The Ashley Affair
By David Donnelly
Monday 06 Dec 2010 10:05:00
Browse all David Donnelly articles

You have just sold 43% of your company and netted £929m, you are worth an estimated £1.9bn, you sit there in your executive boardroom feet up on the desk, and you ask yourself “what do big boy billionaires do?” “Ashley, they buy football clubs!”

10th March 1990, Watford versus Newcastle, I am 6 years old and have just had my first taste of corporate hospitality. Not a bad way to start my affinity with the toon and a million miles away from my dad who at 2 years old made his debut at St. James Park selling peanuts with my great-granddad. From a young age I have been exposed to football as a business, I studied business at university and work as a management consultant. I may not be your stereotypical season ticket holding fan but I love our club as much as anyone.

Football clubs are not run for the fans anymore, however much we want to change this. The money men running the Premier League have turned this sport into a multibillion pound industry. The result; big ego’s making big business decisions. Throughout my career I have worked for big Multi Nationals and have firsthand experience of how big ego’s get in the way of making sustainable and logical business decisions. I’m well placed to dissect Ashley’s business decisions and his Ego!

This isn’t going to be a regular Ashley bashing exercise, the Geordie nation has been doing that ever since the fall out of the mismanagement of Keegan. What I do want to do is to take each big decision that he has made, scrutinise it and decide whether it is was a positive decision for himself, the club and fans. Leaders and executive management can never please every stakeholder. Opinions will always be divided on whether a decision made by management is correct.

The first of Ashley’s decisions to be scrutinised was the one to buy our club. Ashley had two options available; ourselves and Liverpool. Why would you buy us over the scousers? Both clubs have huge fan bases and solid infrastructures. At that time Liverpool were the better team and had the revenue associated with champion’s league football. Newcastle came at a cheaper price and had previous experience of the champion’s league. If Ashley could get Newcastle back where we had been under Sir Bobby there was a potential for a sound investment. Ashley is a businessman, it was a win win situation, he could be a big boy and own a football club and one that had the potential to provide a good return on investment.

On paper it was a good decision for Ashley, the fans backed the change of power as Shepherd was a liability and embarrassment, and it was a good move for the club as it provided a new forward thinking strategy. However a detailed analysis of the clubs accounts was overlooked by Ashley. This may be attributed to poor business management or an overinflated ego that dismissed the small print in order to secure the purchase. Our debt was beyond estimate when Ashley first bought shares in the club. Reported as £80m which was on top of the £133m Ashley paid for the club. This decision cost Ashley significantly and resulted in an interest free loan of £100m being issued to the club.

I would have expected that when due diligence was being undertaken, Ashley’s financial men would have spotted a clear issue with the club’s accounts. Future sponsorship money was being spent before being received. To overlook something like this was the first warning sign that there was the potential for future poor decision making ahead.

Newcastle United as a one team city has always been at the heart of the community. Shepherd and his cronies openly used the club to burgeon their wallets. This alienated themselves from supporters and made it even easier for Ashley to purchase the football club. By parading himself and downing pints with the away fans further covered the eyes of the Geordie faithful. Ashley was pulling a PR stunt, he was there for the fans and not for monetary gain like the previous leadership, “I am one of the lads and whatever the supporters want I will give them.”

Ashley gave us what we wanted, Keegan, but it was soon to be clear that Keegan was a pawn in Ashley’s money making scam. Next issue I will look at the decision to bring back Keegan and how Ashley intended to maximise his return on investment in bringing the messiah back home.

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