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MIKE CRASHLEY; EXCLUSIVE Tycoon loses pounds 300M in a BET on HBOS shares.

Byline: By ADRIAN BUTLER

FOOTBALL tycoon Mike Ashley has lost pounds 300million this week in a BET on crisis-hit bank HBOS.

The Newcastle United owner watched helplessly as HBOS shares plunged in value on Tuesday and Wednesday under sustained attack from speculators.

Ashley made his mammoth bet in March on HBOS's share price when the price was just under pounds 6.

He gambled that the shares would go UP and put down pounds 50m - a 10 per cent deposit of the total HALF A BILLION pounds he was gambling.

The terms of the bet meant that for every penny HBOS's share price went up Ashley made pounds 800,000, and for every penny it went down, he lost the same amount.

Betting on the performance of shares - financial spread betting - is a way of playing the markets while avoiding capital gains tax.

High-rolling gamblers predict what will happen to a firm's share price and can make millions if they get it right.

But if they get it wrong and the shares move in the opposite direction, they end up having to pay fortunes to the financial bookmakers who take the bets.

On Wednesday, as the world reeled from the collapse of US bank Lehman Brothers and insurer AIG, HBOS shares went into freefall amid fears about dodgy debts.

Ashley lost pounds 100m in just one hour as the shares plummeted to an all-time low of 88p.

When trading closed for the day after the price rallied slightly, Ashley had lost pounds 50m in a day, with the world economy in meltdown. He would have been required to wire cash to betting firm IG Index to cover the loss.

The pounds 50m hit took Ashley's loss on his HBOS punt to the mind-boggling total of pounds 380million.

Amid the Lloyds Bank rescue of HBOS, the share price recovered steadily on Thursday and Friday to pounds 2.22, but that still left Ashley pounds 300m down.

And as he was losing millions, Newcastle's owner - whose wealth has been estimated at pounds 1.4billion - was also struggling to sell the club for his asking price, potentially putting him out of pocket by another pounds 100m.

Ashley decided to quit Newcastle after he was blamed by angry fans for manager Kevin Keegan's exit earlier this month. He has been in Dubai trying to sell the club for pounds 400m - but offers so far have valued it at only pounds 200m. Ashley said of his gambling loss at the time: "It is what it is. Unfortunately every morning I get up, I don't always back the winner."

A source close to the businessman said: "Mike has had the week from hell. He was complaining he would be left disastrously out of pocket from Newcastle. Then he is being stalked by this bet, which is killing him financially."

Spread-betting expert Malcolm Pryor said: "I've never heard of a loss as big as this.

Anyone could have seen the way the financial market was going this week - what made Ashley think HBOS would be the exception? Ashley looks like he's made the classic poker error - he knows he has a bad hand but he won't get out of the pot."

His losses began with pounds 129m in March, then grew to pounds 200m by July. But his real problems hit last week, when he told pals: "I've lost pounds 300m this week."

Ashley has admitted he loves gambling, spending many nights in the exclusive Fifty casino on St James Street, Central London.

"Many of the most successful people I know are gamblers," he said. "When you get up on Monday morning you are in the risk business. But there is a fine line between an entrepreneurial investor and a gambler.

"People say: how do you play poker? My answer is 'all in' - I've always been the same."

FORTUNE FROM SPORT EMPIRE

MIKE Ashley left school at 16, started his Sports Direct chain of shops in the 80s and now has more than 400 stores.

He made pounds 929million last year by floating the firm on the stock exchange and was ranked 54th richest person in the UK. He gave wife Linda pounds 50m when they split in 2003.

WHAT IS SPREAD BETTING?

IT'S taking a bet on whether shares in a company will go up or down. You don't buy the shares - you just gamble on what you think will happen to them.

What's the point of that?

If you get it right, you can make vast profits without paying capital gains tax - 40 per cent for top earners.

How come there's no tax?

Because spreadbetting is classed as gambling, all profits from which are exempt from tax.

If you get it wrong?

The gambler OWES the betting firm. Experts tell punters not to bet more than one per cent of their wealth.

And you can bet on the shares going down?

Yes. It's the same as "short selling" - where the more a company fails, the better it is for speculators.

Can it harm the economy?

Yes. If there is a rush of bets on a company going down, it could lead to investors rushing to sell shares in the REAL world of the markets - and, that can be disastrous for its ordinary workers and customers.

adrian.butler@sundaymirror.co.uk

CAPTION(S):

Big spender... Ashley at a charity fashion show; How HBOS shares plunged
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Publication:Sunday Mirror (London, England)
Date:Sep 21, 2008
Words:898
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