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Mike Ashley legal clauses force new Newcastle United owners to keep Sports Direct adverts – Report

1 month ago
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Overwhelming Sports Direct advertising (and other Mike Ashley brands) continue to disfigure St James Park.

The match on Saturday against Chelsea was a woeful watching experience for those present and watching from afar, played out with a fitting backdrop of the offensive promotion of the former owner’s retail empire.

A new media report has revealed why.

The Mail state that the new Newcastle United owners have been forced to keep Sports Direct and related brand signage up inside St James Park, due to legal clauses that were inserted by former owner Mike Ashley ahead of the sale of the club.

They don’t say whether these were clauses hidden away that the new owners weren’t aware of until too late, or late clauses that had to be agreed upon for the deal to go through, either way the net result is the same.

The report says that as things stand, the advertising will continue right throughout this 2021/22 season before it can be removed next summer.

Although The Mail say that the new owners are trying to get the Mike Ashley advertising removed earlier than that. If that did happen, then you have to assume that the only way realistically it could, would be if compensation were paid by the new owners to Ashley…

On the subject of cash, I’m not absolutely sure that The Mail are totally correct with their figures on what Mike Ashley / Sports Direct (now Frasers Group) have paid Newcastle United for the overwhelming worldwide promotion they have enjoyed via NUFC.

The Mail report:

‘The Mail on Sunday has discovered the club earned a total of £2,205,000 from the unpopular deals with Ashley’s retail outfit. Despite dominating the stadium, the club received the equivalent of £157,500-a-year from Sports Direct under Ashley.’

I have looked into this before and to be fair…when Mike Ashley took over the club in 2007 he wasn’t exactly secretive about why he was doing it, his people told Sir John Hall that the overwhelming reason for doing so, was to promote and grow his Sports Direct retail empire around the World. With the Premier League TV deals both domestic and overseas, a perfect opportunity to deliver a sports retailer’s message to the masses.

No Newcastle fan at the time though, realised just what a horrific one-sided relationship this would be…

Back in May 2020 when the official Newcastle United 2018/19 accounts were made public they included this:

‘The group made sales, including stadium advertising income, of £1,113,000 (2018: £385,000)….from Frasers group PLC (formerly Sports Direct International PLC) and subsidiary companies (“Frasers Group”) companies connected with Mr MJW Ashley. These transactions were on normal commercial terms.’

So for the 2018/19 season, Sports Direct / Frasers Group paid a total of £1,113,000 to Newcastle United for stadium adverting and other things ‘on normal commercial terms’ and they paid £385,000 for the same in 2017/18.

Mike Ashley telling the truth, at least in part, about Sports Direct and payment for advertising at St James Park, as well as other services supplied.

If we go back to Friday 26 July 2019, Mike Ashley stated in the Sports Direct accounts:

“In the current and prior year we have in the ordinary course of business been charged £1million per season for advertising rights whilst Newcastle United are in the Premier League, this is covered in the related party note in the financial statements.

“For the football season beginning in August 2019 the Sports Direct Group will be charged £2million for the advertising rights.

“Sports Direct still considers this to be value for its shareholders.”

When the 2019/20 Newcastle United accounts were eventually made public, they stated under Related Party Transactions that: ‘The Group [Newcastle United] made sales of £141,000 [2019: £1,113,000] and purchased goods to the vale of £594,000 [2019: £1,057,000]from Frasers Group PLC and subsidiary companies (“Frasers Group”) companies connect with Mr MJW Ashley.’

So whilst in the 2018/19 NUFC accounts it referred to: ‘The group made sales, including stadium advertising income, of £1,113,000…’ but in the 2019/20 NUFC accounts released in August (2021) there wasn’t even any specific reference to anything paid for advertising, just that Newcastle United ‘made sales of £141,000’ to Ashley’s Frasers Group.

