THE full financial picture of Newcastle United when billionaire owner Mike Ashley took control has been revealed in the club’s accounts.
Massive sums were spent on failing to get casino plans off the ground (£5m) and sacking manager Glenn Roeder (£1.1m), and a staggering £1.1m was paid to director Douglas Hall as a golden handshake on his departure from the club.
The accounts say Mr Ashley had to plough £75m into the club to keep it afloat.
Further expenditure included nearly £3m spent preparing the club for previous takeover bids that never happened – and refinancing the business before the buyout was completed.
The full picture for the last year of the Shepherd and Hall families’ reign at the club shows large debts, a worryingly large wage bill and poor footballing performances sending gate receipts down and hurting the club’s bottom line.
The accounts show former chairman Freddie Shepherd was being paid £500,000 a year, along with private health benefits, before being replaced by Chris Mort. Compensation paid to him will show up in next year’s accounts.
In total, Douglas Hall was paid £1.62m by the club, which included his compensation, his £448,654 salary and a private healthcare allowance. Chairman Chris Mort said in a statement: “Team performance in the 2006/07 FA Premier League fell below the level that the board of directors and the supporters regard as acceptable, culminating in a disappointing 13th-place finish and no European football in 2007/08.”
Mr Mort outlined the club’s ambition as “securing its position among the top teams in England and competing in Europe on a regular basis”.
He goes on: “Following the changes in ownership and team management, the group has invested significant sums in the playing squad and infrastructure of the club.”
The accounts show that despite the club’s earnings from gate receipts and merchandise rising on the previous year, it made a loss of £32.9m, more than £20m greater than in 2006.
The club’s wage bill was £62.5m, up more than £10m from 2006, due to the signing of Damian Duff, Obafemi Martins, Joey Barton and David Rozenhal. That meant 72% of the money generated by Newcastle United is paid out in wages – a long way from the 50% level recommended by football finance experts.
And the figures would be have been even worse had the FA not paid £6.7m in compensation to the club after £17m striker Michel Owen was injured.
The accounts also state that the Magpies were in partnership with MGM Mirage. MGM paid £5m to the club for its stake in land next to St James’s. However, the terms of the deal were that this cash had to be paid back in January 2008 if UK gaming laws were not deregulated.