There’s never a dull moment with Mike Ashley, the British sports business magnate, who ended the month of May with a bid for the Newcastle United football club and with a change of stewardship at Sports Direct, the recently listed sports retail and wholesale company, in which he still holds a majority stake, that owns such properties as Sports World and Dunlop Slazenger.
David Richardson, chairman of Sports Direct, resigned from his position as of May 31st on the grounds that he believed he had been “unable to establish a strong working relationship with the executive team.” The resignation comes a few weeks after Sports Direct came under fire due to a puzzling trading statement and investors’ complaints about the company’s generally opaque attitude. These problems did little to dispel unrest about the stock, which has fallen considerably since Sports Direct was floated in February.
Meanwhile, Sports Direct’s management has taken action to improve its standing among the financial community by officially appointing Merrill Lynch International and Credit Suisse as joint brokers. Financial Dynamics was picked to handle financial communications. Richardson will be temporarily replaced by Simon Bentley, a previously appointed director of Sports Direct who acted as chairman and chief executive of Blacks Leisure until 2002.
Just a few days earlier, on May 25, Newcastle United confirmed that Ashley had bought out Sir John Hall, a property developer who held a 41.6 percent stake in the British football club, and that he had issued a cash offer at the same price of £1 per share for the rest of the shares, valuing Newcastle United at £133.1 million (€195.7m-$263.5m). St James Holdings Limited, the company set up by Ashley for the purpose of this bid, will issue a formal offer document over the next weeks. It will only go ahead if he obtains at least 50 percent of the shares.
Newcastle United’s board reserved its opinion on the offer until a meeting with Ashley, which took place yesterday. Although the discussion was described as “useful and constructive, “ it remained unclear whether the board would support the bid. It represents a premium of about 19 percent compared with the share price at the time of the announcement.
Ashley moved in after failed talks between the club and two other potential buyers. The offer comes a few months after Ashley netted nearly £930 million (€1,367m-$1,840m)from the sale of a 43 percent stake in Sports Direct. He has already used part of the proceeds to buy a small stake in Adidas, which has proved very profitable so far.
Although Ashley has issued the offer as an individual investor, it could benefit Sports World as well. “The Magpies,” so called for their black and white strip, have consistently failed to rank among the leading British football clubs over the last years, but they have a particularly abundant and dedicated following, with an army of fans known as the “Toons.” The team, which includes England stars such as Michael Owen and Kieron Dyer, routinely draws crowds of 50,000 people at its stadium in St James’ Park, which was renovated just 6 years ago. Ironically the club’s kit sponsor is Adidas, which has a somewhat tense relationship with Ashley due to the brand’s moves to cut back its ranges in Sports World stores.
