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Mike Ashley needs to sell before both Newcastle United AND the stock markets crash

6 years ago

I don’t want to bore you with politics and economics, but what we have to remember, even as we walk through the valley of death, is that Mike Ashley operates in a different world to the rest of us.

He is not a football man.

Mike Ashley is a creature of capital. He likes being in control, and he likes influencing people with movements of capital. He likes messing about with money, and he likes feeling powerful.

The thing about rich capitalists though, is that they more than anyone are actually controlled by their own capital. Their lives are not their own. They are ruled by the overweening importance of protecting and nurturing their cash.

They take decisions about their money until they realise that actually larger forces have taken over, and the only decision they can possibly take in relation to their cash is the only remaining option. Like everyone else, except only more so, they can take any decision they like provided it is one that is possible.

I am, I assure you, slowly getting to the point. If you sell your house just before a house price crash, and buy another house just after the crash, you come out on top. That is a good pair of decisions and you are revered by your friends as a person of wisdom.

In a stock market crash, the owners of shares need to sell because it is perfectly possible, if they don’t, that their value will be nothing at all. Houses are different, because we can live in a house, while shares are just pieces of paper.

The longer these financial wizards delay in selling their shares, the less they are worth. And of course all the money they have borrowed with which to buy their shares is suddenly looking pretty enormous. A panic quickly kicks in, and the sell-off starts, and everyone follows suit, like Gadarene swine, or lemmings, or headless chickens.

Mike Ashley, as owner of Newcastle United, wants to protect his capital by making good business decisions of that kind. He does not see himself as a lemming at all.

He has already said he won’t sell the club before May 2016, but that was just to shut up all those of us who were saying he was desperate to sell. But we knew it was just words, and that he was (and is) desperate to sell. He hates being a football club owner.

It’s turned out to be a terrible gamble, he’s in danger of losing money and he doesn’t know how much, and it’s not even fun.

The irony is, because he knows his model of running the club has proven so disastrous, so ineffectual, and so mad, that May 2016, a date he plucked from the air, is now looking like good business sense.

His friends at Spurs long ago persuaded him that Harry Redknapp would be a good long-term manager. What stopped Redknapp becoming manager six years ago was not the distance Redknapp would have to travel from Sandbanks down in Dorset, but the amount of influence (very little) Redknapp would have in sales and purchases of players.

But now what Ashley wants is a good short-term manager. That is why the name of Redknapp is once again surfacing. At 68 years of age Redknapp knows Newcastle would be his last job. And he might just take it.

This time Ashley would give ‘Arry anything he wanted. Steve McClaren has clearly lost any grip he had on a disaffected bunch of foreigners who were bought for their sell-on value. Ashley knows McClaren is doomed, and will doom his team to relegation.

This would be intolerable. Ashley’s shares would crater and he would have to invest in new players, and, quite likely, a whole new club structure and new chief executive to boot, to get Newcastle back up.

The other factor is this. Ashley, an inveterate gambler and as a sensible man, must by now be betting on an economic crash. All around the world stock exchanges are grossly inflated with debt, and with no profits to support them. There is ten times the debt now than there was back in 2007, just before the last crash.

Stock markets are usually the last thing to respond to economic disaster, as the plutocrats who run big companies are the last to stop clinging to their wildly unrealistic valuations of company stock. And we have already had the start of the great crumbling of China, which might be about to devalue the yuan once again.

This time though, he knows it won’t just be a crash. It will be a complete economic disaster, simply because this time central banks are supporting the entire capitalist edifice. This is not a matter of opinion. It is a fact.

There is so much debt this time that entire countries would go bust, because they would not be able to keep up the repayments on the vast amount of loans they have created by printing money.

So maintaining Newcastle’s Premier League status this season, just to be parochial, and not missing out on record television money next season, is not just a financial disaster for Ashley. It is a deadline he can’t afford to miss.

Ashley doesn’t know how long the stock market has got, but he knows there must be a good chance that the crash will arrive before we have managed to get out of the Championship.

At that moment Ashley will have lost his entire stake in Newcastle.

Nobody will be buying anything. Punters will stop buying shell suits in his tacky salons. Rich Americans won’t be buying football clubs. There will be many fewer rich Americans. Heaven forfend, but Mike Ashley himself might actually go personally bust!

Redknapp is the guy to keep us up, Ashley thinks. That is all that matters now. Redknapp will consequently be showered with promises.

He will have funds, the first and final say on players, and a playground of a January window.

And if, after all that, he does keep us up, expect Ashley to be on the first horse out of toon. Mightily relieved!

Merry Christmas!

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