Keith Harris, who was hired by Newcastle in October to sell the club, after his success in selling Manchester City has said today he was unable to find a suitable buyer for Newcastle.
Keith Harris – two potential Newcastle buyers submarined by Madoff
But the real news is that Keith says that the two American buyers in for Newcastle at the end, eventually pulled out after they lost $300M (£197M) in the Bernie Madoff Ponzi scandal.
Harris has claimed that negotiations with the two interested parties in the US, worth several hundreds of millions of pounds broke down after the collapse of the hedge fund run by Bernie Madoff, who is currently being prosecuted in the US for the largest investment fraud in world history, though to be around $50B – well that buy a few decent footballers, for sure..
A Ponzi scheme, explained at the end of this article, is when you take in money from investors, don’t invest it anywhere, and use other investments to pay back unreal returns to ther clients.
Since Madoff’s been in the business for over 40 years, heaven only knows how long he’s been doing this stuff for, and only yesterday the FBI found checks in his NY mansion, where he is under house arrest, written out to his relatives for way over $150M, which he was obviously going to try to keep in the family. A judge will today hear prosecution claims that he should be in jail.
Yes, this guy who has lost $50B of client money through fraud and greed is still not in jail – only in America.
Mike Harris talked about the Newcastle deal today:
“Mike Ashley hasn’t said I’m back in charge, what he has said is that we’ve tried but the economic climate beat us, which it clearly did,”
“A few weeks ago there was a decent degree of positive thought and optimism that there would be a buyer and then, amongst others, Mr Madoff came along.”
“There were two people that were looking at Newcastle with us who lost, let’s say, over $300m to Madoff.”
“Let’s face it, it (the Madoff scandal) holed everything beneath the water line. The people who were investing with him followed their peers and they should have done their due diligence and all those things and they didn’t.
“That came at the end of a two or three-month period of absolute decline in all the stock markets, financial markets and banking markets.”
Harris has also repeated Joe Kinnear’s recent claims that Mike Ashley has cleared the club’s debts, which puts the owner in a more positive light. That’very good to hear, but wouldn’t you think we could borrow say £15M just to get two or three decent players into the club in January, to ensure we don’t get relegated. But maybe that’s going back to our old ways and we like the fact that Mike has paid off all debts – but why didn’t he tell us that?
However, Keith Harris suggests that this zero debt will no doubt be a positive selling point when the economy improves – some time in the future – and maybe even in the summer.
“You don’t need to have a minimum of £5 billion to run a football club. It depends very much on the nature of the club you are taking over,”
“In the case of Newcastle, one of the things that I thought was very attractive was that Mike Ashley put his hand in his own pocket and paid off all the debt.”
“So in the case of Newcastle what you were acquiring would have meant not looking at having to worry about what do I do when the banks we want their money back.”
Mike Ashley has said he will not sell the club, and while that may be OK with most Newcastle fans, that’s only if he is willing to invest in the club and truly tires rebuild.
That doesn’t look like what’s happening right now, but to be fair to Mike and the club, we just don’t really know what’s going on right now, and if we do end up with 4-5 good players by the end of the transfer window we should be in decent shape.
We feel sure also that some bigger deals will be done in the summer, when a lot more players will be available.
Note: Charles Ponzi (March 3, 1882 – January 18, 1949) was one of the greatest swindlers in American history.
A “Ponzi scheme” is a widely known description of any scam that relies on a “pyramid” of “investors” who contribute money to a fraudulent investment program. The fund promises clients very high profits like 50% profit within 45 days, or 100% profit within 90 days, by bascially redistributing the investments from other investors to give out the dividend payments. The program continually skims off money from the pool of investment. These schemes don’t usually last too long so everybody is wondering how Bernie Madoff kept one going for so long.
Ponzi was probably inspired by the scheme of William Miller, a Brooklyn bookkeeper who in 1899 used the same pyramid scheme to take in $1 million, and is the first known person to sue this scheme to defraud investors.