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Must Read: ‘Why Mike Ashley bought Newcastle United and why he won’t be selling’ (Reprised)

6 months ago
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With the spotlight growing ever brighter on Mike Ashley and his running of Newcastle United, we thought this article below deserved another airing, especially with regard to the current debate and attention focusing on what exactly the relationship is between Sports Direct and the NUFC club shop.

We asked the author of the piece to do an introduction to that excellent article (see below).

Hopefully many others will read this piece now, as well as a reminder to others who saw it the first times around:

‘Following the excellent work by the Magpie Group and others over the  last few weeks, the subject of NUFC merchandise has reared its head again.

‘With a host of questions that need to be answered around merchandising  sales and Sports Direct’s involvement in club shops.

‘I wrote this nearly a  year ago (September 2017) after I happened to spot something by chance on the nufcdirect.com site and then spent the next two days (to the dismay of  my missus) delving deeper…’

When Mike Ashley purchased Newcastle United FC it was said to be a spur of the moment deal, done so not for business but to allow the billionaire to “have some fun”. At the time it was made out that the deal was literally carried out in a couple of days.

“The deal was put to me on a Saturday. By the Monday, in advance of speaking to Sir John, I’d deposited the equivalent of money we hoped he would accept for his shares at the lawyers and on the Tuesday the deal was effectively done.

By Wednesday (May 23, 2007) the announcement was public and that was the first anyone, including the media, knew about it. Once I was told about it, it was done very quickly. Sir John was ready to act if I was and it was a very straightforward process.”

If that is the case then why did Sports Direct register the domain name nufcdirect.com 6 months earlier?

mike ashley

In fact, forget the date of the purchase, why did Sports Direct purchase that domain name at all? Without the will of the club they would have been on very shaky ground setting up any online store etc using NUFC in the name.

Since 2012 that domain name has been used to run the NUFC online store through which all online sales of shirts, clothing and general tat have been funnelled. Every replica shirt (current retail price £59.99), beanie hat (£13) or SoccerStarz Rafa  model (£3.50) that we buy from the “official” store goes through here.

And there lies the problem, the official site is just a front end to the Sports Direct website, they are one and the same just with a different look. Imagine a Sports Direct shop with a big cardboard front to make it look like the club shop!

Dont believe me? Have you ever compared any of the products between NUFC and SD? Everything is described, priced etc exactly the same.

Try this:

http://www.nufcdirect.com/puma-newcastle-united-authentic-home-shirt-2017-2018-377410?colcode=37741040

http://www.sportsdirect.com/puma-newcastle-united-authentic-home-shirt-2017-2018-377410?colcode=37741040

Or how about:

http://www.sportsdirect.com/team-knit-hat-mens-900013?colcode=90001310

http://www.nufcdirect.com/team-knit-hat-mens-900013?colcode=90001310

Now try this one

http://www.nufcdirect.com/team-club-3-pack-air-fresheners-840136?colcode=84013640

http://www.sportsdirect.com/team-club-3-pack-air-fresheners-840136?colcode=84013618

And now remove the last part of the URL….

http://www.sportsdirect.com/team-club-3-pack-air-fresheners-840136

Hmmmm Rangers….Spooky eh?

Try it, for yourself, go on nufcdirect and pick a product, then change the http://www.nufcdirect.com in the URL to http://sportsdirect.com and I’ll guarantee you’ll pull up the same page on their site just looking very slightly different. Word for word every description matches, every image is the same. Most importantly the prices are exact in every case.

Whats happening is that the nufcdirect site uses a subset of the Sports Direct product range. Basically anything related to NUFC is displayed on the nufcdirect site. Other than that though everything else is Sports Direct. Ordering, warehouse, delivery etc etc. You are even given a £5 Sports Direct voucher if you get your purchase delivered to one of their stores!

Remember this from 2013? The decision to sell Rangers items on NUFC site caused a kick off….Except I don’t think there ever was a decision to add them, it was a mistake caused by the fact that someone cocked up when writing the description and started the 2nd para with “The Newcastle United jacket sports a traditional…..” meaning it was picked up and included within the NUFC range by the website.

This link can be proven by another look at the nufcdirect who.is record however this time select the DNS tab and here’s where it gets a tad technical.

Look to the bottom of the list and you’ll see a CNAME record showing

www.nufcdirect.com        CNAME        599                others.sportsdirect.edgekey.net

Funnily enough, if you view the Rangers who.is record you’ll see

www.rangersmegastore.com        CNAME        599                others.sportsdirect.edgekey.net

A CNAME Record allows you to redirect a URL to a totally different site without it being obvious. Once you’re redirected to Sports Direct the website sees where you’ve come from and styles the site accordingly, narrowing the products down to the allowed subset (ie anything containing NUFC or Newcastle United). All the time leaving the domain name and any product URL the same as you visited originally.

A check of the sites code shows that the code is the same as well, examples such as..

<link href=”/desktopmodules/sportsdirect/basketsummary/module.css”

litter the HTML for nufcdirect.com.

This is exactly what happens when a company offers their products for sale via white label ie the ability to sell a third party’s goods with a site that looks like its your own. In all white label solutions the referring domain (in this case nufcdirect.com) receives a small commission from every purchase.

When MA bought into Rangers there was uproar at the fact he negotiated a deal to see Sports Direct take over the merchandising of the club. That deal absolutely screwed Rangers seeing their share of the takings reduced to only 7%. MA owned 9% of Rangers and managed to do that.

He owns 100% of NUFC, there is zero chance that he’s not doing the same thing (or even potentially worse) here. Why wouldn’t he?

SO what does that mean in terms of actual cash? well based on a £59.99 shirt sale, assuming NUFC get the same 7% commission structure as Rangers did then you’d be looking at £4.20 per shirt coming NUFCs way. In 2010 the extremely knowledgable Swiss Ramble quoted the club share of a shirt sale in their own stores as being €10 – 15, that was 7 year ago when an adult shirt cost €46 (£40) so if we take €10 that’s approx 22% from every shirt sale.

SportingIntelligence.com had an article on shirt sales which stated that NUFC sold an average 100,000 shirts per year. Based on those figures NUFC would have received a nice straight forward €1m under the standard commission structure. From a 7% SD rate that drops to €315k. Multiply that by the last 5 years and you’re looking at over €3m.

In itself, that’s not a massive amount, however that’s shirt sales alone, we’re talking every piece of tat, scarf, kids gear, garden gnome, souvenirs etc etc. Just as importantly to Ashley however it boosts SDs standing, increases share prices and the overall value of his company while reducing ours. Add in the free advertising, payment of PR fees to his own company, movement of assets from NUFC to St James’ holdings etc and he’s not doing too badly at all.

That is of course, assuming we even get 7%, there’s nothing to say that NUFC’s cut from this isn’t a big fat zero.

One thing that’s always said about football ownership is that it rarely makes a profit and that’s what I believe Ashley wants. Think about it, you have 2 businesses, 1 is massively profitable the other makes nowt therefore why not take some of the profitable bit of business 2 and move it to business 1 meaning the 2nd makes a bigger loss while the 1st a bigger profit. Ashley then includes the loss of NUFC in his personal tax return meaning 47% of that loss is recovered by paying less tax!

So, if you’re still reading this, THAT is why I believe Mike Ashley bought NUFC and more worryingly why he has no intention of selling.

You can follow the author on Twitter @pjwhitfield and you can visit his own personal blog HERE.
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