I Am Almost Becoming A Fan Of Mike Ashley…
I don’t know if you have ever tried to take out an interest-free loan. You would find that, unless you have a very amenable Dad, interest-free loans don’t exist. That is not how money markets work. There are all sorts of ways of borrowing money. Some are very expensive, like using payday loans or credit cards. Others are less expensive, but none are free.
Actually, that is not strictly true. If you pay off the full balance on your credit card every month, you will have secured a few weeks’ free credit. That is the catch, of course. You have to pay it off.
An unusual area of business where interest-free loans do exist, rather oddly, is in the financing of football clubs. In a report just published by Deloitte this week:
“In the summer of 2012, the Premier League clubs had a total debt of £2.4bn.
Of that, some £1.4bn was in interest-free soft loans from owners (2011: £1.5bn), of which around 90% related to three clubs: Chelsea (£895m), Newcastle United (£267m) and Queens Park Rangers (£93m).”
So Mike Ashley appears to have lent Newcastle United £267 million interest-free. In fact about half of that amount was lent to Newcastle United Football Company Limited which runs the football playing part of the business. The other half was lent to another company in Mike’s group in order to pay for the shares he bought in the business.
However, this is presented through the group structure, Mike Ashley has advanced £267 million for no return either in interest or dividends. We know the Chelsea man is just trying to buy trophies with his pocket money. It seems that nobody else at any other Premier League club is coming anywhere near the level of personal interest-free support that we have from our owner.
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