REPORT REVEALS WHY MIKE HAS FAILED TO SELL MAGPIES
REPORT CLAIMS HE WON’T DROP HIS PRICE
A NEW report has attempted to lift the lid on why Mike Ashley has again failed to sell Newcastle United.
Two interested parties say he is “difficult to negotiate with” and – as reported in the Chronicle – report that talks have broken down with Peter Kenyon recently, which extinguishes any hope of the sale that Ashley spoke about before Christmas.
“Would-be buyers say he’s tricky to negotiate with, mainly because he’s suspicious about the terms of the offers, according to two people involved in potential purchases over the past couple of years,” reports US financial site Bloomberg.
Kenyon was seen as the front runner in terms of taking over United by people at the club after exhaustive due diligence in December that included a forensic look at the books and six-figure expenditure on lawyers and accountants.
He wrote to Ashley later in that month revealing Ashley saw his as the “best fit” and hoping that quick progress would be made in the new year – and the letter was released in January as an attempt by the Newcastle owner to prove that there was substance to the takeover talks. But Kenyon – who seemed to be in a position where he had some of the funding but believed he needed detailed information on the state of the club’s finances to attract further investment – was unable to raise more money to meet Ashley’s demands. Bloomberg say “the bid was backed by American funds and debt”.
They also quote Clive Black, director and head of research at Shore Capital.
He says of Ashley: “He’s very single-minded and an aggressive buyer of business assets, not all of which have succeeded.
“But when it comes to selling he seems to have difficulty letting go and has prices in his head that he won’t go below.”
The possibility of relegation was also mentioned as a potential block to selling.
“Selling a football club can be immensely tricky,” said Trevor Watkins, a sports lawyer at Pinsent Masons LLP.
“A buyer’s sentiment is also impacted by performance, with the possibility of a Premier League team being in danger of dropping into the Championship, at the very least affecting the value put on a club and as a consequence the structure of any deal and how and when monies are paid.”
Although it doesn’t add much fresh information, there is a point that has not been made very often about Ashley – that he buys up a lot of companies but rarely sells.
Of the 30 deals done by Sports Direct most recently, only two were sales while the vast majority were purchases. He sold Dunlop for $137.5 million to Japan’s Sumitomo Rubber Industries Ltd in 2017, a premium price of the sort he will be looking to raise for United.
Although the club will not be drawn on the sale talk, sources at United have indicated that Ashley is a willing selling who would accept staggered payments.
They’ve told us that the issue of Sports Direct advertising and the HMRC investigation should not be significant barriers to sale – instead a bigger problem has been the lack of willing buyers. Perhaps that is because of the price he is looking for, which has never been formally disclosed but is close to £300m. That would include the debt owed to Ashley.