I think that the answer to that question is: probably nobody at the moment.  No sensible investor would be prepared to pay what Mike Ashley would expect for the club.  For the same reason, there is unlikely to be a billionaire White Knight on the horizon either.

We are victims of a unique set of circumstances.  Due to the value of the ‘free’ Sports Direct stadium advertising, NUFC is worth far more to MA than it would be to any other investor.

(To feature like Rex, send in your articles for our website to [email protected])

MA and Sports Direct are uniquely in a position to benefit from this, and it is difficult to imagine any other retailer that could gain so much advantage.

How much is that extra value worth to MA?  How much extra would an investor have to pay to buy NUFC, over and above the real value of the club?

By investor I mean an entity or person who is buying the club with the intention of making a return on their investment.

There are a number of ways to value a company.

One method is to consider its average pre-tax profit over a period of time, and then multiply that figure by an appropriate factor.  That factor varies depending upon the nature of the company, and the state of the market in which it operates.  For substantial football clubs the factor is currently something between 5 and 6.

That same factor can be used to calculate the ‘extra value’ that MA uniquely receives from the club.

Various writers have attempted to calculate the financial value to the MA regime of the Sports Direct stadium advertising, and the profit on shirts and other merchandise.  There are two parts to the calculation.

Firstly, there is the real profit from merchandise that is currently diverted away from the club into the Sports Direct coffers.  The second part is the money that Sports Direct should be paying to NUFC for their stadium advertising.  Sports Direct currently pay nothing.  The conservative total when both figures are added together appears to be about £20m pa.

We need to bear in mind that the sale price of the club today would be calculated on the assumption that the stadium advertising revenue would return immediately to the club, once MA was out of the picture.

mike ashley

The club is therefore worth far more than the current balance sheet would suggest.  Let us call that higher figure the ‘real’ figure.

In order to calculate MA’s ‘compensation’ for losing his annual £20m benefit, we initially use the same factor of 5 or 6 that we use to value the whole company.  With an annual benefit of £20m, that equates to about £120m.

A discount would be applied to that figure because MA is receiving this money up front, rather than over a period of time.  With a discount applied, the figure is probably closer to £100m.

That £100m is the sum that an investor would have to pay to MA in addition to paying the ‘real’ figure to buy the club.

Another way to look at it is this.  If MA sold the club today for its real value, but he wanted to continue to advertise at the same level, MA would have to pay somebody else £20m pa for that advertising for a number of years.  That is why MA would expect the extra £100m.

It is that extra sum of £100m that would kill the deal for any investor.

The stadium advertising represents genuine value to MA; but giving Sports Direct free advertising is of no value to anyone else.  The £100m is money that would simply have to be written off.

No investor that wants a return on its investment, even in the very long-term, could afford to write off £100m.

The same problem applies to our billionaire White Knight that some fans hope will appear one day.  Even billionaires would baulk at the prospect of immediately writing-off £100m.  There are probably only a handful of people in the world that would be prepared to do that.

Unless Mike Ashley changes his business model, it is difficult to see from where salvation might come.



  • Andgeo

    The club is now riddled with lies and deceipt, and this culture has developed to hide the truth, which is really plain to see.
    In the last financial accounts our wage bill allegedly rose by a staggering £17m p.a. To put that into perspective, that is 5 coloccini’s. Errrr don’t think so mike!
    It is obvious that the wage bill must be far lower now than it was 8 years ago. He’s knocked at least another £10,000,000 off it this year with the disposal of jonas, Ben arfa, santon, m’biwa and Taylor.
    More lies! So where is the money going? Especially with the sky tv money now at obscene levels.
    This guy must be making £25m to £50m per season, and we will never know the truth on this as when he does eventually sell he will have his lawyers all over it.
    And he gets all his free advertising too!!
    Why would he ever want to sell?

  • Morpeth mag

    I agree and have said this all along, he will never sell the club, it is worth far more to him and his companies, the only thing, if he owns 55% of SD why is NUFC not receiving 45% of the expected revenue for the free advertising that SD has been getting?
    The only hope for our club is he has one to many greggs steak bake’s and keels over,,,,,

  • RexN

    It’s great to see you writing, Rex. I remember you from 6th form at school.

    Keep up the good work.

  • jaffa9765

    NUFCTheMag MikeAshleyLies TaylorandBesty I hope every Toon fan never ventures into a Sports Direct shop !

