News broke on Tuesday that hedge
firm Hargreave Hale had sold 4,000,000 shares at a value of £853,000 to a
‘mystery buyer’.
Immediately Keith Jackson
presumably got on the blower to Dave King who disappointedly conceded he was
not the customer in question. No, yours truly was led to believe it was further
shares being snapped up by Mike Ashley, but without being able to substantiate
this I could not go public with it.
It was confirmed yesterday by the
Club that Newcastle
owner Ashley had indeed bought those shares, taking his stake to 8.92%, and
making him second only to Laxey Partners in terms of numbers owned, and pushing
Sandy Easdale down to third.
To be exact, Ashley, through his
MASH holdings fund bought by proxy through yet another hedge fund in BNP
Paribas Arbitrage SNC, purchased 4,265,000 shares.
His overall number is 7,265,000.
So, getting away from the
numbers, let us try to examine why Ashley, a multibillionaire (reputed wealth
at just under £4B) who already owns English giants Newcastle United, is
interested in owning Rangers.
The fact is it would be more of a
puzzle as to why he was not
interested.
To begin with, since he became
the major shareholder at Newcastle,
they have won absolutely nothing. The club’s success was in the 90’s, during
that thoroughly entertaining tussle between Keegan and Ferguson. But since then, the Geordies have
failed to make a single final, far less win anything. They did have a decent
run in 2013’s Europa League, making the quarter-finals, no less, but the fact
is big football clubs’ major income is prize money. And to that end Newcastle have failed to
secure a bean in Ashley’s entire tenure.
Secondly he is a very, very
unpopular man in the north. Newcastle
supporters have never especially liked him, and downright began to hate him
after the ill-fated attempt to rebrand St James’ Park to the ‘Sports Direct
Arena’. It essentially led to ‘Ashley Out’ banners and it was fair to say
Ashley was no longer the toast of Tyneside. We will not even touch on that
‘pint’ episode.
But why Rangers? Well there
really are a lot of reasons.
First off, Rangers are in a low
place right now. Shares are going for a mere 20p, the football is ghastly, and
supporters are restless. The Club is currently stuck in the Championship with no
guarantee of promotion, and season ticket renewal levels are at an all-time
low. Ibrox is struggling to command crowds over 40,000 these days, even for the
bigger matches. You may ask ‘why would that encourage a buyer’.
Well it really is simple: Rangers’
potential global stock is gigantic, a Club with a massive fanbase – we saw
pre-season at tiny college grid iron pitch-clad stadiums for the friendlies
where the stands were lined with blue tops. Even in small American towns we had
barely heard of, Rangers fans filled the ground.
So when better to buy an ailing
‘fallen’ giant than when it is as cheap as chips, will only cost you a few
million at tops (the guy has almost 10% at barely £2,000,000) and when it is
back where it belongs your ‘pennies’ have become pounds.
Let us not forget just how good
Ashley is at business and just how valuable Rangers potentially are. His Sports
Direct brand, founded by himself as just a small shop, has grown to a
multi-billion empire. This guy, for all his personality defects, knows how to
turn something into big money. Meanwhile Rangers, as I blogged some months ago,
are at least £40M down per season thanks to loss of ST revenue, TV revenue, SPL
prize money & CL participation cash.
In short, Newcastle will never win the English Premier
League, nor will they ever get into the Champions League again. Indeed, they
may get relegated into the English Championship next season. With the right
captain at the helm, Rangers could actually be challenging for the SPL within a
few seasons and be back in the Champions League within a similar timescale.
Bluntly, Rangers are a back-door
into the CL and the money it entails (Something Newcastle will never achieve), while his own
cash will invest in the team to obtain a collection of players good enough for
that level. £100M is pocket change to the man, and he is the type of guy who
knows a good deal when he sees it. Add to that the increased revenue from
either winning or coming second in the SPL, the increased ST numbers (trust me,
they will go back up again), and the increased TV money and the turnover will
look much, much better.
He, simply, is buying Rangers
slowly, methodically, and carefully, while the Club’s stock is cheap and low,
and by the time he has fully invested and the Club is once again profitable, at
the top and in the CL, he is making big cash.
Yes, it is all about the money,
and yes, Ashley is no big Rangers fan. But Rangers need a businessman like him
capable of making unpopular decisions for the good of the Club.
Fans cannot argue ‘they have
never heard of him’ or that he is ‘a shady character’ – Ashley is pretty much
WYSIWYG.
And it is not always especially
pretty or pleasant. But damn, it is effective.
NB: Passage referring to lack of finals or CL was meant to specify during Ashley’s tenure, not a blanket period since Keegan left. Apologies for ambiguity.