I don’t have any clue whatsoever if Newcastle United are about to be bought by a Chinese consortium, or whether there’s going to be a smaller investment in the club. In this regard I suspect I am no different to any of the sports writers and alleged financial gurus that have waded in on the topic since Newcastle declined to deny the most recent rumours.
What I do have that those people seem to lack, what most Newcastle supporters I talk to seem to share, is a healthy dose of scepticism, both in relation to the actions of Mike Ashley and the analysis of his actions that is the bread and butter of content creators during a long quiet summer without football.
What we know is that Mike Ashley has decided to do some fishing to see if he can find anyone willing to bite at the “offer” of investment in Newcastle United. We’ve seen paper talk that this was on the table many times in the past and that’s how we know it’s not entirely media speculation this time, because the last time the Telegraph writer Luke Edwards wrote that Ashley was looking to sell, Newcastle United banned him. Edwards has made exactly the same claims this summer, after the ban was lifted, and there’s not been so much as a denial issued by the club.
Given that there’s clear substance to the claim that Ashley is open to a deal at this moment, those of us jaded by previous pronouncements of the same sort from within the club shrug our shoulders and wait until he’s actually got someone genuinely interested enough to make an offer. In the meantime though, it’s worth scrutinising some of the claims being made for what they are worth.
After Sky Sports broke the story, Edwards was the first journalist to provide some details on what he had been told was going on behind the scenes. The basic premise was that Ashley was “happy to share the responsibility of running the club, in return for the sort of significant investment that would greatly strengthen their player recruitment power.”
So, we are to believe that Mike Ashley’s plan is for some other investor to give Newcastle United lots of money to spend on players in the hope that it improves the club and makes lots more money for Mike Ashley.
Why would any investor seek to provide the funds and carry the risk of Mike Ashley spending their money unwisely? The man has already relegated the club twice at his own expense. Furthermore, why does billionaire Mike Ashley need seed money for his business from anyone else? Why would Mike Ashley hand over any of his business to someone to generate seed money? Especially to be spent on transfers which Ashley is well aware will often generate no return whatsoever but would cost him a large slice of his business.
Nothing about this notion makes any sense to me. When an investor buys shares in a business, they buy those shares from the shareholder. The only way it makes any sense is if Mike Ashley were to put the money received for his shares into his bank, in which case the club would see no increase in their spending power whatsoever.
If, having bought shares in the club, an investor was then going to be asked to finance player recruitment as well, none in their right mind would do it without sharing the liability with their co-owner. Either the business would collectively loan the money from a lender or each shareholder would be required to contribute their share to the coffers. But we know Mike Ashley is opposed to putting any more money into the club.
The fact is it’s always been Ashley’s aim that the club should be self-sustaining. He does not want the club spending more on transfers than it can generate from income, because that would make the club a money pit. Whether he has to put the money in or sacrifice a stake, the cost of buying players is not one Ashley is willing to bare.
Later in the week, a self-styled deal maker was pushing talks of two interested parties in the press:
Alexander Jarvis, chairman of Blackbridge Cross Borders – a company that has advised on several potential Chinese takeovers, confirmed the news of United’s willingness to sell had piqued interest in China. US groups are also interested.
“I have been contacted by two groups from Shenzhen since news that Newcastle are available came out on Monday,” he confirmed to the Sunday Sun.
Newspapers are happy to have someone like this hand them copy on a plate, so their bona fides are rarely questioned. Indeed Jarvis has appeared on the BBC World Service and on panels discussing Chinese investment in the European game, so he has been able to generate himself some authenticity and over 20,000 Twitter followers. However, there’s no evidence I can find that he’s ever brokered any deals.
Blackbridge Cross Borders has a sub-par website with untitled, dead links and a client section that can’t name any actual clients. Companies House lists them as having a low five figure debt and annual losses to match.
They frequently appear in stories that have stretched over 12 months of Southampton being bought by Chinese construction firm Lander. None of which have come to fruition as yet but always seem to have Jarvis claiming the deal is imminent. His primary area of expertise seems to be self-promotion and I’m taking his pronouncements with a large pinch of salt.
None of this is to say that Newcastle United is not an investment opportunity that Chinese interests are keen to exploit. But if it did happen, it would be an entirely different proposition to the Abramovic and Mansour endeavours at Chelsea and Manchester City respectively.
The driver behind the current wave of Chinese interest in European football is not necessarily to improve clubs here but to learn from them and improve the game at home. The Chinese government has decreed that they want to be a football super power by 2050. They’re planning 20,000 training centres and 70,000 pitches. Five out of the six biggest transfers in the last twelve months have been by Chinese clubs. Chinese businessmen looking to get onside with the government are throwing money at the game as part of the three decade plan. This is not LA Galaxy buying a few stars to take MLS up a few notches. This is state policy.
Getting inside access to clubs that have a long history at the top levels of the game will put the Chinese game on the fast track, they hope. Sharing and exploiting our training methods, academy system, scouting networks and commercial deals for example. No league in the world has been able to maximise global media coverage like the Premier League, a seat at that table is very valuable.
Investors might be willing to spend tens of millions to get that access and be a silent partner. I’m not so sure the setup Mike Ashley and Lee Charnley are running will convince anyone its something worth investing in replicating though.