Save Newcastle http://sett.com/savenewcastle Discussions about a Brighter Future for Newcastle United en-us Wed, 18 Jul 2018 17:11:26 +0000 http://sett.com Sett RSS Generator How Much Would it Cost to Buy Newcastle United? http://sett.com/savenewcastle/how-much-would-it-cost-to-buy-newcastle-united

An article I read in the daily mail from June of 2013 suggested Mike Ashley was hoping to sell the club for £279 million. This got me wondering if that was a realistic sale price? Is Mike Ashley asking for too much, or is he asking for too little?

If the fans are going to develop a successful plan to purchase the club or a portion of the club from Mike Ashley it is important to have realistic targets. I am going to go through some details and known facts below to try and get a ball park range on the cost to buy Newcastle United.

Mike Ashley Purchase Price:

According to most reports Mike Ashley purchased the club for £134 million. After purchase he has loaned the club around £140 million to pay off the clubs debt and pay for the additional cost of relegation. According to the NUFC fan forum £11 million of that debt has been repaid. This brings his current total invested cost to £263 million (£134 million purchase and £129 million in interest free loans)

Cost to pay of Mike Ashley's Investments: £263 million

Note: According to the minutes from the fan forum Mike Ashley is hoping to have an additional £18 million repaid to wipe out the additional money he had loan the club due to relegation. This would bring the total loan amount he is owed to the club to £111 million. Any potential takeover should keep a close eye to see if he has withdrawn this additional £18 million.

Sale Price After Relegation:

Rumors were that Mike Ashly tried to sell the club after they were relegated for £100 million. However their is some debate as to whether or not he was actually willing to sell at this price. Clearly the club is worth more now and this number represents the absolute lowest number Mike Ashley was ever possibly going to take for the club..

Relegation Sale Price: £100 million?

Recent Premier League Club Purchases:

Another good reference point for setting a purchase price is to look at the market value of premier league football clubs.

I am not going to draw any specific number for Newcastle United from these numbers as I am not sure how much debt Liverpool and Manchester City had when they were bought out.

Newcastle United Valuations:

Below are some valuations of Newcastle United I found online.

  • Forbes has an article valuing all of the premier league clubs. They have Newcastle United valued at £168 million.
  • I also found this article on the Independent on the value of all the premier league clubs in 2011/12. This article has Newcastle valued at £275.8 million.
  • As mentioned at the top of the article Mike Ashly has been said to value the club at £279 million as recently as the end of last season. That was after a relegation scare, but with increase premier league TV rights on the horizon.
  • Deloitte had Newcastle United ranked 20th in the Money league in 2013 based on their revenue of £115.3 million pounds. This was after dropping out of the list for three years and subsequently dropping back out of the list in 2014. However the Deloitte reports clearly show that Newcastle United is one of the top clubs in the world from a revenue perspective.

3rd Party Valuations: £168 million - £275.8 million.

Estimated Maximum Investment Value:

Next lets look at the recent financial statements from Newcastle United to figure out the value of Newcastle United as a purely financial investment.

Based on the positive trajectory of the profits, limited player investment, and the increased TV deals it would be safe to assume that the size of profits will rise for 2013/14. Assuming a £5 - £10 million a year increase in profits for the next few years would put the 2013/14 profit and loss somewhere just below £20 million.

As an investor I will note that premier league revenue continues to rise at astonishing rates. I would also note that one bad year leading to relegation would cost me at least £50 million pounds. Historically I would be aware that most of the increase in revenue at other clubs goes to the players; because of this I would likely face increasing operating cost as TV revenues rise.

Based on the information above I would list this as a high risk investment. As such I would want to return my initial investment through profit (reinvested into the club or into my pocket) within at least 7 years. Given the generous 2013/14 estimate of £20 million and a target of 7 years that put the valuation at somewhere between £120 - £140 million. However I would be aware that requirements to invest in the playing squad will likely put a lot of pressure on these annual profits.

You may also point out that the club does have some valuable assets such as the stadium and the value of the players. I would counter that the playing staff value is required to stay in the premier league and as such I cannot make a profit off of this amount. The stadium and training facility clearly have value and as such I would be willing to increase my purchase price. Based on the loans Mike Ashley had to pay off that were secured against the stadium and training ground their value is somewhere in the ball park of a £100 million+.

Based on optimistic revenue projections and the value of the clubs assets I would not want to pay more than £220 million for the club. Remember this is a high risk and high maintenance investment so that number is probably on the high side.

Maximum Investment Value: £220 million

These are obviously very rough estimates for reference only. I would never suggest someone should set the value of the club for investment in such an unscientific way.

