse licking of Ashley is beyond anything I can recall. It's a disagrace tbh.

 

We have had one good season, where we performed higher than expected, unfortunately without genuinely reaching out higher it has absolutely no chance of being sustained and has been said, it takes a lot more than that to call a club progressive, ambitious and to wipe out everything that has happened in the previous 4 years.

 

It just amazes me how people can be so blind to what is happening, and the completely illogical hope that you can continue selling your best players to make the owner money while pulling rabbits out of the hat for a fraction of the price made from selling these players. it really does.

[JawD 31]

Aye Stevie, fuck doing well in the league so long as the numbers all add up eh

 

Tbh I'm surprised even LM can't see a glimmer of hope given how we done last season, the compliments from everyone in football about how the club is ran and with the quality of players we are (admittedly alleged) looking at.

 

Hang on, no I'm not

[LeazesMag 0]

Aye Stevie, fuck doing well in the league so long as the numbers all add up eh

 

Tbh I'm surprised even LM can't see a glimmer of hope given how we done last season, the compliments from everyone in football about how the club is ran and with the quality of players we are (admittedly alleged) looking at.

 

Hang on, no I'm not

 

Ok Jaw D, I'll try a slight re-phrase of that, and then I'm off for the rest of the weekend and you can all debate your hearts out about it ......

 

Does anybody who go to games and put their cash into the club, actually OBJECT to the fact that he has not backed his manager with a huge amount of money from the sale of players into making the club as good as possible ? Do you not think that on principle, for better or worse, he OUGHT to let his manager manage his own players and give him the money from sales to spend on the team and make it as good as possible ? If we have really found a Houdini scout ie the new Peter Taylor, who is going to carry on pulling rabbits out of hats in the transfer market and we got 5th because of it, do people not want to see how much better we could do if he actually had all that 32m quid profit or are they happy with being 5th and seeing the owner pocket cash and/or supporting the balance sheet, rather than even better results on the pitch and have as good a team as possible, even better than now ?

 

I've always said this, but if Mike Ashley gives his managers 100% support, then he will get mine.

Edited June 30, 2012 by LeazesMag

[Baggio 0]

So its pretty much as I said?....and Derek saying we're "debt free" is, being charitable, a load of fuckin wank?

 

I understand we're in a better posistion then we were before relegation, and I understand completly the financial model the owner is working to, its pretty much the only game in town available to him and the club, and he's proving to be a canny player, but I just hate being fuckin lied to and this issue for me is a cloud hanging over the whole club that will not go away.

 

This is what the guy who tried to sell it last time for him said about the debt...

 

“I know him well and I’m representing him now, he has actually cleared up Newcastle’s debt. On the balance sheet it shows they don’t owe money, they owe it to him. That’s not debt, that’s equity, a more efficient way for an owner who owns the whole business.”

 

I can remember Matt going into detail about why owners do it here...

 

http://www.toontastic.net/board/topic/32489-newcastle-united-finances-ending-30th-june-2011/page__st__20__p__1048369#entry1048369