Ashley wants to execute strategy for buying young talents – and Benitez must agree

12 March 2019

Mike Ashley ownership Newscastle Benitez new strategy
Photo: Getty Images Mike Ashley, the owner of Newcastle United, wants to install a new strategy based on buying and selling young English talent. Could popular manager Rafa Benitez work under such a strategy?
  • It is believed Ashley wants to change the governance in the club – diluting transfer-power from Benitez.
  • The Newcastle-owner is inspired by Arsenal in their Wenger-era. He believes the strategy has already proved itself.
Martin Hardy hardy@offthepitch.com

Mike Ashleys decision to stay in control at Newcastle United will have huge ramifications for the financial direction of the club and could yet have repercussions for the position of manager Rafa Benitez, offthepitch.com understands.

Ashley, the owner of Sports Direct, announced in October 2017 that once again he was looking to sell a business he had bought without undergoing due diligence in 2007 for £133 million.

“Newcastle United requires a clear direction and a path to a bright and successful future,” a club statement read. “A process will now commence of identifying new ownership for the club that will be capable of delivering the sustained investment in and dedication to the club that is necessary for it to achieve its ambitions.”

Only two names emerged in the following period, Amanda Staveley, a British businesswoman, whose interest Ashley would eventually dismiss by another club statement, which he authorised, that said, “Attempts to reach a deal have proved to be exhausting, frustrating and a complete waste of time.”

More recently, Peter Kenyon, the former Manchester United and Chelsea chief executive, failed in his attempts to get a consortium together. Ashley, who wanted a price believed to be in the region of £280 million, has become so exasperated by the whole process and the cost of lawyers and legal process that he is now no longer looking for a buyer.

Cash is king

Instead the club, which accounts for 3 per cent of his business interests, is now planning for life with Ashley very much at the helm.

Ashley has two loans within the club; a long-term one that stands at £111 million, largely through the debt he encountered after purchasing the club off the Hall family and Freddy Shepherd, and a short-term loan. In the last accounts published for 2016-17 that stood at £33 million, but Ashley took a proportion of that back in the summer of 2017, although the amount will not be revealed until the accounts for 2017-18 are published in two months' time.

Newcastle are also one of few clubs who still insist on paying transfer fees in full up front, rather than the staggered payments used by rivals

During the club’s season in the second tier of English football in the 2016-17 season, Ashley gave the club a loan of £15 million in December 16 for running costs. The Newcastle owner’s financial philosophy at the club is very much that ‘cash is king’. If Newcastle do not have money in the bank, they will rarely be major players in the transfer market.

To that end, Newcastle had to use their overdraft facility with Barclays to fund the record signing of Miguel Almiron in January 2019 for a price that could reach £20.7 million.

Newcastle are also one of few clubs who still insist on paying transfer fees in full up front, rather than the staggered payments used by rivals. Ashley believes this helps the club secure better deals.

What Ashley also firmly believes is that Newcastle’s recruitment model should revolve around finding young talent throughout the globe, developing them and then selling them for a profit. He is said to have admired the way Arsenal recruited under Arsene Wenger and this was very much Newcastle’s policy before Rafa Benitez became manager in March 2016.

It is largely forgotten, but that Premier League season, 2015-16, Newcastle were the third highest spenders in England. They signed four players in the summer transfer window - Gini Wijnaldum, Florian Thauvin, Aleksandar Mitrovic and Chancel Mbemba -and a further three in the winter window in January - Andros Townsend, Jonjo Shelvey and Henri Saivet.

Crucial part of negotiations

The total outlay was around £76 million, by some distance the biggest spending burst during Ashley’s time in charge. Crucially, the average age of the seven players was just 22.6. They were all scouted by Graham Carr, who left the club at the behest of Benitez.

Five of those players have been sold, for a total of £78 million. Shelvey and Saivet (although on loan at Buraspor) are still Newcastle players.

Wijnaldum was sold for £25 million. Previously, when the model worked, Moussa Sissoko, who was bought for just £2 million, went to Spurs for £30 million. This is the model Ashley became fixated with, and the model which, now that he is very much back in control, will direct the club back towards. It will be a crucial part of negotiations with Rafa Benitez about a new contract, which have been put on hold until the club’s Premier League safety has been secured.

Benitez, unhappy with the size of spending in all four transfer windows since promotion, will be told there is a need for further compromise as the club looks to increase the potential profitability of its playing staff.

In the last round of talks, in December, Benitez turned down the option of a short-term, one-year extension. His £6 million-a-year deal, expires in the summer, and there was interest from Leicester City before they appointed Brendan Rodgers. Benitez was not prepared to break his contract at St James’ Park.

Benitez was handed control of Newcastle’s recruitment following relegation in 2016. The club signed 12 players and spent, before agent’s fees, in the region of £60 million, whilst recouping £87 million from sales. Significantly, only three of the players bought that summer have been sold, Matz Sets, Grant Hanley and Daryl Murphy, for a combined total of £9.5 million.

Blocked two deals

Ashley wants the club to recommit to its previous policy of signing young footballers with potential. When Benitez signed his new contract in 2017, he was allowed the final say in incoming players. Newcastle tried to sign two young players last summer in potentially record-breaking deals, and both were blocked by the former Real Madrid manager.

Ashley and the Newcastle board will want assurances that Benitez is prepared to alter his approach in the transfer market before any new deal is agreed. Newcastle signed seven players (two on loan) in the summer of 2018, Federico Fernandez, Salomon Rondon, Yoshinori Muto, Fabian Schär, Kenedy, Ki Sungyeung and Martin Dubravka, with an average age of 27. Indeed, four of those players were 28 or above.

That policy will end this summer. Benitez and Ashley reached compromise in January to sign Almiron from Atlanta United, who turned 25 last month. Benitez, unhappy with the size of spending in all four transfer windows since promotion, will be told there is a need for further compromise as the club looks to increase the potential profitability of its playing staff.

Benitez himself wants assurances over budget and also the further development of the club’s training ground. It suggests there is still some distance to be travelled for a new contract to be agreed.