It’s very difficult to make money when you own a football club.
One way to try to do that is by building up the profits every year, which is something Mike Ashley tried – and he put the financials at Newcastle in a very good state, but if the team doesn’t do well on the field of play it doesn’t mean too much.
Mike Ashley – vows to invest in Newcastle
It’s something Mike Ashley will have learned over the last eight years – assuming he didn’t already know that back in 2007.
When clubs go public – it’s also very difficult to make money off their stock, simply because sports clubs are not good investments, and history has proven that.
Investing money in Newcastle United is a bad idea – at least financially.
Mike Ashley seems to have learned that being top of the financial league table in England means (absolutely) nothing, and the only thing that matters in football is how the team performs on the pitch.
And if Mike Ashley could build a top team at Newcastle and start to finish in the top four of the Premier League, and start winning things, then the club would be worth a lot more than he paid for Newcastle eight years ago.
Ashley paid about £133M for Newcastle in the summer of 2007, and he has put about £135M into the club since that time – so if Mike were to sell Newcastle, he would need to sell for about £270M to get his money back.
So there’s a big financial benefit why Ashley should want to build a top team and have Newcastle win a local cup in England – which we haven’t achieved for 50 years.
Being in the Champions League also adds a significant amount to the club’s value, not to mention the £32M minimum the club will rake in by reaching and playing in the group stages of the Champions League.
When Mike Ashley arrived at the club, he talked about building the global brand of Newcastle United, but he hasn’t been successful in doing that – and in fact if anything our brand has been devalued over the last eight years.
But it’s interesting that Mike Ashley came out in May and said he wanted Newcastle to win something before he would consider selling the club.
He also promised that Newcastle would start to make their own luck.
The summer was very encouraging with four good players brought in and over £52M spent.
It will take time to build up the quality of the squad – but if Mike Ashley continues to invest in the club, and Steve McClaren and his coaching team can make Newcastle into a very good side – then who knows what we can achieve and what we can win in say the next three years.
And then Mike Ashley can sell the club and make a big profit on what he bought the club for back in 2007.
But he must make Newcastle United into a top team in England again, and then it’s a win-win strategy for both club and for Mike Ashley.
Sounds good to us.