Some very surprising breaking news on Thursday afternoon, as Sports Direct are now going to be paying for the ‘advertising and promotional services’ at Newcastle United.
During Mike Ashley’s reign, it has been a major source of resentment from supporters that year after year the rest of Ashley’s business empire has enjoyed the massive benefits of free worldwide advertising via the football club.
A policy that obviously restricts the ability of Newcastle United Football Club to raise extra income to allow it better able to compete in the Premier League.
The full Newcastle United 2014/15 accounts were made public today and in the ‘Related Party Transactions’, it revealed that the club ‘are in the process of agreeing an arms length rate for these services’ with Sports Direct International.
This revelation would appear to strongly suggest that Mike Ashley will be retaining ownership of Newcastle United, at least into next season.
As to the motivation for this move, there are a number of thoughts that may go through the mind.
The Championship has strict rules regarding FFP (Financial Fair Play) and so by paying for the advertising, it would allow extra money to be put into Newcastle United to help the club get back into the Premier League without breaking FFP rules (if indeed NUFC are relegated..).
Alternatively, maybe Mike Ashley will ‘negotiate’ a deal whereby Sports Direct gets a special ‘90% off’ rate of advertising that ties the club to SD beyond the owner’s future departure.
Or maybe Mike Ashley has just realised the error of his ways and wants to run Newcastle United properly now…
Extract from the 2014/15 Newcastle United Football Accounts
‘During the current and prior year, advertising and promotional services were provided to Sports Direct International being a company associated with the ultimate owner of the company, MJW Ashley.
No consideration has been paid by Sports Direct International for these services to date but Sports Direct International and the Company are in the process of agreeing an arms length rate for these services and the Company anticipates receiving payment for these services in the future.
During the current and prior year, advertising and promotional services were provided to companies associated with MR MJW Ashley, the ultimate shareholder of the Company’sultimate parent undertaking MASH Holdings Limited. No consideration was paid or payable for these services.’