The Billionaire Buying Up U.K. Retail Can’t Sell His Soccer Club

(Bloomberg) -- Another season and another sale withers on the vine for one of the last big clubs up for grabs in the world’s richest soccer league. But the difficulty in closing a deal for Newcastle United might say more about the billionaire retailer who owns it than the asset itself.

Mike Ashley is a serial purchaser, snapping up British household names in retail from Evans Cycles to House of Fraser department stores, along with a stake in rival Debenhams Plc. His flagship company, Sports Direct International Plc, said on Feb. 8 it made an offer for collapsed chain Patisserie Valerie. The Financial Times reported the bid was abandoned.

Meanwhile, there have been few sizable divestitures. Of more than 30 deals completed by Sports Direct, only two have been disposals, according to data compiled by Bloomberg. They included the $137.5 million sale of sports brand Dunlop to Japan’s Sumitomo Rubber Industries Ltd. completed in 2017.

The Billionaire Buying Up U.K. Retail Can’t Sell His Soccer Club

Would-be buyers say he’s tricky to negotiate with, mainly because he’s suspicious about the terms of the offers, according to two people involved in potential purchases over the past couple of years. They declined to be identified because of the confidentiality of the negotiations.

Ashley, 54, also has gained a reputation for his informal business techniques. A 2017 court case brought about by a former banker included lurid details of drinking competitions.  

He took control of Premier League club Newcastle for 134 million pounds ($172 million) in 2007. He first put it up for sale as early as 2008 as the northeast English city’s soccer fans quickly turned against him following the departure of club legend Kevin Keegan as manager. There was no buyer. 

The Billionaire Buying Up U.K. Retail Can’t Sell His Soccer Club

Over the years there were frequent rumors of a sale, but none came to fruition. Then came the latest efforts, which started in the second half of 2017 with a price tag of about 400 million pounds. But in recent days talks have broken down, according to people close to the team.

“He’s very single-minded and an aggressive buyer of business assets, not all of which have succeeded,” said Clive Black, director and head of research at Shore Capital. “But when it comes to selling he seems to have difficulty letting go and has prices in his head that he won’t go below.”

A spokesman for Newcastle United declined to comment on the state of the team’s takeover talks, referring questions to Ashley’s media team at Sports Direct. A spokesman at the company also declined to comment.

With wealthy acquirers snapping up previously under-performing teams like Manchester City, Newcastle on paper looks like a decent bet. The club was recently listed as the 19th richest team in Europe in terms of revenue by the professional services firm Deloitte.

Newcastle regularly finished in the top four in the Premier League in the 1990s and early 2000s, qualifying for Europe’s elite Champions League competition. Ashley’s tenure has included a fifth-place finish, though also two relegations to the second tier of English football.

After a 1-1 draw at Wolverhampton Wanderers on Monday evening, Newcastle sits perilously close to the relegation zone again, in 16th place out of 20 teams. The bottom three Premier League teams at the end of the season drop into the Championship, where broadcast fees average around 6 million pounds a year compared with a minimum of about 100 million pounds in the top tier.

“Selling a football club can be immensely tricky,” said Trevor Watkins, a sports lawyer at Pinsent Masons LLP. “A buyer’s sentiment is also impacted by performance, with the possibility of a Premier League team being in danger of dropping into the Championship, at the very least affecting the value put on a club and as a consequence the structure of any deal and how and when monies are paid.” 

The Billionaire Buying Up U.K. Retail Can’t Sell His Soccer Club

Still, despite not having won a major trophy since 1969, Newcastle has a huge fan base, with more than 50,000 people attending each match at a stadium in the city’s center. Streams of people in the team colors of black and white pack bars, restaurants and stores. Its games are also among the best-watched on television.

A vocal group of fans want Ashley out, however, holding regular demonstrations at games. A local member of Parliament, Chi Onwurah, is also involved. She claimed Ashley could easily sell the asset if he truly wanted to. “He keeps changing the terms and conditions during negotiations, though,” Onwurah said.

Over the past few months, a potential buyer has been the former Manchester United and Chelsea commercial executive Peter Kenyon, according to a person familiar with the situation. The bid was backed by American funds and debt, said the person, who didn’t want to be identified because the information is confidential. Kenyon declined to comment.

The Kenyon on-off talks follow protracted negotiations last season with Amanda Staveley, the financier who helped broker the takeover of Manchester City by Sheikh Mansour bin Zayed al Nahyan of the United Arab Emirates. Talks with Staveley broke down in January last year. Sky Sports News cited a source close to Ashley as saying that attempts to reach a deal “proved exhausting.”

©2019 Bloomberg L.P.