IS £300M A FAIR PRICE FOR NEWCASTLE UTD?
FINANCE EXPERT SAYS MIKE ASHLEY MIGHT BE RIGHT TO REDUCE ASKING PRICE
A football finance expert has revealed Newcastle United’s true valuation – and he believes Mike Ashley would be right to look at dropping his asking price.
Owner Ashley is considering whether to put a £300million price tag on the Magpies as he attempts continue to sell the club.
Ashley’s valuation of the club has proven to be a stumbling block in the past, and was one of the reasons Amanda Staveley and PCP Partners’ bid was rejected.
But the Sports Direct tycoon’s decision to lower his demands is seen as a positive step by football finance expert Dr Daniel Plumley, who feels this reflects the club’s valuation.
Such news may surprise Ashley, who may feel the club is worth more, but Plumley – of Sheffield Hallam University – feels that £300million is an accurate asking price.
“There is some subjectivity to it, but if you look at some of the figures it seems about right,” he said.
“The brand value stuff, which is done externally for football clubs, has Newcastle at around £200million. That’s looking at things like the revenue mix and revenue growth, squad value, the heritage, UEFA coefficient ranking and average attendances, among others.
“One thing that doesn’t take into account is the value of the stadium, which Newcastle United own. You can also factor in a little bit more intangible stuff around the fan power and the way in which Newcastle is viewed as a professional football club – and that takes their value to about £300million.
“As long as they’re in the Premier League, there’s nothing to really suggest that it would change. His previous asking prices of around £400million were a bit high, but we think £300million is about right.”
That valuation could, however, change drastically if Newcastle were to be relegated to the Championship.
Ashley’s reluctance to spend in the summer has left manager Rafa Benitez planning for another survival battle - and the Newcastle owner could stand to lose up to £100million if the club suffer the drop.
Plumley believes that falling television revenues, coupled with a drop in prestige, would see Newcastle’s value plummet following a relegation. He added: “Relegation will mean an immediate reduction of £60million, which is linked to the TV money.
“Aclubwhichfinishesbottom of the Premier League earns around £100million in broadcasting money for the current cycle, but if you get relegated you get a parachute payment which - for the first year - will be £40million. So the net effect there is £60million less off the revenue. The other stuff, some of the commercial deals might have relegation clauses in them, so they might drop by circa £10million.
“The attendance, at Newcastle doesn’t tend to drop when they went down before they hold their attendances in the Championship. That won’t have a massive impact as long as the fans remain loyal.
“You’re probably looking at a £70million figure to take off the valuation, and then a little bit more intangible stuff linked to the prestige of being in the Championship versus the Premeir League. So, conservatively, you would say £100million off the valuation.”