  • DownUnderMag

    There is no reason for Ashley to sell.  Sad as that may be for us to hear it is the truth.  The club is making a huge profit, he’s getting free advertising and is decreasing the wage bill season on season to maximise the profit even further. TV money up year on year….our expenses dropping year on year…why would he sell??  
    The only way I can see him offloading the club is if it becomes financially unviable or his highstreet profile starts to take a tumble because of the negative publicity.  I don’t think the highstreet store is in danger because of it’s target audience so the only other way I see is relegation.  
    Do you get the feeling that Ashley only made his end of season TV appearance because he thought we were going down?  And that his blathering on was all about getting a return to the top flight and then he’s panicked when we stayed up as it means he has to spend PREMIERSHIP levels to buy players in to improve us??

  • AMC93

    Joe Lacob. Owns the Golden State Warriors. World class organization that juts won the NBA Finals. The brass is dedicated to winning championships. That is priority number one. He would change things at St. James Park instantly for the better.

  • daveswildcampin

    Morpeth mag  Mmmmmm Greggs Steak bakes

  • WilliamCarney

    Andgeo The only way to get Ashley out is through relegation, and it would have to be for more than 1 season, there is no other way, plus the way things are currently going in our tranfer season, I can almost guarantee that if we don’t sign more than 3 topflight players we will definitly be going down, every team in the premier league is getting better due to the enormous tv money giving to clubs this season, so I would like to tell everyone to keep their heads up high, relegation might be the best thing to of hapened in 8 years, I’m sure you can go a couple of season without topflight football, I know I can.

  • Alsteads

    Everyone associated with FCB and his whole disgraceful sham should be truly ashamed of them selves. Never mind the pro Ashley lot on here. Strip the club bare with out putting absolutely nothing back in to it? Really?? Running a club down so much so the last remaining gullible supporters are easily managed? Really? Get rid of the supporters that give you grief and voice their concerns just like he did with Nolan and Co because he can’t handle criticism or people with characters stronger, bigger more intelligent than his? Really? Just ask all those workers he put out of a job when he bought up JJb shops and closed them the next day what they think of his business plan. Clever and ruthless?? I don’t think so. A pathetic, self important deluded, ignorant, vile prxck.
    Don’t think for one minute this prxck wouldn’t do to us what Oyston has done to Blackpool. Hung on till the parachute payments dried up and then ridiculed fans of the club to a point where he would happily see the club go out of business to get one over on the fans.
    All those FCB supporters that come out and say it was the same with all the previous owners blah blah no it wasn’t. End of! If thats how you want to justify still lining this prxcks pockets when there are other ways to support the toon then carry on. No doubt if we end up where Blackpool are and the club wrecked and FCB laughing into the sunset because he has left the club on its knees we’ll be swapping seats again.
    There isn’t a day goes by I don’t want FCB to prove me wrong and to wave a wand and everyone is mates again and the club are going in the right direction. Thats one thing we could always show those other fans and so called journalists. We were truly united in our support of the club and that fed down to the players and vice versa. If you think this is Newcastle United then I feel utter despair for you.
    Toon till I die (just not this toon)

  • 1957

    There is no way any individual or even consortium will come up with the money to buy Ashley out, nor will he drop his price in response to insults, boycotts or attacks on SD. As the article points out the value of the club to Ashley’s other interests is enormous, in addition he owns the club personally so has no pressure from shareholders.
    Many people see the key to removing Ashley as being SD, but the harsh reality is SD would survive nicely without any sales to NUFC supporters and their families. The rest of the country will continue to buy from SD they rightly care about their personal finance, NUFC is irrelevant.
    Is there no hope?…One day Ashley may leave, but not if we win something (the clubs value would increase) no matter what he says.

  • keeganRescueUs

    I have heard a very credible rumour that Freddie Shepherd has a consortium in place and the sufficient funds to buy the club but Ashley simply not interested in selling. Further investigation required, watch this space

  • Andgeo

    The negative publicity was getting to him last season. We just need to up the anti!

  • Barheys1938

    The above assumes that a new buyer could not sell on the advertising rights to anyone else…….

