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Last Updated: Thursday, 24 May 2007, 09:49 GMT 10:49 UK
The two-man tussle for Newcastle United
By Will Smale
Business reporter, BBC News

Freddie Shepherd
It is not yet known whether Mr Shepherd will sell his 28.1% stake

As billionaire businessman Mike Ashley launches a 133.1m takeover offer for Newcastle United, whether his bid succeeds or fails lies in the hands of one man - Freddie Shepherd.

Mr Shepherd, Newcastle's infamously blunt chairman, owns a 28.1% stake in the club - enough to block Mr Ashley's bid for full ownership.

And with Mr Shepherd yet to declare his intention, it remains far from certain whether he will agree to sell up.

Mr Shepherd could simply refuse to budge, meaning that while Mr Ashley will probably be able to gain majority control, he would not be totally in charge, and Mr Shepherd would remain a major player at the club.

'Geordie Abramovich'

Amid reports that Mr Shepherd was in hospital yesterday recovering from pneumonia when he first heard the news of Mr Ashley's shock bid, the Newcastle supremo's recent comments on the possibility of a takeover have been somewhat contradictory.

The larger Premiership clubs have become seen as potential cash cows
City analyst Richard Hunter

Last week, Mr Shepherd - who takes a salary of more than 500,000 a year from Newcastle - claimed that the club was "impossible to buy", yet he has also said he would be happy to sell to a "Geordie Abramovich".

This is, of course, a reference to the nickname of people from Newcastle and Chelsea's Russian owner Roman Abramovich, who is worth an estimated 15.7bn.

And while Buckinghamshire-based Mike Ashley is not a Geordie, he is a billionaire, albeit with a fortune of just 1.7bn.

Harry Philp, managing director of Hermes Sports Partners financial advisers, believes that despite any vocal indignation, Mr Shepherd will eventually have to sell up to Mr Ashley.

"I don't think Shepherd will sell his shares willingly, but I also don't think he has got a choice in the end," says Mr Philp.

"Otherwise he may end up sitting there with a minority stake that no-one else wants to buy."

Spate of takeovers

But with apparently little previous interest in football, let alone Newcastle United, why has Mr Ashley paid more than 55m for a 41.6% stake in the club from Sir John Hall, with plans to go on and buy it all for 133.1m?

Mike Ashley
Mike Ashley was not thought to have much interest in football

Mainly because Newcastle United represents a great investment, says City analyst Richard Hunter of Hargreaves Lansdown.

"The recent re-negotiation of overseas TV rights, along with potential merchandising forays into other countries, has meant that the larger clubs have become seen as potential cash cows," he says.

This has led to a spate of takeover activity in recent years, with billionaire investors, mostly from overseas, swooping for everyone from Manchester United to Liverpool, Aston Villa to West Ham.

And while Newcastle may not have won any silverware since 1969, and its form has languished in recent years, the club is one of the best supported and most lucrative in the Premiership, despite it making a loss last year.

With sell-out crowds of more than 50,000 at every home game, and fans determined to kit themselves out in the club's famous black and white strips, Newcastle is Europe's 13th wealthiest club by annual revenues.

Past bidders

Other analysts point to the three-way synergy that buying Newcastle would give Mr Ashley.

His company Sports Direct is one of the UK's biggest sellers of football tops, and earlier this year Mr Ashley bought a 3% stake in Newcastle's kit-maker, German sportswear giant Adidas.

Newcastle manager Sam Allardyce
Newcastle has high hopes under new manager Sam Allardyce

And a more successful Newcastle under new manager Sam Allardyce would mean yet more sales of the Magpies' black and white strips.

Yet whether Mr Ashley gains full control of the reigns remains with Mr Shepherd.

And with analysts blaming Mr Shepherd's refusal to budge for the failure of two possible bid approaches earlier this year, from investment fund Belgravia and hedge fund Polygon, Mr Ashley may have some persuading to do.

Shepherd shocked by Newcastle bid
24 May 07 |  Newcastle United
Newcastle get 133m buyout offer
23 May 07 |  Business
Profile: Mike Ashley
23 May 07 |  Business
Sports Direct founder earns 929m
27 Feb 07 |  Business
Belgravia ends Newcastle Utd bid
19 Jan 07 |  Business
Polygon ends Newcastle bid talks
04 Jan 07 |  Business

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