The Ashley Affair by David Donnelly
By David Donnelly
Wednesday 09 Feb 2011 10:03:00
Browse all David Donnelly articles

You are an experienced businessmen who has delivered a product your client craves. However with a wage bill out of control and spiralling debt, you realise that it is time to adopt a new business model, you ask yourself “who has done this before? Who in the face of financial constraints has still managed to deliver operational excellence?” Ashley, look at the Arsenal.

Kevin Keegan has spent money wherever he has managed. He loves a big money signing that will excite the fans both on and off the pitch. Keegan wanted the endless resource only a billionaire can afford. However Newcastle’s billionaire owner was not about to through away his hard earned cash.

After Ashley had milked his cash cow he decided to implement a business model that would allow us to compete sustainably in the future. Ashley had made a mistake in buying the club, so in order to maximise the return on his investment he would have to operate the club as a long term venture. Successful businesses take a proven model, improve and implement it. Two successful models were the Real Madrid’s European giant management model and Arsenal’s sustainable growth model. Ashley combined them to create a model that he believed would allow Newcastle to compete on the European scale whilst at the same time being sustainable. This was credible strategic planning.

Arsenal have managed to operate competitively season after season whilst paying for the Emirates stadium. Wenger is a manager to admire, not only for his football and tactical nous but also his astute business logic. In order to compete with Manchester United and the rest of Europe they needed to implement an infrastructure that could sustain competitive football without putting the club at financial risk. Part of this sustainable business model was the sale of top assets at a premium and the strategic acquisition of youth players.

Real Madrid are the largest football team in the world. Ashley wanted to replicate their management structure. By employing Dennis Wise and Jeff Vetere he was putting his own men in key strategic and operational positions. However implementing this management structure undermined Keegan.

Ashley initiated a policy of purchasing untapped potential with the aim of selling for a future profit. Keegan didn’t have the nous for discovering talent. This was a manger that once dissolved our reserve team and restricted the development of future youth team players. Scouring unearthed talent and selling on for a huge profit has kept a team like Wigan in the premiership. Keegan had been out of the game and didn’t understand the current market and economic operating environment.

James Milner was one of our most valuable assets. An England under 21 international with a growing reputation. Keegan didn’t want a player of that calibre to leave and wanted to build his future vision around such players. Ashley forced through the sale which dented Keegan’s pride. To keep Newcastle financially afloat Ashley had to asset strip. The sale of Milner was the final straw for Keegan. His ego was too big to take direction from senior management. There was only going to be one outcome, Keegan had to go.

Previous years of miss-management had left the club in financial ruin. To become a sustainable and financially sound business, the club would have to change its culture and accept that it could not currently compete on the same stage as Chelsea, Man U and Arsenal.

In bringing Keegan back to the club, Ashley had increased the club’s revenue and market exposure. To ensure that his operational strategy was implemented Ashley needed a yes man. This man turned out to be Joe Kinnear. This was not a popular decision with the fans however Ashley now had an ally in a key position that wouldn’t question or undermine decisions made. As a manager it is imperative that you put the right people in the right places, Keegan was never that man.

Next issue I will look at the financial fallout from relegation and how the strategic restructuring of the club ensured that it survived, how the debt was managed during our promotion season and why it was essential that the club made an instant return to the premiership.

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