Shaking the Magic Money Tree
When Theresa May was asked a question about the public sector pay freeze by a nurse whose own pay hadn’t increased for eight years, she responded with the now infamous, ‘There isn’t a magic money tree that we can shake.’
This flippant, derisory response to a reasonable and justified question showed the disregard she holds for the general public and the arrogance that this is an appropriate and sufficient answer to this woman’s genuine concerns. The nurse is well aware that there is no magic money tree. She is not expecting May to grow one. She just wants to know where the money has gone and why her and her fellow public sector workers seem to be the ones who aren’t seeing any of it.
When Mike Ashley recently appeared on Sky Sports, that was his ‘Magic Money Tree’ moment.
In Ashley Speaks Direct, he was ‘interviewed’ by David Craig, or ‘Craigy’ as he affectionately called him during their pre-rehearsed, pre-approved question and answer session.
‘You can say to me I’m wealthy, in theory I’m a billionaire or a multi-billionaire, but in reality my wealth is in Sports Direct shares, which are the same as wallpaper, I don’t have that cash in the bank, so I don’t have that ability to write a cheque for £200m.’
There is no magic money tree here folks. Mike Ashley has an estimated net worth of £2.4bn and in 2015 wrote a cheque for £200m to buy the Clearings in West London, a luxury redevelopment site. On August 22nd, Debenhams announced that Ashley had increased his stake in the company to 21%. This followed announcements in July that he had bought up a 25% stake in video game retailer Game Digital and 27% in fashion retailer French Connection. I’m assuming that he paid for all of this with wallpaper.
‘I am not wealthy enough in football now to compete with the likes of Man City.’
In 2009, Sheikh Mansour bought Manchester City for £265m. A man with an estimated personal wealth of £20bn from a family with an estimated combined wealth of £1 trillion, putting him firmly in the number one spot in a list of England’s richest football club owners. Mike Ashley is 11th on this list. He is right, he can’t compete financially with Man City.
But who asked him to? Who expects him to? Man City spent £220m on players this summer alone. Ashley is 11th on the list though and, at 11th on the list, surely he can compete financially with the majority of clubs.
With the recent surge in the financial side of football, due mainly to broadcasting and commercial rights, the money available to football clubs has hit unimaginable levels over the last few years. Of the 20 current Premier League teams, 19 have broken their club transfer record between 2015-17. The one club that hasn’t? Newcastle United.
Newcastle’s transfer record was set in 2005 when they signed Michael Owen for £16.8m. At the time, the British transfer record was £30m. 12 years later, the British transfer record is £89m. Newcastle United can’t compete with Man Utd for the likes of Pogba but how are our more comparable rivals doing?
In either the 2016 or 2017 transfer windows, Bournemouth signed a £20m player, Crystal Palace signed a £27m player, Burnley signed a £15m player, Leicester signed a £29m player, Stoke signed an £18m player, West Ham signed a £20m player. Aren’t you wealthy enough to compete with the likes of these clubs, Mike? Newcastle finally signed a much-needed striker for this summer for £5m – less than the figure we spent on Les Ferdinand 22 years ago.
Newcastle United’s most recent published accounts (2015/16 season) revealed a turnover of £126m (9th highest in England). The wage bill for the same period was £75m (16th highest in England).
The average attendance last (2016/17) season was 51,064 (6th highest in England). Newcastle United sold 38,000 season tickets for that season (5th highest in England). For six consecutive years, our accounts have shown a profit after tax. Over these six years, that combined profit totals at £87m.
In the ten years since Ashley bought Newcastle for £134m, they have made a net profit on transfers in five seasons. Not including this current transfer window, as it is not yet complete, Newcastle has spent £330m on transfer fees and received £292m. A net spend, over ten years, of £38m.
‘Every penny the club generates he (Benitez) can have, but it doesn’t generate enough. It’s Newcastle United, it doesn’t have a £40m a year stadium naming rights deal, it doesn’t.’
When Arsenal moved stadium, Emirates paid £100m for an initial 15 year naming rights deal. Manchester United, Chelsea and Liverpool have refused to make such deals with club history and tradition overriding the opportunity to make money, at least until new stadiums are built in the future.
Ashley attempted a stadium naming rights deal in 2011, using his own company Sports Direct to ‘showcase’ the opportunity. The move was a PR disaster and the idea was dropped the following year. No doubt Ashley’s reference to Newcastle United not having a £40m a year deal was a thinly-veiled attack on Newcastle fans, who strongly protested against his previous attempts. Interestingly, Stoke, in naming their home ground the Bet365 Stadium, earn a reported £5m per year. In fact, no club has a £40m a year stadium naming rights deal.
In terms of shirt sponsorship, the ‘Big 6’ have deals worth anywhere between £16m per year (Tottenham) and £55m per year (Man Utd). The other 14 teams have shirt sponsorship deals worth £6m per year or less. Newcastle United’s deal with Wonga was worth £4.8m per year. Their current deal with Fun88 is said to be greater than this figure.
So ten years down the line, how do you sum up Ashley’s tenure? Well, one of his final answers to ‘Craigy’ summed it up better than I ever could:
‘I think you always have the ambition to turn something into more than it was. So you think maybe I can make just that little bit of difference. In my case, it was to think in a different time frame, maybe if we didn’t live for every Saturday and for that game, maybe if we had a three-year plan, a five-year plan, a seven-year plan, we could actually build on something at Newcastle United. You must remember at the time that Manchester City didn’t have the owners they have now, and if you look back 10 years, Newcastle United could have easily been the fourth club in [English] football. Easily.’
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