Global financial crisis hits Ashley's price tag
Has the financial collapse made Newcastle owner Mike Ashley moderate how much he wants for the club?
Little more than a week ago, Ashley wanted about £450m - now I understand a figure of between £280m and £300m could be enough.
In July 2007, Ashley paid £133m for the club and has since cleared off the loans, making a total of £243m.
That means that if he were to get £300m, it would still leave him with a profit of £50m, which is also the sort of profit Thaksin Shinawatra made out of Manchester City over a similar period of time.
If that happens, it will not be bad business.
As many as five bidders, including a Nigerian consortium, may be interested but just expressing an interest does not make a bid.
For that, a buyer must show they have the money, and even that is only the first of several hurdles to clear before step before the sale takes place.
The bidding process promises to be complicated and may be quite long
Ashley's financial advisers Seymour Pierce, led by Keith Harris, has drawn up what is called a non-disclosure agreement which bidders have to sign.
They are then given the chance to look at the important Newcastle documents in a data room which has been set up for potential bidders at the legal firm Freshfields.
Newcastle is a private company and Ashley has no shareholders to consult before accepting a bid.
In that sense, the club's value is whatever he can get for it on the market.
But how do you value the club?
The present valuation of the stadium is about £150m.
It holds 52,000 fans, 35,000 of them season-ticket holders, and despite last week's attendance for the Carling Cup tie with Tottenham, it is usually a near sell-out.
There are also fixed assets round the ground owned by the club and a squad worth around £100m, with a wage bill of £70m - not impossible by Premier League standards.
The club makes a profit and all this means Newcastle is being touted to potential buyers as a unique football club
Sceptical fans may mock such claims but Ashley and his advisers are keen to make the club look as attractive as possible to get the sale done at a price which still leaves Ashley comfortably off.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~29~RS~)
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brilliant - if anyone read my posting on Mihirs last article you will see that i pleaded with him not to write another article on "someone may buy premiership club" seeing as he has written about Everton and Spurs recently... and then ... he goes and writes another article about a premiership club that may be bought.....
Mihir .. please!.. stop!... please just assume that we all take for granted that there are rich people in the world that may want to buy premier league football clubs and that the owners of said football clubs will be interested in selling those clubs if they receive a good offer / profit on their investment....
which team will be next to have Mihir write an article about them being bought?... place your bets now please!
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It may be harsh, but it could be fair: I am bored to tears by the majority of this gus articles.
Long live Tim Vickery, he should be in charge.
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Sweet Lord - this stuff is dire. I'm convinced Craig Brown has taken over this blog.
Mr. Bose - please advise next how much I should pay for Stoke City in these turbulent financial times. Thanks!
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It's not exactly Mihir's fault if the majority of footballing news is currently surrounding buy outs of various clubs! Keep up the good work Mihir.....every article that I read of yours informs me and tells me something new....even if it is whithin a continually developing sphere such as these takeovers. This can't be said of all of your contemporaries and it is a quality that I at least appreciate.
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Even though I'm a Newcastle fan, this was boring.
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I would be interested to know if it is true (as reported on a number of occasions) that Ashley did not do his due diligence properly when buying and was surprised to find money still owing on players. If true it would be interesting to know why this was not done, especially as Ashley seemed to rate his lawyer (Chris Mort of Freshfields) so highly he made him Chairman. Mind you he also chose Denis Wise to be director of football.
PS Mihir; it's called a non-disclosure agreement
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Mihir, in light of the comments bade by boomshakalak #1, please, PLEASE give us another similar article - I believe Pompey may be available for 200 million...
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Even if we were in an Economic BOOM, I dont think people would be clamouring to buy Newcastle, let alone a crisis!,
I think Ashley overpriced Newcastle to begin with, and is now setting the value at something more realistic!- its called business!
groan, this article is about 50% copy and pasted ~!
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If I win the lottery this weekend I may put a bid in myself. Then again If I get four numbers I'll take my wife out for a Chinese instead.
