The Star has an exclusive out today about the Newcastle takeover, which has gone into hibernation since the beginning of December and nothing much will happen until Newcastle are safe from relegation.
Dr. Tom Markham is part of Football manager and did his Ph.D. on valuation models, and Kieran Maguire of Liverpool University has used his work to put a value on Newcastle United.
Kieran Maguire of Liverpool University
Here’s what Liverpool University Management School Lecturer Kieran Maguire has said about the mathematical valuation of Newcastle United as reported by the Star:
“We use a valuation model here at the University from a guy call Dr. Tom Markham, who is now head of Sports Interactive – the people that do Football Manager.”
“His PhD was based on this. I’ve crunched the numbers into that and it comes out at around £280m for a cash price.”
“That is also around about the amount of money that Ashley has stuck in on a personal level, so I think when he walks away from Newcastle, he doesn’t want to be out of pocket himself.”
“If PCP stuck in an extra £20M-£30M on top of their final £250M offer I think perhaps he might move on that £300M asking price.”
“I think he is reluctant about the relegation clauses as realistically there’s about a 30% chance of Newcastle being relegated, given the position they’re in.”
“There are 11 clubs separated by six points, so you’ve got a three in 11 chance of going down – that’s quite nasty to contemplate because the money in the Championship is pretty tough.
“The other issue in terms of outstanding concerns is the HMRC investigation into Newcastle and I think that was also built into the first two bids that were made by PCP.”
“But the third bid – which was £250M – and we’ll take on all the risk ourselves.”
“We’ll take on relegation and the risk of HMRC fines. They say the reason we’re coming in so much lower is because we’re the risk takers.”
“If you take on risk, they make you factor that into a price.”
If we believe all the news on the bids then Ms. Staveley was just £50M short of the minimum Mike Ashley would accept – which was an upfront cash payment of £300M.
But why wouldn’t Staveley go in with an offer of £275M (split the difference) and maybe clinch the deal?
Not sure what the answer is to that but maybe Mike Ashley will not sell the club to Ms. Staveley after what has happened; there could be bad blood between the two parties.
Hopefully, there’ll not be too much on this takeover stuff in the press until we are safe from relegation and things could start up again.
But we don’t think Mike Ashley will sell the club at the third time of trying and neither do the majority of Newcastle fans.
What do you think?