Many times Newcastle United have repeated the claim that every penny made stays in the club and is made available to the manager…despite £44m of loan repayments from the club directly to Mike Ashley, the falsehood has been consistently repeated.
As recently as July this year, Mike Ashley was quoted by the Daily Mail stating “A good custodian will make every penny count. No interest, no repayments.”
This week, for the first time, perhaps in recognition of how transparent a lie it was, the claim of not a penny leaving NUFC has been more specifically qualified by the club.
In their statement responding to a speech by Jeremy Corbyn that criticised Mike Ashley, the club heavily caveated the argument that Ashley hasn’t taken a penny. In addition to admitting that repayments have indeed been made, they said “we would like to make it clear that Mike Ashley has not taken a penny out of Newcastle United in interest, salary or dividend, as is customary at many clubs.”
There are two responses to this I feel worth making.
The first is to be clear that the defence offered by the club remains as disingenuous as the argument that the club cannot compete with Manchester City. No one expects to compete with Manchester City and Mike Ashley clearly extracts value at a cost to Newcastle United in several ways without paying himself any interest, salary or dividends:
Every set of accounts from the year Ashley bought the club right up to the most recent (June 2018) stated no income for the advertising provided. There has been a recent promise on the record that an agreement has been made for future advertising to be paid (as there previously was in 2015) and Sports Direct have said they will eventually be paying £2m annually.
Disregarding the fact that this must represent good value for Ashley’s shop and more could therefore likely be generated from other advertisers, £2m a year over 11 years (2007-2018) would represent a £22m loss to NUFC and saving for Ashley’s store.
Property sale –
Strawberry Place was sold to Ashley for £6m (without a public bidding process to maximise the return for the club). Subsequently he sold the land for £9m. A £3m private profit for the owner that cut the club out.
Since 2013 accounts have reported sales to Newcastle United from Ashley’s shop totalling £9.8m, that’s an average of £1.6m annually that the club pay Ashley’s shop. The club has stated that “The only money paid by the Club to Sports Direct is for the stock (at cost price), plus a handling fee”. Cost price plus a handling could also be described as at a profit.
Does Ashley’s shop have any other customer that pays them more than £1.6m annually, or does this make Newcastle United their biggest individual client?
That’s just shy of a £35m return Ashley and his store have extracted from his owning Newcastle United without interest, salary or dividends.
The second response is to the idea that customarily many clubs pay interest, salaries or dividends to their owners, as if Mike Ashley is peculiarly generous to Newcastle by not doing so in comparison.
I asked Twitter football financials gurus @swissramble and @KieranMaguire about this and they told me that only one of twenty Premier League clubs paid a dividend last season. Manchester United’s Glazers were unique in rewarding themselves £22m and are despised by supporters of the club for this approach that makes them anything but the custom.
Furthermore, they provided historical details that only West Brom, Swansea, Tottenham, Blackpool and Leeds had paid dividends in the past 10 years, ranging from £800k to £27m.
When it came to owner loans, only West Ham paid their owners any interest on loans. In fact, only three clubs paid their owners back any loans in 17/18. While Ashley was repaid nothing in that season, the £33m we know he repaid himself the following year makes him unique in the punitive level of loan recovery he is willing to impose in a single season on the club he owns. Almost three times the £13m maximum repayment any of those three clubs repaid (Liverpool).
Owners on a salary? Steve Parish is one of three owners at Crystal Palace but the only one to take a £1.5m salary as chairman. He also gifts himself £2m rent on property in much the same way as Ashley sells his services to the club.
These few examples are not the custom, they’re the minority. And the amounts they’re taking cannot match the £35m value we’ve ascertained Ashley has extracted.
In fact, the custom among Premier League clubs is that owners generally subsidise their clubs – £230m of owner loans were made to ten clubs in the most recent accounts.
My point here is not that Ashley should pile more of his money into Newcastle of course, only that he’s misrepresenting the ubiquity of other owners taking a reward, while he himself enjoys some very nice benefits unique to him, as far as I can tell.
I want a self-sustaining club. I do not want Premier League clubs borrowing over £600m from owners and banks between them (as they did in 17/18) when they’re already paid so much that they shouldn’t have to risk further borrowing. This is exactly the point Corbyn and supporters are making about extending regulation.
Which brings me to one more complaint about Newcastle’s response to Corbyn. To claim the Labour leader is “overlooking existing governance and regulation” so soon after the demise of Bury is like a sick joke. The current regulation is poor and there is little transparency for institutions of such cultural importance.
Ashley exploits the assets at Newcastle on behalf of his shops and refuses to exploit it’s assets for the good of the club itself. He paints himself as the most responsible of owners, arguing that others profit from interest, salaries and dividends that harm clubs, that he doesn’t think an owner should take.
If it were true, Ashley would not have reacted so angrily to Corbyn’s speech. If it were true he would welcome regulation that would put a sensibly run Newcastle United on a more level playing field with other clubs that overextend themselves. He’d also be genuinely interested in how a Corbyn government would help him transfer shareholdings of a club he’s supposedly been trying to sell for a decade into the hands of supporters, freeing him from what he would have you believe has been an albatross around his neck.
The truth is, he is one of the very worst owners in the league, using and abusing a club he cares nothing about for personal gain.
He would suffer more than many if sensible measures were brought in to limit his omnipotence at Newcastle and shine a light on the details of those areas he’s been able to exploit.
You can follow the author on Twitter @bigchrisholt
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