Newcastle United and Sports Direct boss Mike Ashley’s personal investment firm’s profits nearly halved last year after a difficult period for both of his main assets.
Revenues at the billionaire’s Mash Holdings group rose by 2.4% to £3.03bn but pre-tax profits slumped by 47% to £278m in the year to 26 April 2016, as ticket sales fell at Newcastle over a “hugely disappointing season” in which the club was relegated from the Premier League while the retail chain he founded suffered a number of own goals.
Sales at Newcastle, which returned to the Premier League last month, slid to £131m from £132m last year as the average league home attendance at St James’ Park slipped under 50,000.
In a year when Sports Direct faced heavy criticism over treatment of its workers, 22% of employees left the business – mainly in its stores – up from 18.7% the year before. The company blamed a “tough trading environment” for poor earnings at the sports chain where Ashley is the majority shareholder via Mash Holdings.
Full-year pre-tax profits fell by 8.4% to £275.2m at the publicly listed chain last year after it was forced to discount to clear winter stock during unseasonably warm weather.
In a difficult year, the documents filed at Companies House this week indicated that Ashley lent the group about £116m interest-free, and did not take a dividend or any pay cheque. Mash did provide a guarantee for a £50m overdraft with HSBC for the billionaire, however.
The accounts also show that matchday hospitality worth £101,000 was offered to the Ashley family over the year, down from £124,000 the year before. The accounts say the amount was paid in full by the end of the balance sheet, but does not clarify who settled the account.
A series of statements in the Mash accounts also show how closely Ashley’s business dealings are linked with his family relationships.
Mash states that it invested in an internet radio station, understood to be the billionaire’s son’s loss-making Radar Radio, and confirms the end of a deal with a firm called Barlin Delivery, owned by Ashley’s brother John.
Under a controversial arrangement, Barlin previously handled some of Sports Direct’s international deliveries to online purchasers. The financial watchdog is looking into Sports Direct auditor Grant Thornton’s failure to report the deal.
Michael Murray, the boyfriend of one of Ashley’s daughters who provides property consultancy services including finding and negotiating on sites for new Sports Direct stores and gyms, would not be paid any fees until September next year so that the company’s independent non-executive directors “have a sufficient amount of time to assess performance”.
The arrangement with Murray, whose fees are payable at the “absolute and sole discretion” of the non-executives who independently review performance twice a year, is seen as controversial by investors.
The Mash Holdings figures came ahead of another tough year of trading at Sports Direct. In July the listed retail group revealed a 60% drop in annual profits to £275.2m. Ashley blamed the fall in profits on the decline in the value of the pound against the dollar, which he said had a “significant impact” on the cost of buying goods overseas.
Ashley had not responded to a request for comment at the time of publication.