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It's called a Nondisclosure Agreement, not a Nondisclosable Agreement.
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so ashley's statement about losing money but "doing it for the club" is BS. he is a typical businessman trying to make more money - whatever the cost - to NUFC in this case.
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Contrary to the views of some of Mihir's readers, I find his blogs anything but boring. The value is in his ability to reveal the politics and business of sport. While I admire many of the sports journalists on the BBC for various reasons, this approach is unique on the site and it is his weight and connections as the Sports Editor which enable him to bring the stories to us.
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Oh god not another one
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Why is it that every article has to be amazingly interesting ?
Can't it just be educating rather than have cheesy jokes on every other line.
I like it Mihir.
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The Nigerian bid is dead.deceased it is no more like the parrot!!!!! No businessman declares he is lowering his price if he has recieved a viable bid as claimed by this so called Nigerian consortium!!
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Do Newcastle make a profit? Last I heard they were losing £20 million a year. Then again Bose has also claimed Newcastle were on a different level of investment possibility to Liverpool because Liverpool are looking to move to a new stadium!
I want to know where he got those figures from, are they the ones that Ashley's team are quoting or are they just made up (note the two are not mutually exclusive!). However I once again must point out that Sid James' can't be part of any valuation as Newcastle don't own the stadium OR the ground it is built on. Therefore that £150 million must only come from ticket sales and for them to be worth £150 million every single seat must make £2884.62 profit, which I highly doubt.
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Whilst I have no particular wish to stick up for Mike Ashley, it should be noted that the fees for both buying and selling the club will be considerable - particularly the former, as acquiring a PLC boasting a large number of shareholders is very costly - therefore on Mihir's figures his net profit will be significantly less than £50 million in the final outcome. I would suggest that right now, bargaining positions aside, he would be happy to get out with a break even.
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He really does want to sell then. The value he has added is wiping out the debt. He shouldn't get a premium on his purchase plus investment because:
a) its a poor market, a really poor market.
b) a huge erosion of goodwill with regard to the customer base (fans)
c) despite debts being cleared a good deal of investment will be required and expected both on and off the pitch.
The only attraction is the tv revenue streams (if they stay up) and perhaps a turnaround in fan sentiment increasing gate and commercial revenue. And that is by no means certain.
I reckon he'll do well to break even and might be forced to sell at a substantial loss. It's become a white elephant.
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This is not a bad article, but that's the problem - it's an article, not a blog.
Perhaps things have changed, but I always thought the idea of a blog was to offer some kind of personal opinion or original take on a news story. This is just the facts, laid out with nothing original added at all.
As an informative article aimed at people who are unfamiliar with the buying process, it's perfectly fine. But as a blog... what's the point?
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Is Mihir Bose the most boring blogger on the BBC?
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"Perhaps things have changed, but I always thought the idea of a blog was to offer some kind of personal opinion or original take on a news story. This is just the facts, laid out with nothing original added at all"
Spot on. I started reading these blogs to find out someones real opinion of something, not to find out what I've already read elsewhere...
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Mihir, as football fans we're interested in the actual game of football, what goes on on the pitch, not what goes on in the boardroom. We follow our football clubs because we love the game and are passionate about their results on the pitch. Maybe you could bear this in mind and in future write articles about football, afterall you are a sports editor, not a legal/ financial editor.
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#14
i agree - a far better read than the awful live text commentary we get on bbc sport online
"the Roonster just scored..."
"a snorter from Broady..."
"Boggo hits the net..."
just rubbish - tell us what's happening and without the public school humour...rant over!
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£300m? He's only selling the football club, not the whole North of England .......
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Good Blog..
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I see that Keith Harris is co-ordinating the sale. Given Newcastle's recent history, I hope that he isn't being assisted by Orville.
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Stick to writing reviews of free holidays in the Mail on Sunday.
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This blog is about "key sports stories and issues behind the headlines".
