Mike Ashley and his running of Sports Direct has been getting a hammering for quite some time now.
This is set to reach a crescendo on Wednesday when Ashley and the other top brass face shareholders at the AGM.
The Sports Direct share price has more than halved in the past 12 months, whilst even its own shareholders are starting to show some concern/embarrassment at the way the vast majority of staff are treated.
Pension funds and other major shareholders have made clear that they are going to vote for the removal of Chairman Keith Hellawell, plus other senior directors. Many of them also indicating that they will also call for Mike Ashley to be voted out from his official post of Executive Deputy Chairman.
Ashley attracted even more unwelcome publicity with recent revelations that various members of his family are all profiting from roles inside Sports Direct or via associated companies.
However, Newcastle fans will be more interested in another matter this Wednesday, one which so far had been massively to the advantage of Sports Direct shareholders, though not quite so beneficial to the football club.
During the reign of Mike Ashley at Newcastle United, the rest of his business empire has received free promotion and over the top advertising from NUFC, with St James Park covered in Sports Direct branding as well as numerous adverts for other companies Ashley is involved with.
However, five months ago the Newcastle United accounts were released and included the following under ‘Related Party Transactions’:
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’s ultimate parent undertaking MASH Holdings Limited. No consideration was paid or payable for these services.’
Since this April 2016 declaration that Sports Direct were now going to be paying for the ‘advertising and promotional services’ at Newcastle United, there has been no further comment by either the football club or Sports Direct on the matter.
It seems most unlikely that SD shareholders will not be questioning just how much Sports Direct will be/are paying to another business solely owned by Mike Ashley, especially in this climate of looking closely at just how the founder is now running the retail empire.
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.
As to the motivation for this move, there were a number of thoughts out forward back in April 2016 when Newcastle fans first heard about the ‘change of heart’ by Mike Ashley and Sports Direct….
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.
Alternatively, maybe Mike Ashley has ‘negotiated’ 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…
It would be nice to hear confirmation on Wednesday that Sports Direct are indeed paying for the NUFC services that they benefit from, plus of course exactly what that figure is.