Price for club would just be beginning
MARK DOUGLAS LOOKS AT HOW THE TAKEOVER MIGHT IMPROVE NEWCASTLE – AND HOW MUCH IT COULD COST
AMANDA Staveley’s first offer for Newcastle United is in – and it was on the skinny side, even for apparently motivated seller Mike Ashley.
Staveley’s incentivised bid for United was shot down by Ashley because he is looking for a bigger profit margin for a club that has been relegated twice on his watch. While the sport is now more profitable than it was when he paid £134.4million, his determination to drive a hard bargain and talk that Staveley is “trying it on” with the first offer should be measured against the cost of improving Newcastle’s lot.
Under Ashley there have been advances: the manager is the best Newcastle have ever had in terms of CV. He is without doubt the most handsomely paid. Similarly the ticketing policy has helped to encourage a new generation of supporters.
But there are other areas where investment has been limited or nonexistent and any takeover that wanted to take Newcastle forward would require significant funds.
The price paid for the club would only be the start of what any new owner with aspirations of challenging for the top eight would need to put into a club where there is a real need for root and branch review of on and off-thefield operations.
It’s understood Rafa Benitez put a business plan to Ashley in the summer that touched on some of these areas and it’s not inconceivable that Staveley or a new owner would look to the experienced Spaniard to build an infrastructure at the club that is fit for the Premier League of 2017.
This is the gift and the curse for any prospective Newcastle owner. Ashley’s tenure has seen the club’s latent potential left dormant: there are areas where drastic improvements could be made at Newcastle. But they would come at a cost that has to be factored into any buy-out. It is why PCP Capital Partners – like any realistic investor – is driving a hard bargain. Any money saved on the price of the club may need to be invested in other areas.
Here is where potential gains can be made – at a cost.
United is a business that depends on how eleven players are able to perform every Saturday. Its profitability and ability to compete financially is tied to access to the riches that come from competing in the Premier League – which is both the reason that it has attracted interest and Ashley’s asking price is fairly steep.
The first, easiest and most expensive way to make a mark is by investing in new players. The Manchester City takeover brokered by Staveley was marked by the astonishing purchase of Robinho for £32.5million – a clear sign of the new owner’s intent. But at Newcastle, any recruitment would be on a needs must basis – with the current squad not fit for Premier League purpose yearon-year.
United would need to invest significantly – immediately – to shore up the squad and stay out of the relegation argument in the Premier League. Given that a £30million spend in 2015’s January transfer window was not enough and that two strikers are required, it could be that even more would be needed to establish Newcastle safely in the top flight.
But looking further ahead, the talk of handing the manager £100million over three or four transfer windows would feel like the minimum required in an age when players with potential like Nathan Ake and Jordan Pickford transfer for £30million.
Put it in context: Manchester City were lifted out of mediocrity and into contention for the Premier League title with a spend of £940million in four years.
That has probably been spent again bringing them up to the level of European heavyweights. That is just on players.
No matter how great the as-yet unidentified finances that might be at play in United’s takeover, that will simply not be happening at St James’ Park – where talk of “doing a Manchester City” should be consigned to the ether.
What is realistic is quickly advancing Newcastle from a club where surival is the main aim into top six contention. Newcastle’s wage bill of £74.7million is lower mid-table – below 13 of their divisional rivals. Don’t forget: a club’s wage bill is often seen as the figure that most closely correlates with a team’s spending power and ability to make a splash in the transfer market. The current top six in the Premier League have the biggest wage bills and five of the top six wage payers made up the top six last season too.
Newcastle control costs aggressively and that means they miss out on players.
Tammy Abraham opted for Swansea: others have turned Newcastle down. If Benitez had a freer hand to offer contracts that could entice higher calibre players, a rapid improvement in Newcastle’s squad would be visible quickly.
Any smart investor would recognise that spending here would be the quickest way to improve Newcastle’s lot. And with a manager of Benitez’s ilk and meticulous methods, there could be confidence that it would be invested with a plan in mind. How much? £100million – minimum
TECHNICAL STAFF
The Manchester City model relied on huge investment in players but it did not end there. Pep Guardiola’s appointment two years ago was the natural conclusion of a plan that started when they poached Director of Sport Txiki Begiristain and Chief Executive Officer Ferran Soriano from Barcelona, the team of the 2000s.
