Mike Ashley’s Purchase Of Newcastle United Was Always About Promoting Sports Direct

When Mike Ashley initially bought Newcastle United in 2007 a sense of optimism rung around St. James’ Park.

“Newcastle attracted me because everyone in England knows that it has the best fans in football… don’t get me wrong. I did not buy Newcastle to make money. I bought Newcastle because I love football”

Mike Ashley pictured at Tup Tup Palace.

Mike Ashley pictured at Tup Tup Palace, Newcastle.

At the time the club was riddled with debt and financial management was poor, to say the least. Ashley added “I paid £134 million out of my own pocket for the club. I then poured another £110 million into the club not to pay off the debt but just to reduce it. The club is still in debt. Even worse than that, the club still owes millions of pounds in transfer fees”

Ashley has maintained claims that he did not know about the debt upon buying the NUFC. Fast forward 8 years later, and he is one of the most hated owners in modern day sports.

Relegation in 2009 was the real turning point for most fans – this was to be our 2nd and only season ever outside of the Premier League. We are one of only 8 clubs in English football to have never dropped below the top 2 tiers.

Ashley’s transfer policy is often brought into question, the “buy cheap sell high” philosophy reeks of Mike’s Sports Direct model. You can argue this works from a retail perspective (in turn translating into lower retail for consumer) but this does not translate across into Premier League football. Self sufficiency is nothing more than an acceptance of mediocrity and distinct lack of ambition in a league against financial powerhouses such as Manchester City, Chelsea and Manchester United.

It wasn’t always bad, Mike Ashley brought Kevin Keegan back as manager of Newcastle United in 2008 for the first time since his resignation in 1997 and was then his 3rd stint at the club. The fans rejoiced the appointment and return of beloved player, manager, even saviour, King Kev. Keegan quit in September 2008, only 9 months after his appointment under suspicious circumstance. He and Mike Ashley were in disagreement on – yes, you guessed it – Mike’s then under-the-radar ludicrous transfer policy. A reoccurring theme with several managers, including most recently with Alan Pardew. Pardew recently came out with some choice words about how Mike Ashley runs things at Newcastle:

“There were players who went in there who were for the club’s purposes and not for my first eleven purposes – that is frustrating, especially after I had such a great start.”

After the Keegan departure there were numerous fan protests, followed by relegation and Ashley made a calculated risk in an attempt to cut his losses and put the club up for sale. Despite mass speculation there was never a solid offer made.

Sir John Hall echoed the thoughts of many NUFC fans, proclaiming Ashley bought the club for the sole purpose of advertising his Sports Direct brand.

“They wanted to market their sports goods in the Far East and would use the club to help do this”

To be frank, the proof is in the pudding. Mike Ashley, who has a net worth of $5.6 billion (#10 in the UK), owns a company named Sports Direct PLC, in case you didn’t know. The relentless and tasteless “SPORTSDIRECT.COM” advertisement shadow over St. James’ Park. To make matters worse it what could even be deemed a deliberate attempt to antagonize fans Ashley even renamed the historic cathedral on the hill to the “Sports Direct Arena” and later backtracked stating they never intended to lose the iconic name, re-branding it a 2nd time “SportsDirect.com @ St James’ Park Stadium”. This brought a huge outcry of negative publicity ultimately curbing any advertising opportunity, but was also a sheer ‘slap to the face’ if you like to a momentous and remarkable historical stadium in the North East of England.

There are several parallels in the way Mike Ashley runs Sports Direct and Newcastle United. The similarities can begin with the “buy cheap sell him” philosophy mentioned earlier. Sport Direct bought up failing brands such as Slazenger, Everlast, Lonsdale, Dunlop and Sondico, and now use these companies for near break-even sell on to Sports Direct retail stores, meaning end-user prices are significantly less. Now, compare this Newcastle United’s transfer model; Yohan Cabaye was bought from Lille for £4M in 2011, and then sold to PSG 3 years later for a reported fee of £19M, a 5x profit of return on investment. Newcastle also bought Mathieu Débuchy from Lille for a reported fee of £5.5M in 2013 and then flipped to Arsenal a year later for a £12M fee. Geordie-born Andy Carroll was brought through the Newcastle United academy (a fan favorite for years); in 2011, Newcastle sold him for £35 million to Liverpool. These 3 examples are nothing but minor cases in the way Mike Ashley does business; rarely does he re-invest into the club with the money he sells the players for, instead opting for impressive balance sheets and cheap, young foreign imports. Here we’ve compiled a year on year net transfer spend in the time Ashley has owned Newcastle for your perusal.

