Profits tumble at Mike Ashley’s empire as Newcastle costs mount

Profits have more than halved at Sports Direct tycoon Mike Ashley’s empire, it emerged on Wednesday.

Pre-tax profits fell to £102.5 million for the year to the end of April 2017, down from £277 million a year earlier, according to freshly filed accounts at Companies House for his investment vehicle, Mash Holdings. It controls Ashley’s stakes in Sports Direct and Newcastle United.

Those profits were already down £520 million from the year before, as the retail tycoon suffered from the headwinds engulfing the High Street.

The profit fall was largely down to his football club, Newcastle United, which saw turnover shrink 30% from £131 million to £91 million as media revenue fell. Newcastle remain up for sale.

Sports Direct’s profits were also hit by higher foreign exchange costs.

The accounts show Ashley borrowed £907 million durning the financial year, which has since increased to £913.5 million.

The billionaire, who was beaten by a Canadian entrepreneur in a battle to buy music chain HMV from administration last week, said in the accounts he will continue to use the extra cash “to seek out profitable investments and development projects”.

He also pulled out of the bidding for Patisserie Valerie last weekend, just two days after he made a surprise bid for the collapsed cafés chain.

The accounts, which were lodged six months late, pre-date Sports Direct’s takeover of House of Fraser in August and Evans Cycles in October for £90 million and £8 million and Ashley adding Sofa.com to his retail empire this month for a “nominal sum”.

Ashley has kept the City guessing over his strategy. Some believe he is making a concerted effort to take over the High Street, while others believe he is attempting to make quick profits on opportunistic deals.

The accounts show while Ashley did not take a salary or receive a dividend last year, Mash spent £109 million buying back shares from shareholders. This potentially includes Ashley himself.

Sports Direct, listed on the London Stock Exchange, posted revenues of £1.7 billion for the 26 weeks to 28 October 2018, up 4.6%. Pre-tax profits fell 26.8% to £64 million from £88 million.

Ashley could not be reached for comment.