The overwhelming publicity of Sports Direct (and other Mike Ashley brands) continues to disfigure St James Park.
Saturday’s game against Chelsea was a deplorable viewing experience for those present and far away, played against the backdrop of the offensive promotion of the former owner’s retail empire.
A new media report has revealed why.
The Mail says the new owners of Newcastle United were forced to keep Sports Direct and associated brand signage inside St James Park, due to legal clauses inserted by former owner Mike Ashley prior to the sale of the club.
They don’t say whether these were hidden clauses that the new owners were aware of until too late, or late clauses that had to be agreed to for the deal to be done, either way the net result is the same.
The report states that as it stands, the ad will continue throughout this 2021/22 season before it can be removed next summer.
Although The Mail says the new owners are trying to get Mike Ashley’s ad removed sooner than that. If that were to happen then you have to assume that the only realistic way to do it would be for the new owners to pay Ashley compensationâ¦
As far as cash is concerned, I am not absolutely sure that The mail are absolutely correct with their figures on what Mike Ashley / Sports Direct (now Frasers Group) paid Newcastle United for the overwhelming global promotion they received through NUFC.
The Mail report:
âThe Mail on Sunday found out the club had earned a total of Â£ 2,205,000 from unpopular deals with Ashley’s retail outfit. Despite the stadium’s dominance, the club received the equivalent of Â£ 157,500 a year from Sports Direct under Ashley.
I’ve looked at this before and to be fairâ¦ when Mike Ashley took over the club in 2007 he wasn’t really hiding why he was doing it, his people told Sir John Hall the main reason for doing it was to promote and grow its Sports Direct retail empire around the world. With Premier League TV offerings both domestically and abroad, this is a perfect opportunity to get a sports retailer’s message to the masses.
No Newcastle fan at the time, however, realized how horrible this would be a one-sided relationship …
Back in May 2020 when Newcastle United 2018/19 official accounts were made public, they included this:
âThe group achieved sales, including stadium advertising revenue, of Â£ 1,113,000 (2018: Â£ 385,000)â¦ to the Frasers PLC group (formerly Sports Direct International PLC) and subsidiary companies (” Fraser group “) related to Mr. MJW Ashley. These transactions took place on normal commercial terms.
So for the 2018/19 season Sports Direct / Frasers Group paid a total of Â£ 1,113,000 to Newcastle United for stadium advertising and other things “on normal commercial terms” and they paid 385,000 Â£ for the same in 2017/18.
Mike Ashley is telling the truth, at least in part, about Sports Direct and the payment for advertising at St James Park, as well as other services provided.
Going back to Friday July 26, 2019, Mike Ashley said in Sports Direct’s accounts:
âIn the current year and the year before, in the normal course of business we have been charged Â£ 1million per season for advertising rights while Newcastle United are in the Premier League, this is covered in the note to related parties in the financial statements.
âFor the football season starting in August 2019, the Sports Direct group will be charged Â£ 2million for advertising rights.
“Sports Direct still sees this as value for its shareholders.”
When Newcastle United’s 2019/20 accounts were finally made public, they stated under Related Party Transactions that: ‘The group [Newcastle United] achieved a turnover of Â£ 141,000 [2019: Â£1,113,000] and bought goods worth Â£ 594,000 [2019: Â£1,057,000]of Frasers Group PLC and subsidiary companies (âFrasers Groupâ) connect with Mr. MJW Ashley. ‘
Thus, while in the NUFC 2018/19 accounts, he referred to: “The group achieved sales, including advertising revenue in the stadiums, of Â£ 1,113,000â¦ â but in the NUFC 2019/20 accounts released in August (2021), there was not even any specific reference to anything paid for advertising, just that Newcastle United ‘made Â£ 141,000 in sales’ to the group. Ashley Frasers.
So when it comes to what Mike Ashley and Sports Direct (Frasers Group) actually pay, if any, to Newcastle United for advertising, this is very rarely, if ever, clearly stated in the accounts. With what Mike Ashley claimed to happen / did happen, it’s impossible to back up what the accounts show. Ashley said Â£ 2million would be paid by Frasers Group / Sports Direct for advertising during the 2019/20 season and yet the accounts do not mention any money paid for advertising in related party transactions.
