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Football finance expert values Newcastle United at the ‘Brand Value’ plus £100m

5 months ago
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How much is Newcastle United worth?

That question has been back on everybody’s minds due to Mike Ashley’s people briefing journalists, claiming that Mike Ashley is now prepared to take £300m for Newcastle United, rather than the widely reported previous £400m valuation he was said to have after relegation was averted in April this year.

Whilst many/most Newcastle fans are understandably sceptical that Ashley has any intention at all of selling, a football finance expert has come up with an explanation as to why a £300m valuation for NUFC is probably on the money.

Dr. Daniel Plumley is a Sport finance specialist, who researches professional team sports, and is a senior lecturer in Sport Business Management at Sheffield Hallam University.

He believes that Newcastle United has a ‘Brand Value’ of around £200m and that it is feasible to then add £100m to that figure, based on then also taking the fanbase, the image/perception of the club, plus the fact St James Park is owned by the club – although the land it stands on is on a long-term lease which is owned by the Freemen of Newcastle who charge a nominal rent.

The Brand Finance Football 50 is an annual study conducted by the leading brand valuation and strategy consultancy, ‘Brand Finance’.

They use various criteria to determine which clubs around the world command the most valuable and powerful brands and published their latest updated top 50 in May (2018).

Brand value is the cost that a third party would have to pay to license the use of a brand. The analysis of brand strength benchmarks risk, strength, longevity and future potential of the brand, relative to competitors.

In this latest current 2018 list, Newcastle United are rated at £194m (and 22nd highest in the world) in terms of brand value, which will be where Dr Daniel Plumley will have got his ballpark £200m brand value from.

After promotion in May 2017, Newcastle were given a brand value of £193m, the fact that a year after promotion that brand value had gone up by only £1m, reflects the lack of ambition and investment allowed by Mike Ashley in the playing squad and infrastructure of the club.

Dr Daniel Plumley also suggests that if Newcastle were relegated for a third time under Mike Ashley, a fair valuation of the club would drop to around £200m. This is backed up by the fact that after the last relegation, the Brand Value of NUFC in the 2016 list was put at £87m, so if you add the football finance expert’s theory of adding £100m for other factors, you can then get to around that overall £200m valuation if Newcastle dropped into the Championship.

These days that also factors in the fact that if NUFC did drop this season, then next year they would get around £50m in parachute payments for the 2019/20 season. Though of course if Newcastle stayed in the Championship the parachute payments go down in each of the next two seasons before ending, whilst obviously the brand value and overall club valuation would clearly also go down each season as well if staying in the second tier.

What is clear, is that when you have a club that is run with zero ambition such as Newcastle United, with so many risks taken each summer on which division the team will be playing in next season, you are always going to have a fluctuating valuation.

You have to think that if Mike Ashley was really serious about selling the club, as soon as Premier League safety was achieved in early April this year, he would have put Newcastle United up for sale at a fair market price. At that point he would  have had every chance of getting a fair price, with new owners having time to get into the club and back Rafa Benitez in time for this current season.

Instead, we have the craziness of this summer’s transfer window and the longer the club is fighting relegation this season, the lower the true valuation goes.

Obviously the dream scenario is that a sale does happen as soon as possible and new owners are in control ahead of the January transfer window, which would allow them to back Rafa and start to turn the club around both on and off the pitch.

I remain to be convinced that Mike Ashley has any intention of selling but I will be very happy if I’m proved wrong.

Dr. Daniel Plumley talking to The Shields Gazette:

“There is some subjectivity to it (claims of Mike Ashley accepting valuation of NUFC is £300m) but if you look at some of the figures it seems about right.

“The brand value stuff, which is done externally for football clubs, has Newcastle at around £200m.

“That is looking at things like revenue mix and revenue growth, the squad value, the heritage, UEFA coefficient ranking, and average attendances, among others.

“One thing that it doesn’t take into account is the value of the stadium, which Newcastle United own.

“You can also factor in a little bit more intangible stuff around the fan power, and the way in which Newcastle is viewed as a professional football club, that takes their value to about £300m.

“As long as they are in the Premier League, there is nothing to really suggest that it would change.

“His previous asking prices of £400m was a bit high but we think £300m is about right.”

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