Changes make Newcastle United sale a strong possibility
With the new mega TV deal recently announced for the Premier League, many Newcastle United fans were resigned to that being the end of any hopes of getting rid of Mike Ashley.
The theory being that the extra broadcasting revenues coming online from 2016/17 ensure the club is far too lucrative for him to let it go.
Mike Ashley of course sees Newcastle United as being just the same as any other business he might own, it could be a shoe shop or a failing sports brand for all he cares.
He has the same philosophy regardless, which to be fair most business people have – buy a company that is ailing and then in the future hopefully sell at a big profit, fingers crossed banking cash in the meantime.
The current TV deals and failing to meaningfully invest in the squad have ensured that Mike Ashley is now making large profits out of Newcastle United, the imminent financial figures for 2013/14 are expected to show a profit of around £50m or more. Whilst the January business Ashley did in selling Mapou and loaning out players will help to ensure healthy returns on this season.
So on his longer term game, why would he sell now?
The simple answer is, if somebody offers him enough. Which to be fair has always been the case, I don’t believe for one second that there hasn’t been serious interest in buying the club from Mike Ashley, the problem being of course that nobody has been willing to stump up enough to sway him into selling.
Now though, outside factors are coming together which could well see a flurry of clubs changing hands in the Premier League and Newcastle United could very well be in amongst them.
Low interest rates, FFP (Financial Fair Play) and the massive TV deals are now coming together to make Premier League clubs look very attractive.
So there are two sides of it.
Firstly, here is the attraction of potentially making serious money, with the introduction of FFP helping to lessen the risk of losing money and the ever growing TV deals growing revenues massively.
Secondly, the fact that interest rates are so low and private lenders are desperately looking around for a better return on their investments, means that it’s very likely there will be more prospective buyers of football clubs and with access to bigger piles of cash.
So we have the prospect of more potential club owners in the future doing it via borrowing most or all of the money. Rather than needing another Abramovich, a Mansour, or….an Ashley, to buy a club outright with cash.
Of course this would lead to the potential of what could happen if things turned bad, which basically means relegation in terms of the football business. Arguably though, a well run Newcastle United shouldn’t be at risk of being relegated, or at least no more so than the likes of sayTottenham.
Things are so depressing at the moment in terms of lack of ambition under Mike Ashley, that worrying about somebody purchasing Newcastle United largely via debt is not something that would keep me awake at night.
Julian Dupont, who is a director at Fitch Ratings in London says that the view of football being a risky investment is changing:,
“This shift is a combination of factors. Recent regulations such as UEFA’s Financial Fair Play or the English Premier League’s own Profitability and Sustainable regulation are forcing clubs to manage their businesses in a more structured way.
“The sports market is starting to look more like the US in that respect where clubs can be very profitable where there is a reliable business profile.
“Football is one of the few markets where revenues are both growing and increasingly largely contracted.”
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