Newcastle United the new goal for investors

August 23, 2006
NEWCASTLE United has become the latest English Premiership football club to attract investor interest, with a Jersey-based investment company admitting it is considering an offer.

Shares in Newcastle jumped almost 10 per cent after the Belgravia Group, a little-known private company, confirmed it was "examining the potential opportunity" of acquiring the club.

Sir John Hall, the local entrepreneur who controls about 28.8 per cent of Newcastle United, has previously indicated he would like to sell his stake and in June he revealed talks with Polygon, a US hedge fund.

But Freddy Shepherd, Newcastle's chairman, also owns about 29 per cent and is understood to be reluctant to sell.

Earlier this month Randy Lerner, a US businessman, had a pound stg. 62.6 million offer accepted for Aston Villa - like Newcastle, a well-supported club that has failed to achieve success on the pitch for many years.

Richard Hunter, head of British equities at stockbroker Hargreaves Lansdown, who last week predicted that the more marketable brand of Newcastle was likely to be one of the next acquisition targets, said the sector had come back in vogue this year for a number of reasons.

"There is a perception that players' wages have started to plateau, record television football rights have been negotiated and the World Cup has generated interest," he said.

In its most recent full-year results for the year to July 2005, Newcastle made a small pre-tax profit of pound stg. 16,000 on turnover of pound stg. 87 million. However, the company is expected to report a loss this year after its failure to qualify for lucrative European competitions last season.

Belgravia, which also has offices in London, is backed by a group of wealthy investors and chaired by Duncan Hickman, formerly a fund manager at Liberty Ermitage. The company has investments in telecommunications, marketing and management services, as well as an asset management subsidiary.

Wealthy businessmen have poured hundreds of millions into British football assets in recent years. The money has inflated salaries and transfer fees but successful returns have been elusive, even for the richest clubs.

Last year Newcastle United finished seventh in its domestic league and has also qualified for European competition this year.

Source: The Australian