Ashley looks to go on the attack during the downturn
Feb 12 2009 by Peter McCusker, The Journal
SENIOR figures at Newcastle United have claimed the club’s owner Mike Ashley has seen the value of his retail empire fall by at least £1bn during the economic slowdown and he is now being linked with purchases of two struggling businesses. Peter McCusker and Adrian Pearson report.
IF NEWCASTLE United owner Mike Ashley is successful in his rumoured attempt to purchase two ailing leisure businesses they could cost him over £60m.
Mr Ashley’s reported interest in buying outdoor clothing firm Blacks Leisure will cost him in the region of £15m, and the purchase of the gyms belonging to sports retailer JJB Sports will cost around £50m.
Yesterday Derek Llambias Newcastle’s managing director stated the value of Ashley’s interest in his retail empire Sports Direct had fallen from £2.5bn to £200m.
This follows comments from manager Joe Kinnear following the defeat to Manchester City in January when he said: “The credit crunch is killing us. Mike has lost £2bn in his own businesses and shares. He is just about paying the wages but it is not an easy situation.”
But the two mooted purchases should be well within Ashley’s budget with Llambias stating the club’s owner is still a “billionaire”.
Ashley burst into the North East public’s consciousness in spectacular fashion in the summer of 2007 when he splashed out £134m to buy Newcastle with recent accounts showing he has also lent the club around £100m in an interest-free loan to clear any third-party debts.
Ashley, who until then was known for being unusually publicity shy, had made £929bn in February that year, floating his business Sports Direct International on the stock market, selling 41.6% of the shares at £3 each.
Ashley has subsequently bought shares back at much lower prices than the initial floatation offering and now owns 70% of Sport Direct .
With shares currently trading at around 60p Ashley’s stake in the business will be in the region of £270m. Far less than the £1.3bn his stake was valued at the time of floatation.
