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Unnecessary financial gamble by Newcastle chief

Unnecessary financial gamble by Newcastle chief

£300m is what Mike Ashley reportedly wants to sell our club. From a purely business perspective, analysts believe this to be the right amount, but a football team is not just about a business.

The risk of relegation from the Premier League would cost the club tens of millions, and the club`s valuation would plummet to closer to £200m some say, below what Amanda Staveley`s consortium have claimed they have offered (£250m). So why has our owner been so tight with the purse strings considering the huge loss he could be dealt if the club finish in the bottom three?

It seems one of the reasons is down to how much he has already invested. In 2007, Ashley bought a majority stake, and in addition to the interest free loans he has given the club, he needs £250m to break even. Giving the club more money to spend on transfers would therefore mean he would have to take a loss on his investment if he can`t get his asking price.

Like any Magpies fan, I want to see the man leave as soon as possible, but he won`t leave without getting his money. However, even if we take into consideration the above, he is risking a huge loss in the club`s valuation if the club are relegated.

The failure to invest in the January transfer window was essentially a huge gamble on the club`s future. By refusing to give Rafa much needed cash, he is hoping that the team stay up by the skin of their teeth, without any further investment, so he can sell the Premier League club for a price he is happy with.

He is essentially banking on the managerial talents of Benitez to get him out of a hole. It`s a high-risk strategy. Reports suggest that there aren`t any takers for the club at the £300m mark currently, and although that may change if the Magpies stay in the Premier League, relegation could see not only a drop in valuation, but also even less interest in buying the team, especially if the club`s manager also decides to leave.

Currently it seems Ashley`s only focus is making sure he comes out of his decade as owner with a tidy profit, and it seems he is prepared to bet on Newcastle`s Premier League survival to do so.

Click here to join in the debate on the club forum.

Writer:Looney Toon
Date:Monday February 26 2018
Time: 8:00PM

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