2007/08: -£4.69m
2008/09: +£4.36m
2009/10: +£14.55m
2010/11: -£19.44m
2011/12: -£7.09m
2012/13: -£11.67m
2013/14: +£15.45m
2014/15: -£7.99m

Total net spend: +£22.36m

He’s overseen the club to a more than 22M profit on transfers alone since 07/08 (excluding the current 15/16 window as we don’t have a final figure yet, at time of writing it’s at -£32.4m). Or, take the fact that Mike Ashley came out before the West Ham game and stated his intent of not to sell the club “until we win something, or qualify for the Champions League” – a genuine wish to do well? Or simply a ploy to sell the club at a high for maximum return on his investment? No one really knows exactly what the owner has planned but if you take Ashley’s business methodologies and the way he runs Sports Direct into consideration, the pessimistic viewpoint on the selling aspect makes a lot more sense. Mike Ashley definitely wants to wait on Champions League or a major trophy to ensure the value of the club is at a peak and all-time high when he’s selling.

Profit are paramount above anything else; above fan satisfaction or customer satisfaction, this is how Mike Ashley runs his businesses. Take a look at how Sports Direct’s profit and operating income has increased in the last 2 years and the correlation between his recent off-loading of shares in the PLC. If history repeats itself, Mike Ashley will be looking to do the same thing with Newcastle United, and as previously mentioned, once they are at a selling peak, that is when he will cash in.

2014 (http://www.sportsdirectplc.com/~/media/Files/S/Sports-Direct/annual-report/Annual%20Report%202014.pdf):
Operating income after tax: £249 million
Profit after tax: £180 million

2013 (http://www.sportsdirectplc.com/~/media/Files/S/Sports-Direct/annual-report/annual-report-2013.pdf):
Operating income after tax: £208.1 million
Profit after tax: £151.7 million

2012 (http://www.sportsdirectplc.com/~/media/Files/S/Sports-Direct/annual-report/annual-report-2012.pdf):
Operating income after tax: £152.6 million
Profit after tax: 106.2 million

Hate or love him, boycott matches or crude remarks; it really has no affect on Mike Ashley – financial gain is his only drive and the words of 52,000 voices in the North of England holds little weight for the founder of a now-worldwide business and one of the wealthiest men in the UK.

Ex-Newcastle United player Yohan Cabaye surmises the current state of NUFC very well, echoing a lot of the Toon faithful’s sentiments:

“It is hard for me to describe that club. Newcastle, for me, should be one of the best in the country. They have got the stadium, training ground, fans. They have everything you need. But sometimes they did things I cannot understand. Maybe it is the owner’s mentality, I don’t know. But it is a shame for me because Newcastle has to be one of the biggest teams in the country. I loved the club”.

A quick perusal of websites such as www.ashleyout.com will give you a factual, reasoned account of how the man operates. There is absolutely no doubt that buying Newcastle United was about promoting Sports Direct and his business tactics and strategies demonstrate that quite clearly. Boycotts have been previously attempted, but with false accomplishments. It makes no difference to Ashley, he will keep attending the matches, whether fans enforce an embargo or not. However, it is up to the Toon Army and Geordie nation to keep supporting their beloved club on a daily basis and one day Newcastle United will get back to a more ambitious and successful club. That is the only way to make sure the club is run properly; until then, patience is a virtue.

Words by Aziz Khalil, an avid Newcastle United supporter from Ottawa, Canada. Follow him on Twitter @AzizK47. Written for Newcastle Stats.


Post your comment here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s