Newcastle’s brief experiment with a director of football was disastrous. Joe Kinnear was unsuited to the role that he was appointed to in 2013 – much as the team assembled by Ashley when Kevin Keegan was brought back felt ill-starred. Graham Carr, one-time Chief Scout, was a de facto director of football.
It is an experiment that may be worth revisting. Benitez enjoys working with his tightly-knit group at Newcastle, which affords him influence but he is used to different models and has spoken enthusiastically about the wider team he had at Liverpool. It is something that a new Newcastle may consider.
To attract the best, you must pay. Both Begiristain and Soriano are on sizeable wages. How much? Up to £1million
ACADEMY UPGRADE
Newcastle’s Academy has good people who work hard. But it is an area that is crying out for investment and needs to be re-imagined in an era where the sums spent by the top clubs are truly eye-watering.
Manchester United spend £3.5million a year. Chelsea’s Academy costs double that and Manchester City spend £12million a year on an Academy that recruits some of the best young players in the world to East Manchester to play in facilities that are world leading. The Etihad Campus – complete with ministadium that hosts under-23 games – cost £200million.
Ashley has paid lip service to the Academy and there have been attempts to encourage a new generation of North East talent to consider the club but it has rarely been backed up with the sort of financial clout that rivals had. The long, drawn-out process of securing Category One status summed up an area that many have felt is ripe for a total re-think at Newcastle.
There are good players who emerge at Newcastle, but no grand plan. New coaches, facilities and a recruitment plan would cost mil-
Manchester City were lifted out of mediocrity and into contention for the Premier League title with a spend of £940million
lions – but, again, it’s an area where quick wins could be achieved, How much? Up to £7million (a year)
STADIUM
St James’ Park is a jewel in the club’s crown: a city centre stadium that captures the imagination and has been attracting big gates for years. But it, too, requires some improvements and maintenance. There are new venues popping up across the Premier League that are larger and offer greater potential corporate yield than Newcastle. Tottenham have spent £800million to build a new stadium with a view to boosting their corporate offer. West Ham have moved into a new stadium while Everton will do the same soon. It would be difficult to achieve the same ‘quick wins’ as you could in other areas but there may arrive a point where grander plans might need to be considered. Sir John Hall once imagined a Tyneside equivalent of the San Siro on the Town Moor, a plan that was defeated by justified concerns. But an out-oftown stadium with a bigger capacity – which would come with a humongous price tag – is arguably the only way to improve a city centre stadium hemmed in by office, retail and housing developments. How much? £25million-£400million
TRAINING GROUND
Newcastle’s training ground has been scheduled for improvements since the Kinnear era but the club explained that they were mothballed on Benitez’s say-so in order to concentrate on building a team capable of competing in the Premier League. It is typical of the sort of constraints that are limiting the growth of the club.
United’s Benton training base is smart and does what is required but there are others in the Premier League that have invested in this area since Newcastle’s last significant spend on their facilities. Southampton spent £40million on their Staplewood training ground; Liverpool plan a £50million upgrade to their Melwood complex. United are being left behind and these things matter. Benitez ordered simple things like changes in facilities and a fresh lick of paint in his first close season but a bigger re-fit is required. How much? Up to £40million
SCOUTING NETWORK
United have built a “scouting shed” at the training ground in an attempt to bring their recruitment processes up to speed but Newcastle’s efforts pale in comparison with others. Manchester United appointed 50 scouts in the summer, criss-crossing the globe in an attempt to spot and recruit the best talent in Europe.
Newcastle’s operation is smaller and they have had considerable success considering its scale. Benitez, too, brings his own expertise. But greater resources mean greater manpower and perhaps more infrastructure spend: the scouting shed would be just the beginning. How much? From £1million upwards
INFRASTRUCTURE/STAFFING
Southampton spent £1.8million recently updating systems and adding more staff to their backroom operations. That includes ticketing, IT and adding more staff to their payroll to help the commercial, ticketing and marketing arms of the business.
Newcastle have a dedicated, hardworking and efficient staff. United’s attempts to control costs in the wake of their first relegation led to redundancies with some roles replaced. But if they were following Premier League rivals a takeover could see the club’s off-the-field infrastructure beefed up. How much? From £1million upwards