To all those critiscising Mr Bose, you've got no reason to. He's doing exactly what he should be.
I've been interested in the whole Saga (As I'm currently resident in Newcastle), and its good to have someone lay out the facts clearly.
So thank you Mihir.
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I'll start the bidding at a crate of Newcastle Brown and a truck load of pork pies. Should keep that fat clown happy.
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Boring Bose strikes again!
Well done on learning the copy and paste function. I didn't know you could plagiarise yourself up until now.
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Its still more interesting than Garth Crooks
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got to agree with others...
"sports stories behind the headlines"
thats a plural of sport and story there
this blog now seems to relate to a single story,
previously, it seemed to relate to a single sport (bar the very odd exception, like the olympics - though we were even asked if that was the 'new football'!!!)
haven't we just had a dramatic end to the cricket season, and are having a gripping end to the rugby league season (with all the issues of franchising etc which would surely benefit from some behind the scenes/headlines analysis?), and a new rugby union season begin?
at least state its a football finance blog if that is all it will ever cover!!!! this is not the blog to go to for behind the headlines sports analysis...
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"Maybe you could bear this in mind and in future write articles about football, afterall you are a sports editor, not a legal/ financial editor."
Listen, there's nothing wrong with what Mihir Bose writes about. Issues such as club ownership are extremely important to the game of football and its supporters. The journalists / pundits write about what happens on the pitch, the sports editor covers the more political areas. No problem with that.
The issue is whether or not this kind of stuff should be in a blog, which as many have said, should be a place for originality, personal thought and stories that show us a bit of the author's personality. Mihir Bose's articles deserve a place somewhere, but not under the name of a 'blog' I'm afraid.
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The situation with Newcastle is bit more solid than that of Spurs and Everton. The owner is selling it, and as such there will definitely be a buyer of some sorts.
So yes, he has every right to speculate on these things and if reading about Newcastle or the selling of Premiership football clubs bores you, choose not to read them. No one is forcing you.
I always find it amusing that people get so angry about what someone writes, as though they had a gun put to their heads and were forced to read them. If Mihir's articles and blogs don't interest you, stop reading them. No really, you are allowed to read other parts of the website without reading the parts you're not interested in.
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"I understand"?
Sums up your approach to journalism.
Please apply for that job as gossip journalist at Heat magazine and leave the BBC.
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This comment was removed because the moderators found it broke the House Rules.
"I see that Keith Harris is co-ordinating the sale. Given Newcastle's recent history, I hope that he isn't being assisted by Orville."
-------------------------------------------
Why not? I think Orville would be perfect for naive and superstitious Geordies
"I wish I could fly
High up in the sky..."
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Mihir, is there any word on the FA Stock Exchange as to the rumours about a Nigerian consortium trying to buy you out? With the proper marketing, the Mihir brand could become huge.
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Mr Bose, why can't the BBC be precise with its figures. It was reported 13 days ago that Mr Ashley wanted £481m for NUFC, not your stated £450m...it was also reported that he paid £134m for the club not your £133m. Your 'report' seems based on possibly a chat with investment bank Seymour Pierce ( dealing with the sale) who have told you that - surprise - in these tough times Mr Ashley will accept less than earlier thought. 'Club open to offers' is not really a story, now is it?
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This may be controversial BUT, I think its what people are thinking anyway.
Who is going to believe the finances of the Nigerians. Don't a lot of the money laundering and rip-off scandals originate out of Nigeria???
May be I'm wrong and its no disrespect to the guys buying the club, but this is what the people on the terraces think.
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Just in case my previous post was a bit too touchy and doesnt get thru, I have moderated it myself and am posting a "milder" version.
I want to ask the question, is anyone going to be carrying out due dilligenc on the Nigerian consortium ???
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Great piece of business for Mr Ashley...... Do you think he cares about where Newcastle perform in the league in the time he is milking it to get the best profit possible?
