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Retail entrepreneur Mike Ashley has launched a £133.1m bid for Newcastle United, having already bought a 41.6 per cent stake in the Premiership club. Ashley, who floated his Sports Direct retail business in February, said that his bid vehicle St.James Holdings Ltd. had bought 55.3m shares from the club's biggest shareholder and life president, John Hall and his family, at £1 apiece. Ashley, who runs the Sports World and Lillywhites retail chains, said he was offering to buy the rest of the club's shares at the same price, which represents a 19 per cent premium to Tuesday's closing price. He now needs to buy out the stake of chairman Freddy Shepherd who has said that he has no intention of selling. Mr Shepherd is very involved in the day-to-day running of the club while his son Kevin conducts most of Newcastle United's transfer deals. He is thought to have blocked approaches in the last twelve months from Jersey based investment fund Belgravia and hedge fund Polygon. Unfortunately, Mr Shepherd was admitted to hospital yesterday where his condition is said to be serious.
The low profile Mr Ashley is thought to have no interest in football. The former squash coach opened his first store in Berkshire in 1982. Shunning the limelight, he became one of Britain's most successful entrepreneurs using a 'pile 'em high, sell 'em cheap' strategy. He raised £929m when he sold a 43 per cent stake in Sports Direct at the public offering, but investors have seen their shares fall 28 per cent since then, attracting criticism of the company from analysts. He used £183m of his money to buy a three per cent stake in Adidas, the German sportswear company. With Newcastle United, Mr Ashley would own the club, a stake in its sponsor Adidas, and the biggest sportswear retailer in the UK to sell the shirts. However, the real driver is that observers think that he can spot hidden value at Newcastle. The club has a large and fanatical fan base and a stadium modernised ten years ago that regularly attracts attendances of over 50,000. The club ranks thirteenth among European clubs in terms of revenues which are some £125m a year. They have dropped off in recent years because of the failure to qualify for Europe. There is thought to be more scope for professional management, marketing the brand internationally and greater segmentation of ticket pricing.
Most of the club's fans seem to have given the news a welcome. Mark Jensen, editor of the fanzine The Mag commented, 'It's the best possible news because Newcastle United has needed a change from top to bottom. The club has underachieved. Newcastle United has been an unsuccesful business both in terms of the finances and in achievements on the pitch.'
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