Newcastle Was Run On Hire Purchase By Shepherd


When Mike Ashley bought the club a year last summer, he found out Newcastle were still paying for stars that Graeme Souness and Glenn Roeder had brought to the club years before.

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Freddy Shepherd – ran the club on hire purchase – loans

Newcastle are still paying off the fees for Oba Martins and Damien Duff, brought in by Roeder, while the club have only recently cleared debts for our Spanish flop Albert Luque and the Turkish International Emre, brought in by Souness, and we’d be very surprised if we’ve paid off all the £17M to Real Madrid for Michael Owen.

The fees were paid via installments spread out over many seasons, simply because Newcastle never really had the money in the first place.

Of course we expect to hear from Freddy Shepherd within a few days saying this is nonsense, but we know the club was not run with any financial responsibility by Shepherd – we know that – otherwise we wouldn’t have been in the financial mess Mike inherited.

There are still payments to make on some of those transfers over the next two years, while the £11M from major long-term commercial deals, understood to be Northern Rock and Adidas, were spent up front by the previous regime.

These are not new revelations, but point to the suicidal way the club was previously run financially.

Llambias said today:

“We are trying to get away from dating so that we don’t have huge amounts of money going out.” “We are trying to pay up front.”

“People like Coloccini, Xisco and Gutierrez, which is just getting sorted out now – we own those players.”

“It’s like buying a car on HP but then it gets written off, but you still have to pay it.”

“That’s how the business was being run, they ran it on a credit.”

However, Llambias has vowed that Newcastle will be in the transfer market in the summer again, and we have a good idea who we’ll after, following some our failed advances in January.

With a number of players leaving in the summer who have huge wages, Newcastle should also be able to get the wage bill under control.

Derek added:

“There is £8M there and it will be spent in the summer.” “Mike isn’t afraid to spend money out of his own pocket.”

“Last year we lost £34m, this year we’ll lose £20m, and next year it will be around £7m.”

“But it still doesn’t mean that Mike won’t invest when he has to invest.” “We aren’t a selling club, we’re a buying club.”

“We are out there in the market.”

The £8M is what we made in the January transfer window.

We sold Charles for around £8M and Shay for £6M, and laid out £4M for Nolan, and £2M for Ryan Taylor, so we had around £8M net left.

It’s good that Kinnear will have that money to spend in the summer, plus any money he can get from selling some of the players he doesn’t want, like Geremi, Xisco, and possibly Smith and Enrique.

Viduka, Edgar and Cacapa will likely not be retained, when their contracts expire in the summer, and we don’t expect Michael Owen to stay, although the club wants to keep him.

Comments welcome.



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116 comments so far

  • ronaldeano

    Feb 10, 2009 at 2:53 PM

    Comment #1

    http://media.southparkstudios.com/media/images/1008/1008_jenkins.jpg

    Freddy Shepherd logging on to NUFC blog!!!

    🙂

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  • RyanToon

    Feb 10, 2009 at 2:54 PM

    Comment #2

    stardust, we await your great debate 🙂

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  • cicero

    Feb 10, 2009 at 2:56 PM

    Comment #3

    MA has probably saved the club from financial meltdown. If the previous bunch were still in charge we would be looking to do a Leeds. I know it’s frustrating after years of big name signings, but of the players we signed in the summer and the January window I think everyone is quite pleased with them. Unlike in the past where we’ve spent millions on players who turn out to be crap.

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  • ObaFan2

    Feb 10, 2009 at 2:58 PM

    Comment #4

    😆

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  • cicero

    Feb 10, 2009 at 3:00 PM

    Comment #5

    Communication has been the problem. I think most real supporters can see the sense in getting the whole club on a solid operational and financial footing. Keep talking to us.

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  • richyg01

    Feb 10, 2009 at 3:05 PM

    Comment #6

    I think part of challenging for ANYTHING relies upon strong financial foundations.

    If Mike sets the club up onto sound financial foundations then this gives a great starting point.

