Mike Ashley celebrating seriously good financial news – Ends any Newcastle United takeover hopes?
It is thirteen years and seven months since Mike Ashley bought John Hall’s shares in May 2007, effectively buying Newcastle United, only a matter of time then before he completed the purchase of those from other shareholders.
For all but the first of those years, Mike Ashley has been promising to sell Newcastle United, NUFC fans gradually realising that Ashley promises count for little as it became apparent he was only pretending to try and sell the club.
In 2020 though we did at last see a change, as Mike Ashley was at last genuinely now trying to sell the football club, but only because the Saudis had offered a figure significantly more than the club is really worth at normal market price.
That clearly backed up by the fact that since the collapse of the Saudi deal, there has been nobody stepping in to take advantage by snapping up the club. Mike Ashley and his people claiming previously, along with many in the media, that rival serious bidders were ready to go as alternatives, proved to be false.
The Saudis also came along at the right time because as well as offering way above what the club is actually worth, the outlook for Ashley’s retail empire was looking anything but bright in early 2020, especially as the virus impacted on us all and lockdown came in the spring, a nightmare pretty much for all businesses apart from the obvious exceptions (supermarkets, those providing PPE etc.), especially those that were struggling already.
If you go back to 2 April 2020, Frasers Group (formerly known as Sports Direct International) saw their shares trading at only 184p.
Moving forward to the present day, (10 December 2020), the Frasers Group have seen their share price go as high as 507p, a rise of almost 180% in the past eight months, this included a rise of over 15% on yesterday’s closing share price of 439p.
The share price has settled a bit after that high of 507p on Thursday morning but it is still trading at around 480p (at 10.05am) a rise of over 160% on April 2020 and almost 10% higher than yesterday.
The surge in the Mike Ashley Frasers Group share price has come on the back of significantly better financial figures announced by the company for the half year up to the end of October 2020.
Rather than the virus impact proving fatal for Ashley’s empire, it has instead seen it thrive, like a cockroach after nuclear armageddon.
Rather than customers turning their backs on a company that has become notorious for all the wrong reasons, instead Frasers Group have pointed to excellent online sales performance and sales at their stores very healthy once the first lockdown ended.
LBC Business report that: ‘Pre-tax profit rose by 17.6% to £106.1 million at Frasers Group, in the half year to the end of October, even amid a 7.4% drop in revenue to £1.9 billion…it expects earnings before interest, tax, depreciation and amortisation to increase by about 20% to 30% over the financial year, a better range than previously guided.’
The bottom line is that Ashley’s financial outlook has now totally changed.
I believe any need or desire to sell Newcastle United, certainly to somebody for the market price and not the Saudi inflated one, has now disappeared and why sell a great asset that has given Mike Ashley so much help in growing his empire and fortune?
Mike Ashley famously called his vast wealth ‘Wallpaper’ when asked why he didn’t show more ambition with Newcastle United, basically saying almost all of his wealth was tied up in shares, not able to be used in helping NUFC to be a more successful business, on and off the pitch.
The thing is, in the past, during his time owning Newcastle United, Mike Ashley has at various terms used his ‘wallpaper’ wealth to help his business enterprises, though not NUFC.
The NUFC owner has sold Sports Direct (now Frasers Group) shares in order to speculate and finance deals and expansion elsewhere.
A number of times Mike Ashley sold a few per cent at a time and the two most recent instances I found were when he raised £117m in cash when reducing his SD / Fraser Group shareholding by 2.7%, this followed the raising of £200m cash in April 2014 when he sold a few per cent of his main business.
These past eight months and that 160%+ increase in the Frasers Group share price, has increased the ‘wallpaper’ value of that (Mike Ashley’s) shareholding (around two thirds of Frasers Group total shareholding) alone, by over £1billion. Plus of course the trading performance of the Frasers Group now looking so buoyant.
If Mike Ashley was wanting to raise £300m / £350m by selling Newcastle United to the Saudis, now he could comfortably sell a small part of his Fraser Group shareholding and raise cash if he needs it. Ashley seemingly set to go on yet another spending spree snapping up ailing brands / businesses, with Debenhams in particular once again in his sights.
Down the years, I have always thought that the only time we stood a chance of Mike Ashley selling Newcastle United, was when / if he needed that cash to use elsewhere.
Sadly, I think that moment in time has now gone. How he and the Fraser Group have bounced back from what looked a dire situation, is a mystery to me. Clearly the public mood that existed in March and April when people were disgusted at Ashley’s reaction to the virus crisis, has obviously swiftly disappeared once they needed cheap white socks and other gear.
At Newcastle United he has got his ideal scenario, a patsy Head Coach who won’t / can’t make any demands and no matter how badly the squad are managed, there clearly looks to be at least three or four teams at the bottom who will ensure another season of Premier League survival, with Mike Ashley continuing to pick up the usual benefits of having NUFC as part of his business empire, especially the worldwide promotion the football club delivers via global TV deals.
With even better for him, every single match (and his adverts) at the moment televised live in the UK, as well as around the world.
There is of course the legal move Mike Ashley has brought against the Premier League and we all hope that this will somehow lead to an eventual Saudi takeover being allowed to go through. The reality instead though I believe, is that this is simply Ashley lashing out and trying to hassle and embarrass the Premier League by exposing aspects of their behaviour, because they prevented the Saudi deal going through when he wanted it to do so.
Plus of course we have Mike Ashley with the added bonus of due to the takeover collapse, him personally benefiting by reportedly keeping the non-refundable £17m deposit the Saudis paid to give them exclusivity on buying Newcastle United, until the Premier League dallied and the Saudis eventually pulled out.
I will always hope for the best with Newcastle United but at the same time, very much fear the worst, because after 14 seasons of Mike Ashley our hopes of seeing the back of him have been repeatedly dashed.
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