Thursday saw the Premier League’s summer transfer window close, Mike Ashley ending it with a profit of over £20m on transfers in and out.
Newcastle United having the worst performance of all 20 clubs in terms of the net ‘spend’ on transfers.
When the NUFC owner promised Rafa Benitez the backing of ‘every penny’ in the transfer market, the other 19 clubs obviously offered their managers a few more ‘pennies’ to invest in the squad.
Friday morning then saw the confirmation that House of Fraser had gone into administration, this being quickly followed by news that Sports Direct (Mike Ashley) had bought it up for £90m.
Predictably, the two things (NUFC making Premier League’s biggest transfer profit and SD/MA buying up House of Fraser) have got some/many Newcastle fans angry.
However, personally I don’t think anybody should be getting upset about the House of Fraser deal, it’s a real red herring.
I actually think it is a positive, that House of Fraser have been saved. I wouldn’t want to work for a tyrant such as Mike Ashley but hopefully the fact that he (Sports Direct) has bought them up, will mean that a decent number of people will still have jobs next week/month/year.
Newcastle United not spending (instead making!) money this transfer window and Sports Direct making this retail purchase, were not dependent on each other.
What we should be getting annoyed/upset about is that firstly of course, Mike Ashley has no intention of selling Newcastle United, then secondly, the fact that he treats NUFC in a way that is so different to the rest of his business empire.
We don’t want/need any favours/help from Mike Ashley, just to be treated fairly and the club to be allowed to try and be as good as it can possibly be.
Sports Direct can well afford to buy House of Fraser, after all, they make hundreds of millions of pounds of profits each year.
Where the problem comes is that Mike Ashley simply chooses that Sports Direct don’t pay anything at all to Newcastle United, for the essential massive worldwide advertising/promotion they get via the Premier League’s TV deals.
In the 2014/15 NUFC accounts released in April 2016, Mike Ashley committed/promised that this was changing, that a market rate would now be paid in the future (see below).
However, when the 2015/16 NUFC accounts came out in April 2017, that appeared to have been reversed (also see below). The 2016/17 NUFC accounts came out n May this year but yet again didn’t show any payment had been made.
This is where the problem comes, Mike Ashley says that Rafa Benitez/the club has his full support but then massively handicaps them by cutting off any chance of growing their commercial revenues. I think at a conservative estimate, the way Sports Direct/Mike Ashley uses Newcastle United, it must be worth at least £10m+, just compare that to what FUN88 get for their £6.5m per season shirt sponsorship, the SD profile via NUFC must be worth at least two or three times what the betting company get.
There are other ways in which Mike Ashley pretty much guarantees Newcastle United won’t be a success on the pitch.
His aim with Sports Direct and other brands (including HoF as well now) is a simple one, make as much money as possible. To do this he will back them with investment where necessary, pay for plenty of stock on the shelves, as well as investing in the bricks and mortar.
At Newcastle United it is very different.
Mike Ashley’s aim is for the club to stay in the Premier League with the lowest possible spend. This has two main parts, on the one hand so SD get all that worldwide TV exposure, as well as ensuring the football club rises in value as an asset to be sold sometime in the future.
This doesn’t though equal any plan to try and succeed on the pitch, unless surviving in the PL on the cheap is a plan you can believe in.
If Mike Ashley actually embraced Newcastle United as a key and equal part of his business empire, who knows what it could achieve?
If he looked at all the ways the rest of his empire could help support the football club, rather than only taking from it.
I would include the Newcastle fans in this discussion as well.
A bit too late for it now of course but when you think back, why wasn’t Mike Ashley interested in making a connection between Sports Direct & associated brands and the Newcastle United fanbase?
Why not look to get potentially hundreds of thousands of Newcastle fans feeling they are part of your overall business empire and get even more money out of them? Give them a 10% off card to use, or whatever.
Instead of them ending up protesting outside your high street stores and running interference on all your commercial social media communication lines.
I think the bottom line is that Mike Ashley thinks Newcastle United is nothing special. The only special thing he sees is that it is a club with a massive fanbase who desperately want to be part of the club and watch their team.
The Mag – 14 April 2016
Extract from the 2014/15 Newcastle United Football Accounts
‘During the current and prior year, advertising and promotional services were provided to Sports Direct International being a company associated with the ultimate owner of the company, MJW Ashley.
No consideration has been paid by Sports Direct International for these services to date but Sports Direct International and the Company are in the process of agreeing an arms length rate for these services and the Company anticipates receiving payment for these services in the future.’
One year on and it would appear that despite last year’s announcement, nothing has changed…
The Mag – 11 April 2017
Extract from the 2015/16 Newcastle United Football Accounts
‘During the current and prior year, advertising and promotional services were provided to Sports Direct International PLC, being a company associated with the ultimate owner of the company MR MJW Ashley.’
With the club once again using the words ‘current and prior year’ they are pitching in both years/seasons together, suggesting there has been no change in terms of Sports Direct now starting to pay for the advertising/promotion provided by NUFC.