The “Ashley Affair”
By David Donnelly
Tuesday 14 Dec 2010 11:33:00
Browse all David Donnelly articles
 


You have brought a football club on a financial whim without exercising due diligence, you realise that you have made a grave financial error, you sit there in your executive boardroom feet up on the desk, and you ask yourself “how do I rectify this?” Ashley you need to “Bring home the messiah!”

On 16th January 2008 the messiah returned. I, like the majority of the Geordie nation was ecstatic. Ashley’s decision to hire Keegan as manager was a great strategic acquisition. He didn’t need to undertake extensive market research to understand that Keegan was the most revered manager of the club’s recent history. Keegan took us from the brink of non-existence to challenging for the title and world transfer records. Apart from the late Sir Bobby no one has come close to Keegan’s achievements. 

As with every managerial appointment at Newcastle United, the media were having a field day. The back pages were filled with headlines of Keegan extravagantly spending Ashley’s billions and signing players of the calibre of Thierry Henry. The club’s marketing team was in overdrive, fuelling the expectations of the ever loyal supporters and customers of Newcastle United. Ashley was playing the role of a salesman; over exaggerating his product to an enthusiastic customer base. It was now time for Ashley to rectify his financial mistake and maximise his return on Newcastle United.

Ashley is a proven businessman, you do not become a billionaire overnight without understanding the framework and model required to run a profitable enterprise. He understands his market and delivers the right product to the right people at the right price – a simple marketing and sales strategy repeated time and again with Sports Direct.

Keegan’s first game back in charge against Bolton was nowhere near a sell out prior to the announcement of his appointment.  The morning tickets became available I like many other supporters was on the phone desperately trying to get a seat. I had a meeting with a client and couldn’t continue trying for tickets, so I asked my dad to see if he would. He was also in an important meeting with a solicitor signing a contract. Like a true Geordie boy, he had the solicitor ringing up for tickets on her mobile whilst he was on the landline. (The contract wasn’t signed until he had managed to get me a ticket for the homecoming of the messiah!) This is exactly what Ashley wanted, people fighting for tickets and a sold out St. James Park.

I arrived early at St. James for my pre game pint; Shearer’s bar was packed as was the club shop. The launch of Ashley’s marketing and sales strategy looked as if it was a success. I walked through the club shop which was advertising free Keegan printing on replica shirts, the queue was huge! Our once infamous chairman Shepherd had made a mockery out of us paying over inflated costs on replica shirts. Ashley’s strategy at Sports Direct is to pack them high and sell them cheap. The same strategy was being applied to Newcastle United. T-Shirts with Keegan’s face on were selling for £10 each; I would estimate his cost to be less than 50p a shirt including distribution and manufacturing.

As I understand; when Keegan signed for us as a player he agreed that a percentage of the increase in match day revenue was his. I believe that once again Keegan had inserted a similar clause in his contract. His Soccer Circus in Glasgow was costing him millions to run. A couple of years at £3m a season was always going to be too much for Keegan to say no. Keegan’s appointment was all about financial gain for both Keegan and Ashley.

Ashley’s decision to appoint Keegan was a great one in hindsight, match day revenue was up, the club shop full and his loyal customer base happy. It was soon to be clear that Keegan was a key strategic acquisition that didn’t provide the return on investment that Ashley had hoped. Next issue I will look at the beginning of the end for Keegan, the stripping of club assets and how the wage bill was brought under control.



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