    So yes, while it is indeed quite reasonable to assume that the advertising rights are worth (say) £120m to MA, a new buyer will also be able to sell the same advertising rights to one or many buyers and raise annual revenue that would add to club profits. In fact, one might argue that by selling the rights to a number of bidders, they might actually be able to get more than the £20m or so per annum that MA should be paying us – so whilst I understand the argument, I am not convinced by it……

    There is also the debate about whether £20m a year is a reasonable amount to put on the advertising rights anyway – clearly, it depends upon the number of games broadcast on the tele, European exposure, etc… Right now of course, we’re not in Europe (and not likely to be for a while at this rate) and have eschewed cup competitions (so don’t get FA cup games exposure either). Outside of the competition for the top spot, the other race that takes up most air and media time is the relegation battle – so you could argue that financially, it works better to hover just above the relegation zone !!!!

  • slackbob

    Barheys1938 You’ve completely misunderstood the point of the article.

  • Duke Fame

    Interesting analysis but not so sure about your figures.

    For SD advertising, if you compare to similar profile clubs such as Villa & Everton, they take an income for stadium advertising of £4m a year rather than the £20m quoted. You value this to give a NPV at around £100m but state that “advertising is of no value to anyone else.” and “The £100m is money that would simply have to be written off.”. That’s not true, the stadium advertising is an income stream and whilst I disagree with your £20m pa valuation, it’s a value to the next owner. 

    I doubt the factor used to value the company. Football clubs generally get valued at a far greater factor than 5-6 times partly because football clubs are not very profitable and the owners tend to buy the cubs for other reasons than cashflow. 

    I also think you have misunderstood the relationship with merchandise. SD act as a facilitator for merchandise distribution rather than the profit centre. This makes the merchandise income higher than when it was in-house which cost over £700,000 in wages, warehouse rent, delivery costs etc.

  • LeazesEnder

    Alsteads Well said

  • Duke Fame

    Barheys1938 I hadn’t seen your post before making a simila point, the only issue is that comparative clubs such as Everton make far less than £20m from stadium advertising.

  • LeazesEnder

    Morpeth mag Steak bakes excellent…. in winter …..one in each pocket to warm the hands while watching the game then a delicious half time meal….

  • LeazesEnder

    Duke Fame He’s making the stuff as well

  • Duke Fame

    LeazesEnder Duke Fame Sports Direct imports a lot of the licensed stuff for a number of clubs, he’s not making it. Obviously the Puma branded gear is from Puma.

  • Duke Fame

    Andgeo How many contradictions can you make in one post? You Identify £10m wages in 5 players that we had for the season the accounts relates to. We aquired players in that year, we also have non-playing staff wages that expanded. 

    Lies and deceit that hide the truth are plain to see, good one.

  • Duke Fame

    Morpeth mag because he owns 100% of NUFC and they are separate entities

  • Morpeth mag

    I’m not really sure what you mean, SD is a PLC and they are getting free advertising because there major shareholder is giving it to them free gratis, his privately owned company is giving a £20 million gift to a Plc, meaning no tax is paid on he £20 million NUFC should be paid for its advertising space,
    do you mean because he owns 100% of NUFC hence he can do as he wishes?
    The thing is NUFC is contracted to the premier league and his running of the club is not in accordance with there rules, I can’t remember the full ins and outs, but someone posted on here a while back setting out the premier leagues rules and regulations and his running of the club breaks those conditions, the free gift he gives SD every season could buy and pay the wages of a decent player, the club is just his advertising tool, but we should still be getting at least 45% of the advertising revenue as he only owns 55% of SD.

  • AB233

    AMC93 And the reason to believe he even knows what NUFC is is what exactly?

  • Duke Fame

    keeganRescueUs I’d be very worried is Shepherd was part of the ownership of NUFC. It did not end well with him

  • v0ices

    Morpeth mag his 55percent share of sd is worth over 2billion his 100percent share share of nufc say 300million so the free advertising to sd is worth far more to him in real value than 20million to newcastle united. although judging by the inflated amounts other clubs get the 28million value may be a lottle low.

  • v0ices

    AB233 AMC93 any reason to believe he doe not?

  • v0ices

    Duke Fame Barheys1938 we get shown on tv a great deal. and just how much do everton get?

  • v0ices

    LeazesEnder Duke Fame hes just saying what ashley pays him to say the same old coblers hes spouted under his previous accounts.

  • Duke Fame

    v0ices Duke Fame Barheys1938 IIRC Everton’s income for stadium advertising in the year to June 2014 was £4m. It all depends on what their main sponsorship deals offer as well, you may find the perimeter ads include Chang Beer as part of that deal so £4m may be a little misleading.  Villa’s income was very similar which I’d assume would be pretty comparable.

  • AB233

    v0ices AB233 AMC93 …