News today that Mike Ashley’s company Sports Direct is continuing to beat expectations on the financial side of things.
Mike Ashley – Newcastle owner on incentive plan at Sports Direct
The group has about 470 stores in the UK and have reported that sales rose 10.2% to £408.6M in the quarter to January 22nd.
Mike Ashley holds the position of Founder and Deputy Executive Chairman, and the company was founded by Mike Ashley in 1982 as a single store in Maidenhead trading under the name of Mike Ashley Sports .
The results have been boosted by strong trading on the Internet, and they are close to meeting a target of £225M for the financial year to April.
Apparently there is an incentive program in place and while Mike Ashley receives no wages, he is now on track to receive six million shares as a bonus payment in 2018, which are currently worth around £16M.
The bonus Ashley receives – it’s a variation of stock options – has increased by £4M in recent months, due to the rise in the stock price of the company.
For the most recent quarter gross profits increased 10.2% to £184.4M and the results are better than expected.
And it seems that Mike is keen to pay employees at Newcastle United by an incentive plan, and indeed manager Alan Pardew is said to be on a fairly low wage, but has different incentives depending on how Newcastle perform this season.
And that’s the deal top striker Demba Ba is on at Newcastle, and he was signed to a fairly low wage because of his dodgy knee, but has incentives based on appearances and goals, but with 16 goals in 22 appearances, Ba must be doing okay at Newcastle.
But that will not stop Newcastle from offering him a new deal which at least will have a higher basic wage, and the club will also remove that release clause that is said to be in his contract.
The release clause is low for a player who is currently 3rd top of the Premier League scoring charts behind only Robin van Persie and Wayne Rooney.
The Newcastle club could keep the release clause in, but raise the amount from the £7M that Harry Redknapp told the world it was in January. Maybe to £40M. 😀
There’s nothing wrong with incentive based contracts, and of course it’s good for the company because if the company does well they earn more money and can afford to pay out incentives.
We expect that Mike Ashley has also introduced incentives to the non-playing staff at Newcastle, which will depend on how well Newcastle are doing.
But these incentive based contracts could also be why players sometimes balk at the contracts on Tyneside, because if the club doesn’t do well, then they will not earn top dollar either.
It’s got its advantages and disadvantages with employees, but they are generally good for the company.
But if Newcastle can finish in the top seven this season in the Premier League, then at least Alan Pardew should do well financially, although of course we didn’t do well in the two local Cup competitions.