    Also, during the recent window, fans were like, if we sell so-and-so we will get £x Million to spend, and that clearly is not the case because that money is spoken for to pay off whichever repayments are due.

    Whereas with a sound footing, spending money that you have, you buy someone, the bank balance goes down, sell someone and it goes back up. No more virtual money and credit!

    I think Mike has a sound financial and business mind, sure he does’nt have a football mind but he is doing a lot of good work securing the future of the club and I personally think this is a giant leap in the right direction, especially in the current climate too!

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  • RyanToonsBrother

    Feb 10, 2009 at 3:05 PM

    Comment #7

    calm down wor kid its just a computer your talking to! So Stardust is part of the ashley fan club correct? then he is going dow, sinking fast into the abyss along with ashley and crew. from what the world has seen Ashley has took all of the geordies for mugs since around day 6 of his reign. If people want to walk around with rose coloured specs on then let them!! NUFC will be a BOLTON or FULHAM in no time at all!!!

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  • beyethegreat

    Feb 10, 2009 at 3:07 PM

    Comment #8

    would we realy have gone in to meltdown arent man u in 500 mil in debt from what iunderstand we were say 100 mil in debt

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  • Girth

    Feb 10, 2009 at 3:09 PM

    Comment #9

    ive got no probs with Ashley, im patient and understand that it will take time, just complete monkeys who think other wise. Ed- glad you wrote this, completly sick of people being negative towards Ashley when we so quickly forget what an absolute mess our finances were in before he came along, NUFC – because of the credit crunch- would be in serious danger of not existing if he hadnt come in!

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  • richyg01

    Feb 10, 2009 at 3:09 PM

    Comment #10

    I agree cicero COMMUNICATION is the key.

    Unless MA (or someone) comes out and says: “okay we are selling Xxxx and we will get £xM for him, £yM will go to paying of the outstanding debt for Yyy and £xM will be available to spend on another player.”
    The fans just assume that that cash is going into MA’s back pocket (or the casino), just tell us whats going on, thats all we ask!

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  • THE MAGPIE

    Feb 10, 2009 at 3:10 PM

    Comment #11

    5 years- i would be amazed if Ashley still owns the club in 5 years.
    Its not unusual to spread the payments for players over the length of their contracts-normal practice in fact.
    How the hell do they know that the club will make a 7m loss in 2010.
    If the club had more debt than at 1st thought then Mike should have paid 100m for it not 134m-what an idiot.

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  • stevep

    Feb 10, 2009 at 3:11 PM

    Comment #12

    the financial failings from the previous regime were alway sgoing to come back and bite us at some stage, the fact that Ashley didnt do due diligence says more about him than anything else but at the end of the day thats probably a good thing and explains why a number of other suiters pulled out.

    The trouble is that we don’t know if we can believe anything this management say and the fact that they come out after the transfer window shuts and say we’re a buying club hardly sits well.
    I suppose we have no choice but to wait until summer presuming we’re still in the premiership.

    Will Kinnear still be here in the summer, given his health I’m not sure we should allow it, the stress of running the toon is probably a lot higher than almost any other club in the land and I’m not sure we should be responsible for any further deteriation in kinnears health

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  • richyg01

    Feb 10, 2009 at 3:11 PM

    Comment #13

    Good call Girth, I agree, Brilliant Post Ed, its about time ALL fans were BEHIND the club, not against it!

    MA is a businessman, not a magician at the end of the day!

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  • THE MAGPIE

    Feb 10, 2009 at 3:13 PM

    Comment #14

    Can anyone explain Llambias 1st paragraph about dating??

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  • shearerbliss

    Feb 10, 2009 at 3:13 PM

    Comment #15

    Ed when it comes to transfer funds it does not work like that! I do not know why you and alot of fans think that we are in any diffrent situation than other clubs. Say Wigan are paying US in installments DOES it mean we have 8 mill to spend?
    We have made this mistake to much as fans, we sell milner for 12 mil so we have 12 mill to spend. Come on ED! the players, stadium and traing facilities are our assets, therefore the club is valued against that, so because we sell a car for £5 from our garage does it mean we can ot spend £2 of it on food!