However, official NUFC 2018/19 accounts showed that Mike Ashley may be telling the truth in Sports Direct’s accounts regarding the Â£ 1million payment to Newcastle United for the 2018/19 season (although this was included in an overall turnover of Â£ 1,113,000 we cannot know for sure) BUT he also stated that Â£ 1million was paid in 2017/18 and it was not True, it was only Â£ 385,000 (total sales figure, which would have included any advertising money paid) as the official NUFC accounts show up.
The relationship between Sports Direct and Newcastle United has been largely a case of smoke and mirrors. A tangled web totally lacking in transparency and even sometimes truth.
As you can see below, the club’s own accounts for 2014/15, when published on April 14, 2016, indicated that nothing had been paid that season or previously by Mike Ashley’s Sports Direct, but that the NUFC was ‘in the process of agreeing an arm’s length rate for these services’â¦
However, the accounts for the next two years show that nothing was actually paid, just that the âadvertising and promotion servicesâ were provided for nothing as usual.
To get a confirmation of the full picture in terms of Sports Direct’s ‘advertising and promotional services’ provided by Newcastle United, here are the references to these in the previous four NUFC Annual Accounts prior to these 2018/19.
On April 14, 2016, when the 2014/15 Newcastle United football accounts were released, they included:
âDuring the current year and the previous year, advertising and promotional services were provided to Sports Direct International, a company associated with the ultimate owner of the company, Mr. JW Ashley.
No consideration has been paid by Sports Direct International for these services to date, but Sports Direct International and the Company are in the process of agreeing an arm’s length rate for these services and the Company expects to receive payment for these services. services in the future.
On April 11, 2017, Newcastle United’s 2015/16 football accounts were released which included:
“During the current year and the previous year, advertising and promotional services were provided to Sports Direct International PLC, being a company associated with the ultimate owner of the company MR MJW Ashley.”
On May 22, 2018, Newcastle United’s 2016/17 accounts showed:
“During the current year and the previous year, advertising and promotional services were provided to Sports Direct International PLC (” Sports Direct “) and its subsidiaries, being companies associated with the ultimate owner of the company Mr. R. MJW Ashley.
On April 18, 2019, Newcastle United’s 2017/2018 accounts showed:
âDuring the current and prior year, advertising and promotional services were provided to Sports Direct International plc and its subsidiariesâ¦ associated with ultimate owner, Mike Ashley.
“Following the end of the year, an agreement has been put in place whereby (NUFC) will receive payment from Sports Direct for stadium advertising.”
Then to assert that stadium advertising and other services provided to Sports Direct by Newcastle United are now carried out “on normal commercial terms” and at market rates paid, was also certainly laughable:
Sports Direct doesn’t just run a few billboards around St James Park.
What about the giant horrible advertisements plastered at the top of the bleachers?
Or the giant screen which is massively used to promote Sports Direct and associated brands?
The reality is that Sports Direct has effectively sponsored the stadium for over 14 years. There is more Sports Direct at St James Park than any other club in England gives to a suitable stadium sponsor (for a fee).
Advertising in the stadium is only part of the overall / overwhelming promotion of Sports Direct anyway.
At every NUFC press conference, SD is important, every time players are signed, the SD mark is exposed, every time the training ground is shown in photos / footage, SD billboards are almost always guaranteed to be in the plans, while the club’s official website is SD compatible as well.
If an appropriate market rate were paid by Sports Direct, it would be well over Â£ 2million, not to mention the fact that absolutely nothing was paid in the first decade of the “partnership” … as well as everything. what has been paid in recent years, if anything sometimes!
Ironically enough that we look back at this shameless behavior by Mike Ashley for a decade and a half that is still going on with these clauses now SD advertising within SJP … when “related party transactions” hit the headlines. like the rest of the Premier League is trying to prevent the new owners of the NUFC from investing too much money in Newcastle United through other related businesses !!!
Anyone who wants to wonder why Newcastle United weren’t instantly transformed overnight by the new owners must be wondering what an absolute mess Mike Ashley (and Steve Bruce when it comes to pitch issues) left behind these clauses legal tricking new owners into continuing their minimal ad budget (if any) is just one of the issues they need to tackle.