Mike Ashley’s Business Favorites To Buy Umbro

Mike Ashley business in the world of football – namely Newcastle United – is finally starting to do well.

Mike Ashley – at a Newcastle game

Mike’s has owned the famous Tyneside club for five years now, and the first two years were a compete and utter disaster, with Newcastle ending up being relegated, and Ashley has admitted he made many mistakes in that time.

He’s right about that, but over the last three years Newcastle have made an amazing come-back, and finished 5th top of the Premier League last season, and Ashley is now a little more popular with Newcastle fans.

It looks like his Sports Direct business is also doing very well, with increased revenues and profits,  and news today that the company is in the lead to buy Umbro, the football kit-maker put up for sale by American company Nike last week.

Umbro designs, sources, and markets sport-related apparel, footwear, and equipment, and its products are now  sold in over 90 countries around the world.

Nike bought Umbro for £285M in 2008, and others, particularly some private equity firms are also interested in buying Umbro, which is best known for its long-running association with the England football  team.

Apart from the time between 1974 and 1984, in which Admiral supplied the kits, Umbro has supplied the England teams at all levels since 1954 – I remember it very well. 😀

Umbro was founded in 1924, in Wilmslow, Cheshire as Humphreys Brothers Clothing, and Harold Humphreys set up Umbro with his brother Wallace, with the aim of bringing the ideals and practices of the clothing industry to the rapidly growing world of sportswear, and they settled the business to Cheadle, near Manchester,

Umbro now provide the kits for Premier League Champions Manchester City, and they had revenues of $224M (£146M) in 2011, but  there was no growth over the previous year.

Nike wants to unload the company and concentrate on the brands it has, which are growing more rapidly.

Sports Direct used to have a 30% share of Umbro before it was taken over four years ago, and Mike Ashley’s company has had strong sales growth for both February and March of this year.

Workers at the company, and of course Mike Ashley himself, are in line for big bonuses if the company meets its stretch earnings targets.  Revenues for the 9 weeks to 25th March were £267.6M, and that was an increase of 13.2% year over year.

Sports Direct will give their 2,000 staff shares worth about £50K each,  after hitting sales targets in both previous financial years – 2010 and 2011.

The company owns top brands Lonsdale and Slazenger, and has recently set a new stretch target for Ashley himself, who is the Executive Deputy Chairman and receives no real wages,  but is paid in shares he receives, based on the overall performance of the company.

Ashley is in line to get up to 8M shares,  if the company’s earnings rise by 70% to £340M in 2015, and Sports Direct is due to announce its full-year results next month.

The Newcastle United non-playing staff will look at these figures,  and hope they will be put on the same kind of incentive based deals, when Newcastle do well – and it seems now would be a good time to offer the incentives, based on various criteria.

Manager Alan Pardew is already paid heavily on incentives, based on how the Newcastle team performs, and we have to hope that Alan was handsomely paid for last season  – he deserves every penny for transforming Newcastle in such a short time-frame.

Mike Ashley may already have the rest of the non-playing staff on some incentives, and of course the actual playing staff don’t need any more money – they get enough as it is.

Comments welcome.