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  • stevep

    Feb 10, 2009 at 3:14 PM

    Comment #16

    @beyethegreat – the difference with man u / liverpools debt is that they have the liquidity to service the debt. we’ve long spent our sponsorship money and our gate receipts just about cover wages which mean that any players bought i.e. Luque, Owen, Smith etc etc are bought by loaning money on high interest rates due to the fact that our capital assets don’t cover the cost of our debt

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  • Stardust

    Feb 10, 2009 at 3:15 PM

    Comment #17

    richyg01 – great post fella – and Ed thanks for this article – Ive been crying for it for a year! lol 😉

    At least I am persistant!

    Beye the great – Many U’s facility is costing them 200k a day interest!!!!!! and the terms are it could rise to 300k a day by the end of the Year! horrendous! Luckily they have that much turnover they are OK but as their facility draws to a close, is a repayment is demanded (they will actually owe almost 1billion by the end of this year) they are up the creek!

    Thats why Liverpoool are bing touted too -the leveraged buyouts are coming to haunt them a bit like happened in Italy 20 years ago.

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  • cicero

    Feb 10, 2009 at 3:16 PM

    Comment #18

    beyethegreat – Yes they did borrow £500 but again this was a structured loan based on future gate returns, Man U are run by business men who know how to operate in the financial world. Not the ‘run up the credit card to the max then take out another credit card when you see a shiny new player’ approach adopted by the previous board.

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  • beyethegreat

    Feb 10, 2009 at 3:17 PM

    Comment #19

    stevep

    surely though they shouldnt be that much better off?

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  • richyg01

    Feb 10, 2009 at 3:17 PM

    Comment #20

    shearerbliss

    Sure it doesnt work like that, but I think the whole point is reducing and clearing debts in order to make profits rather than getting charged interest on debts.

    The less debt you have, the less you have to pay out each month/year/season, hence that means that more of the gate receipts/player sales etc actually accumulate a sum of money for the club to spend, rather than just paying off our creditors.

    People seem to forget, sure you borrow say £17m for Owen, but by the time that sum is paid back to the creditors that sum is nowhere near £17m!

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  • Joseph

    Feb 10, 2009 at 3:18 PM

    Comment #21

    beye
    United are 600-700m in debt (from the takeover the yanks lumped the debt on the club) however the key difference between us and them when it comes to debt,
    1 united have huge income the biggest around
    2 united are very succesful so the money they get from that (cl etc) can go towards keeping the club going but if ever they failed to get to cl then they would be in serious bother money wise.

    When ma took over we weren’t sucessful (bottom half of table) and our finances were in the shi**er not a good combination.

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  • stevep

    Feb 10, 2009 at 3:19 PM

    Comment #22

    Am i on the right blog here!!!
    seems to be a lot of reasonable debate rather than a bunch of idiots slagging both the team and each other off.

    Long may it continue

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  • beyethegreat

    Feb 10, 2009 at 3:19 PM

    Comment #23

    anjd stardust i just read youre part aswell

    does that mean that man u could be well and truly feccked(plz be so)

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  • Stuart79

    Feb 10, 2009 at 3:19 PM

    Comment #24

    Now this is all that was needed by the club.

    Wasn’t that hard was it to explain a few things?

    It won’t appease some fans but I think the majority will accept it.

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  • bennytoon

    Feb 10, 2009 at 3:21 PM

    Comment #25

    ronaldeano- what a sad case you are. You have posted that picture 20 times today. It wasnt funny the first time. I bet you laugh though every time you post it. Dimwit!

    I see you have made a friend though today in the easily impressionable ryan (pecham)toon. Your like a poor mans version of the chuckle brothers. I tell you what would be funny is if you posted that picture again saying it was me. Oh how i would laugh.yawn.

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  • alextoon

    Feb 10, 2009 at 3:21 PM

    Comment #26

    Whats interesting his the chairmans stance on NUSC.