So when it comes to what Mike Ashley and Sports Direct (Frasers Group) ever actually pay, if anything, to Newcastle United for advertising, it is very rarely, if ever, made clear in the accounts. With what Mike Ashley has claimed is happening / has happened, impossible to back up with what the accounts show. Ashley stated £2m would be paid by Frasers Group / Sports Direct for advertising in the 2019/20 season and yet the accounts don’t mention any money paid at all for advertising in the Related Party Transactions.

However, the 2018/19 official NUFC accounts did show Mike Ashley WAS possibly telling the truth in the Sports Direct accounts about paying Newcastle United £1m for the 2018/19 season (although it was included in an overall sales figure of £1,113,000 so we can’t know for absolutely sure) BUT he also stated £1m had been paid in 2017/18 and that wasn’t true, it was only £385,000 (total sales figure, which would have included any advertising money paid) as the official NUFC accounts show.

The Sports Direct and Newcastle United relationship has been very much a case of smoke and mirrors. A tangled web totally lacking in transparency and indeed truth at times.

As you can see below, the club’s own accounts for 2014/15 when released on 14 April 2016 stated that nothing was paid that season or previously by Mike Ashley’s Sports Direct but that NUFC were ‘in the process of agreeing an arms length rate for these services’…

However, then the next two years of accounts indicate that nothing was actually paid, just that the ‘advertising and promotional services’ were supplied for nothing as per normal.

To get confirmation of the full picture in terms of the Sports Direct ‘advertising and promotional services’ provided by Newcastle United, these are the references to them in the previous four NUFC annual accounts before these latest 2018/19 ones.

On 14 April 2016, when the 2014/15 Newcastle United Football Accounts were released, they included:

‘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.’

On 11 April 2017 the 2015/16 Newcastle United Football Accounts were released, they included:

‘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.’

On 22 May 2018 the Newcastle United 2016/17 accounts stated:

‘During the current and prior year, advertising and promotional services were provided to Sports Direct International PLC (“Sports Direct”) and subsidiary companies, being companies associated with the ultimate owner of the company MR MJW Ashley.’

On 18 April 2019 the Newcastle United 2017/2018 accounts stated:

‘During the current and prior year advertising and promotional services were provided to Sports Direct International plc, and subsidiary companies… being associated with the ultimate owner Mike Ashley.

“Subsequent to the year end an agreement has been put in place under which (NUFC) will receive payment from Sports Direct for stadium advertising.’

To then claim that stadium advertising as well as other services supplied to Sports Direct by Newcastle United, are now done ‘on normal commercial terms’ and a market rate paid, was also surely laughable:

Sports Direct don’t just get a few advertising hoardings spread around St James Park.

What about the giant horrendous adverts plastered on the top of the stands?

Or indeed the giant screen which overwhelmingly is used to promote Sports Direct and related brands?

The reality is that Sports Direct have effectively been the stadium sponsor for these past 14+ years. There is more Sports Direct plastered over St James Park than any other club in England gives over to a proper (paying) stadium sponsor.

The stadium advertising is just one part of the overall/overwhelming Sports Direct promotion anyway.

At every NUFC press conference SD is prominent, whenever players are signed the SD brand is on show, whenever the training ground is shown in photos/footage, the SD advertising hoardings are almost always ensured to be in the shots, whilst the official club website is also SD friendly.

If a proper market rate was paid by Sports Direct then it would be far far more than £2m, never mind the fact absolutely nothing was paid in the first decade of the ‘partnership’…as well whatever has been paid in recent years, if anything at times!

Quite ironic that we are looking back at this shameless behaviour of Mike Ashley for a decade and a half and which is still ongoing with these clauses keeping the SD advertising within SJP…when ‘Related Party Transactions’ is making big headlines as the rest of the Premier League attempt to stop the new NUFC owners putting too much money into Newcastle United via other related businesses!!!

Anybody wanting to question why Newcastle United hasn’t been instantly transformed overnight by the new owners, needs to consider just what an absolute mess Mike Ashley (and Steve Bruce when it comes to on the pitch issues) has left behind, these legal clauses trapping the new owners into continuing his minimal (if anything) budget advertising being just one of the issues they have to tackle.

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