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Sports Direct Profits Increase Without Spending On Advertising…

8 years ago

Many fans still seem unable to accept just what massive benefits, despite the overwhelming evidence, that Sports Direct and the rest of Ashley’s empire gets from the free promotion of its brands via the association with Newcastle United.

With Sports Direct and the other Ashley brands booming, the latest rich list from the Sunday Times has Ashley’s personal wealth increasing by almost one and a half billion pounds (£1.45billion) in the last year.

So what part does Newcastle United play in that huge rise in Ashley’s wealth, when the club’s official accounts show very little, if any, profit year after year.

Well I have just come across the following quote from Sports Direct’s Chief Executive a few months ago, which give us an invaluable insight into how the whole Ashley operation works, proving you have to look at his business empire as a whole, rather than the individual parts such as NUFC, SD, or any of the other branches.

When Sports Direct released their latest profit/sales rises in February, Dave Forsey, the Sports Direct Chief Executive, said that while they could increase their spending on advertising/marketing, they believed they could hit their full year profits target of £310m without having to spend any significant marketing (advertising) cash;

“While we retain the ability to invest in margin, inventory and group marketing to deliver long-term sustainable growth, the board’s very confident of achieving at least our full year internal EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) target of £310m.”

Industry specialists Marketing Week making the point;

‘While Sports Direct does invest in price, it spends relatively little on advertising.’

SD has 400 UK stores and is continuing to expand across Europe with 19 countries on the continent already with a Sports Direct presence.

So, what could give you loads of free advertising/marketing to a massive UK and European/Worldwide market, especially when it to comes to promoting the retail of sports goods?

I wonder if anybody has ever thought about buying a football club, run it in as cheap a way as possible with no ambition in terms of what happens on the pitch, load it with debt, then promote all the companies/brands you own to the lucrative Premier League audience via the broadcasting deal (and media partners such as Sky) at home and abroad, without a penny of advertising revenue going into the football club to help it to try and compete?

I’m sure somebody will think of it one day…


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