    I’ve said on here many times recently that whilst I obvioulsy share a lot of the same concerns as NUSC…they are not the voice of all of us and their tactics of small ‘rally’s’ and closeness with the press with regards to demanding meetings is very naive.

    If they had approached things in a less confrontational way they may have got to have that meeting with Ashley they wanted but for a group that holds NUFC at heart like we all do, and I do believe they do.

    But the way they have tried to gain publicity by using the tabloids and giving them the ammo needed to stir things up is behaviour that could only possibly lead to adverse publicity at the very least….at worst, cause a chain reaction of bad feeling to see us crumble and fall in to the lower leagues.

    Charging a membership fee, arrogantly assuming that our whole fanbase believed in their actions and getting cozy with media hacks that have in the past have slated our club…That’s not the way to go about things at all.

    I’d happily join a supporters group, we do probably need one. But not sure about NUSC.

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  • valle

    Feb 10, 2009 at 3:21 PM

    Comment #27

    BTW… I know Brian Johnson from AC/DC as well as Knopfler are NUFC fans, but what about Sting and Hank Marvin? they also come from the Newcastle area.

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  • richyg01

    Feb 10, 2009 at 3:21 PM

    Comment #28

    @ Beyethegreat

    No. it doesnt mean Man U are Feccked.

    As cicero (post 16) explained, it all depends on how the money is borrowed, our borrowing was in no way structured, it was very ad-hoc

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  • beyethegreat

    Feb 10, 2009 at 3:22 PM

    Comment #29
  • Joseph

    Feb 10, 2009 at 3:23 PM

    Comment #30

    beyethe great
    they could well be but they have a lot of sellable assets. Of coarse united aren’t the only club with large debts, in fact i think pool have until july to come up with the remainder of the money they owe

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  • RyanToon

    Feb 10, 2009 at 3:23 PM

    Comment #31

    for the THIRD time

    DOES ANYONE KNOW WHEN JOE KINNEAR IS OUT OF HOSPITAL

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  • beyethegreat

    Feb 10, 2009 at 3:24 PM

    Comment #32

    valle yes sting is a toon fanthough i am not sure he is really that passionate or perhaps trying to keep that away from his image or what?

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  • RyanToonsBrother

    Feb 10, 2009 at 3:24 PM

    Comment #33

    Friday wor kid

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  • Stuart79

    Feb 10, 2009 at 3:24 PM

    Comment #34

    I am however still sceptical after a comment like “were not a selling club”

    We’ve had to sell to buy for every player since Mike Ashley was here.

    Only time will tell I guess

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  • Pons Aelius

    Feb 10, 2009 at 3:25 PM

    Comment #35

    I’m a big believer in zero debt. I’m glad Ashley is balancing the books, but I understand that in football you HAVE to borrow money in order to fund transfer fees. You simply don’t make enough after expenses to fund multi-million spending sprees. I’m confident when the right player comes along, we’ll bid big enough (remember we bid £16m for Modric).

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  • Pons Aelius

    Feb 10, 2009 at 3:25 PM

    Comment #36

    Ryantoon – I have no idea mate. Sorry.

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  • beyethegreat

    Feb 10, 2009 at 3:25 PM

    Comment #37

    ryantoon

    i dont know

    joseph

    but players would be an asset so could they atleast drop down from where they currently are

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  • richyg01

    Feb 10, 2009 at 3:25 PM

    Comment #38

    RyanToon

    for the FIRST time

    YOU HAVE NOT ASKED THAT QUESTION ON THIS POST YET

    if you posted it elsewhere you should wait there for your answer instead of littering 3 different blogs!

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  • RyanToon

    Feb 10, 2009 at 3:26 PM

    Comment #39

    ashley has to sell in the summer for me,

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  • beyethegreat

    Feb 10, 2009 at 3:27 PM

    Comment #40

    also according to look north we are stilol on debt and ashley has only loaned the money to us and we will have to pay it back when the next regime comes in

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