Money Matter$

More bad news for Newcastle

Sports Direct profits fall a whopping 91 per cent

Some fine Sports Direct merchandise

It certainly seems to be raining shit on Newcastle at the moment. Not only do they prepare themselves for the forthcoming Championship season with an uncertain management team, a restless squad and a dreadful away strip, but owner Mike Ashley has taken a fiscal pounding thanks to his underperforming sportswear chain.

Sports Direct, the company in which the rotund businessman owns a 71 per cent share, has suffered a 91 per cent fall in pre-tax profits. Earnings fell from £118.9m to £10.7m this year, even though revenues topped £1bn and sales were up 5.1 per cent.

The huge downturn is a result of the collapse of Icelandic bank Kaupthing Singer & Friedlander (KSF) – the very same organisation that ruined former West Ham owner Bjorgolfur Gudmundsson. The collapse caused the sports retailer to write-off a staggering £53.1 million of shares, which is an awful lot of hoodies and baseball caps. The Times explains:

The write-down arose because the shares were held on Sports Direct’s behalf by KSF, and partly financed by the now stricken Icelandic bank. When KSF went into administration on October of last year, the shares it bought on behalf of Mr Ashley were frozen.

Sports Direct said it was “in dispute” with KSF’s administrators, Ernst & Young, as to the true ownership of the shares. But, while that battle continues, the retailer said that it had to take account the fact that it did not have full control over the shareholdings.

Sports Direct finished the financial year with a net debt of £431m, and shareholders were delighted to hear that their final dividend has been scrapped in order to save £21m.

While the fall in profits is devastating news for Mr Ashley, it could be viewed as positive news for the Toon Army. With so few pennies lining his coffers, the maligned owner could be forced to accept a much lower offer for the club in the very near future…

8 responses so far
  • jim // July 16, 2009 at 2:19 pm

    i agree tho-it has to give ashley a push as to speak lol

  • jim // July 16, 2009 at 2:21 pm

    so-you have contradicted what you said in the headline” More bad news for Newcastle” and now in the same breath are saying its good news for newcastle? ? erm i detect someones not doing their job properly lol

  • Ryan Bailey // July 16, 2009 at 2:38 pm

    jim, this post is about bad news for Newcastle, but in the last paragraph I have given a reason why this bad news may actually be perceived as good news.

    After all, Newcastle fans need their clouds to have as many silver linings as possible at the moment.

  • jim // July 16, 2009 at 3:12 pm

    but its not bad news at all is it? thats my point !and yours!

  • jim // July 16, 2009 at 3:36 pm

    Ask the Newcastle supporters, they will tell u how happy they are if its going pair shaped for ashley-after what hes done to the club? like i said…. your story is wrong

  • David Allison // July 16, 2009 at 3:53 pm

    You’re probably right, Jim, but “Good News” and “Newcastle” don’t go together well when making attention-catching headlines. C’mon Ryan, don’t you start accumulating these type of Newcastle stories – there’s PLENTY to go around, I’m sure you’ll agree…

  • David // July 16, 2009 at 5:14 pm

    way to be a dog with a bone jim.

    there becomes a point in time where you feel sorry for ashley. sure he obviously was a poor club owner, but who’s business goes from £118.9m to £10.7m? when it rains it pours, evidently.

  • Noel Hopper // July 16, 2009 at 7:21 pm

    This is actually very good news for newcastle but hardly unexpected as in a recession who wants a new shirt over food on the table.

    This might just force Ashley to sell much quicker. I do hope so.

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