By the time hes finished he could be left with a club worth 150m....the value of the ground. But then without a prospering football club that is not the true value of this property. Newcastle without Newcastle United would be .............. unthinkably soulless
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According to Freddie Shepherd, the minute the Halls lost control of the club, the mortgage on St James' Park had to be paid immediately in its entirety.
That's £57 million quid that Ashley had to spend right off the bat - which he won't have known about, due to there beig no due diligence preceeding his takeover.
If Fat Fred is telling the truth, the mortgage on St James' being paid off would certainly seem to make the club a more attractive proposition for investors.
Ashley claims to have pumped over £100 million into `solving` the club's debt problem, so maybe the mortgage story would would be part of that figure.
Anyone who knows better please clarify, I realise Jabba the Fred isn't the best source of reliable info.
I wonder if Ashley had a moment if despair when that £57 million had to be coughed up.
It would certainly explain in his complete lack of net spending on players over the summer and the inability to splash out on basic requirements like a new left back to replace the winger currently playing there every game.
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Mihir - your headline and then your opening paragraph really confuse me. "Global financial crisis hits Ashley's price tag", a statement of fact vs "Has the financial collapse made Newcastle owner Mike Ashley moderate how much he wants for the club?" indicating that your headline isn't a statement of fact.
And the rest of the article really doesn't tell us much new about the whole debacle other than Ashley overvalued the club initially.
Not sure who you had dinner with to get this 'scoop', but please could we have something other than 'football club might be bought' next time?
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It's hardly surprising that as a businessman he's going to make a profit.
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Richyburger...Newcastle United DO own St James Park, so the valuation is valid (I think it's potentially worth more, but that's just my opinion) however, the land it's built on is Leashold instead of Freehold but Sir John Hall in his time as chairman/owner extended this leasehold for another 99 years back in the mid 90's.
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so ashley's statement about losing money but "doing it for the club" is BS. he is a typical businessman trying to make more money - whatever the cost - to NUFC in this case.
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Actually he was prepared to lose money on the club until the idiots that called themselves fans decided to start sending him threats of physical violence.
Given that I don't blame him for saying screw the club I want my money back.
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This comment was removed because the moderators found it broke the House Rules.
I cannot believe how this man can draw a salary (one that is no doubt quite healthy) when all he is doing is regurgitating information that was in all the papers over the weekend/Monday morning!
May I suggest in these hard times that the BBC simply replace Mr Bose with a part-time student who could draft these articles just as well using his/her ability to read and their ability to "cut and paste" ... Or, alternatively, I could probably spare 15 mins once or twice a week!
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I quite enjoy this blog, especially the Indian Cricket Twenty20 stuff.
This wasn't amazing but still informative.
Maybe more personal opinions or more well informed gossip wouldn't go a miss.
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This comment was removed because the moderators found it broke the House Rules.
The thing that really annoys me about you, Mihir, is that you talk about things like you're the only person that knows, or that you have lots of people feeding you secret information in high places which you like to brag about, for example YOU understand Ashley has dropped his price, whereas I thought that was common knowledge, it's quite irritating as you're clearly trying to big yourself up.
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"all he is doing is regurgitating information that was in all the papers over the weekend/Monday morning!"
99% of all blogs are simply personal opinion and their content is made up of exactly that.
The idea of a good blog is not whether you can learn new facts from it, but rather whether you can gain an insight into the subject or the story that you can't from other sources.
In the end all blogs are just opinion. What makes most of us read them is the ability of the author to hold our interest, and whether or not we appreciate the insight his expert knowledge can impart.
If you think that this blog fails on those points, you have every right to criticise. If you think this blog fails because it doesn't give you new facts about the subject, you're missing the point of reading a blog.
I think this one passes muster on all of the above.
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This comment was removed because the moderators found it broke the House Rules.
Mihir:
Has the financial collapse made Newcastle owner Mike Ashley moderate how much he wants for the club?
I hope that Mike Ashley, due to the lateness of this item...Did he moderate the amount of money he wanted for his club...
~Dennis Junior~
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