Conclusion:

Based on the observations and estimates above the value of the club is realistically between £200 - £300 million. Mike Ashley has a secure financial situation and does not need to sell the club so he is unlikely to sell much below his total investment value. However, I am sure he has much better investment opportunities and clearly does not enjoy managing the club. Because of this I would assume that he be open to selling at a price that recoups his investments plus a small profit so that he can save face and call his investment a success (£279 million?).

Estimated Current Sale Price: £263 - £279 million.

This is probably overpriced, but it will probably take something in this ball park to get Mike Ashley to sell as he appears to be prideful, stubborn, and enjoys ripping people off.

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Wed, 12 Feb 2014 14:01:13 +0000 http://sett.com/savenewcastle/how-much-would-it-cost-to-buy-newcastle-united
Supporter Owned Clubs - Does it Work? http://sett.com/savenewcastle/supporter-owned-clubs-does-it-work

When the ideas of supporter ownership comes up people often ask two questions:

  1. Is supporter ownership possible?
  2. Wouldn't it be anarchy with the ever changing opinions of the average fan?

To address those two questions I have compiled a partial list of clubs currently owned by supporters around the world. As you can see from the list some of the world's most successful clubs, such as Barcelona and Bayern Munich, are majority owned by their supporters. Not only is it possible it has been proven to be a successful model if implemented properly.

Supporter Owned Clubs:

La Liga (Spain):

  • FC Barcelona
  • Real Madrid C.F.
  • Atheltic Bilbao
  • AC Osasuna
  • Many other clubs in Spain are organized as a type of public limited company in which supporter groups hold a majority or large portion of the clubs shares.

Bundasliga (Germany):

  • All German football clubs are required to have at least 51% supporter ownership (except for some historic works teams that are allowed to maintain their company affiliation, such as Volkswagen's VfL Wolfsburg and Bayer's Bayer 04 Leverkusen). - Wikipedia
  • Check out this BBC article about how the Bundasliga differs from the premier league for more details. http://www.bbc.co.uk/news/business-22625160

United Kingdom:

  • Swansea City (Welsh) - 20% owned by the Swans Trust.
  • Portsmouth F.C. (English) - Fully owned by the Portsmouth Supporters Trust.
  • Motherwell (Scottish) - Currently in the process of switching to fan ownership. Find out more details at the Wells Society website http://www.thewellsociety.co.uk/.
  • There are over 40 other smaller clubs in the UK where fans own a large percentage of their club. Most of these are owned by supporters trusts. I chose to highlight Swansea, Portsmouth, and Motherwell because they are some of the more high profile clubs with significant fan ownership. Check out a full list of clubs here: http://en.wikipedia.org/wiki/List_of_fan-owned_sports_teams#England
  • You will notice that a lot of the clubs owned by supporters in the UK have only started to be supporter owned in the past 10 years. Momentum is growing for supporter ownership in the UK. A lot of great work is being done by Supporters Direct to help supporters buy shares of their clubs check out their website for the latest news: http://www.supporters-direct.org/.

United States:

  • Green Bay Packers (American Football). They are the only supporter owned sports team in the four major American sports league. They are one of the NFL's most successful teams on the field, and off the field the Packers' have some of the most engaged fans in the NFL with over a 100,000 names on the season ticket waiting list. Many fans put their kids names on the list as soon as they are born. Check out the Packers' website for more details of how their fan ownership model works http://www.packers.com/community/shareholders/.

Brazil and Argentina:

  • In Argentina all clubs are supporter owned. No other ownership model is allowed.
  • Almost all Brazil clubs are supporter owned as well.

More:

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Mon, 10 Feb 2014 12:43:26 +0000 http://sett.com/savenewcastle/supporter-owned-clubs-does-it-work
Purpose of this Blog: Save Newcastle! http://sett.com/savenewcastle/purpose-of-this-blog-save-newcastle

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This blog is intended to be a place for discussion on how we can ensure a bright future for Newcastle United. I believe the club is never truly safe in the hands of one or a handful of rich owners. Even if they are doing a good job now a time will come when they become disinterested or die and leave the club to less competent heirs.

As fans we have the most to lose from the the club imploding like Leeds. However, if we can have strong fan organization and plans in place we can provide the contingency plan that can save us from League 1 or the next Vincent Tan (He changed Cardiff's colors from blue to Red).

Hopefully the posts and discussion on this site will play a small part in encouraging positive action now and incubating more ambitious ideas and improving them until their time has come.

Please share your ideas in the community section. I will push the best ideas and hottest discussions to the front page.

Sincerely,

Peter

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Thu, 16 Jan 2014 11:37:12 +0000 http://sett.com/savenewcastle/purpose-of-this-blog-save-newcastle