Mike Ashley’s Money Keeps Newcastle Afloat Financially

There was a piece in the Journal yesterday on Newcastle’s finances, but we couldn’t  understand all of it.

Mike Ashley – £111M loan to the club – interest free

Although the exact amounts are open to variance, it seems that the Newcastle club owe Mike Ashley around £111M, and most of that was the £100M he found that Newcastle owed, when he bought the club in May of 2007.

Mike didn’t do enough due diligence with the club’s finances before he bought the club, and the £100M debt was only one of some financial shocks Chris Mort got, when he did a full financial study of the books in 2007.

Chris also found that all the money coming in from Northern Rock had already been spoken for – and was going directly to Real Madrid to pay the transfer fee for Michael Owen.

Just to remind Newcastle fans –  Michael cost about £17M from Real Madrid as well as costing the club about £22M in wages over four years, and of course we didn’t get much of a return with just 30 goals and 70 appearances for that £39M.

My right arm just started to hurt again. 😀

Mike is saving Newcastle money by making the loans interest free – and will save Newcastle about £11M a year if the loans were with a bank for say 10% interest.

The amount owed the owner is probably more than £111M now, since the Journal reported that the transfer and loan fees this summer were paid by Mike himself, but that was only around £6M by our reckoning –  £3.5M for Tiote, £1.5M for Perch and around £800K for Ben Arfa’s season-long loan deal.

The club seems to be doing quite well in stabilizing the financial books, although Newcastle fans want to see more investment in the club fairly quickly.   But when you already owe over £100M, that’s difficult, and we think the club has done quite well this summer in getting in 5 new players for just around £6M.

And of course  European clubs will soon be forced to make ends meet and balance their books, when UEFA President Michel Platini’s new financial rules start to be implemented next year.

Ashley put in around £25M of his own money last season to keep the club ticking over in the Championship, because of the reduced revenues, and still having a fairly massive wage bill at the club, even though the club were in England’s second tier.

But it paid off big time, in that Newcastle were easily promoted back to England’s top league.  We now have to hope the club can generate enough new revenues, so that they can loosen the purse strings a little, to allow more new players to arrive at the club.

They seems to be doing that full steam ahead at the moment , but they’ll have to be careful with some of the things they seem to be contemplating.

The naming rights of St. James’ Park is one example, and the Board already seem to have decided to rename it Sportsdirect.com@St.James’Park, and that’s not being well received by the Newcastle faithful.

The new business plan depends on Newcastle avoiding relegation this season, which seems obvious, but it will put pressure on Chris Hughton to keep the side afloat this season.  The Journal says that Newcastle will be financially self-sufficient by this time next year, with all of the extra revenue generated earmarked for squad improvement.

But we don’t know exactly what that means – if it means the spending will only meet the increased revenues, then we can see that – but there is also the little problem of still having over £100M in debts.  As long as Ashley doesn’t want that money back anytime soon, it will give the club some breathing room, and indeed money can be made available to improve the squad.

However, we do agree with the Journal that if the lads do well this season, transfer money will be made available by the club next summer, and hopefully that will be the extra revenue the club generates and will not be another Mike Ashley loan.

Comments welcome.

25 comments so far

  • geordielad880

    Sep 15, 2010 at 12:16 PM

    Comment #1

    I would go for the following side against everton:-




    routledge————————————-ben arfa


  • BillyfromConsett

    Sep 15, 2010 at 12:30 PM

    Comment #2

    Mike Ashley is clearly a wonderful bloke, after keeping us going with all his own money – the 4ok+ fans’ finances obviously amounts to nothing.

  • listie

    Sep 15, 2010 at 12:33 PM

    Comment #3

    Promotion to the EPL is reported to be worth around £90 million, anyone seen it?

  • Indian Magpie

    Sep 15, 2010 at 12:33 PM

    Comment #4

    @ geordielad880 – Chris will never drop Jonas , and nolan, you may be right but i just cannot c that happening.

  • Indian Magpie

    Sep 15, 2010 at 12:36 PM

    Comment #5

    Also no conspiracy theories, but, its been 3 years since mike took over all i have heard about balancing the books. I mean how bad were our finances. i mean we are still having the after effects of the Financial eathquake.

  • Indian Magpie

    Sep 15, 2010 at 12:36 PM

    Comment #6

    * earthquake. i am no insider but still.

  • geordielad880

    Sep 15, 2010 at 12:45 PM

    Comment #7

    indian magpie, i totally agree mate, i think he will go for:-



    ben arfa—————————————-jonas


  • tynesidetommo

    Sep 15, 2010 at 12:48 PM

    Comment #8

    Call me naive.

    But if I buy a car from a neighbour without getting a mechanical to give it the once over only to end up spending £111m in repairs does that not bar me from passing on the extra cost to the next buyer since it was my own stupidity to blame?
    I only ask even though John Hall supposedly clawed back every penny of his own investment.

  • Toontastico

    Sep 15, 2010 at 12:51 PM

    Comment #9

    Listie you just dont get a big fat payment of 90m when ye get promoted, these things are calculated based on drawn out incremented TV rights payments and estimated increased matchday revenue etc.

    Indian Mag we’ve been losing money for the last 3/4 years it takes time to balance the books.

    If NUFC can stay up this year and be self sufficient next year it will be fantastic and another step in the right direction, as much as i was against Fat Ash he seems to have turned a corner and since the apt of CH he has done nowt wrong IMO – the “no capital outlay” release was jumped on and misinterapted by most and the stadium re-naming is actually a re-branding rather then a re-naming – as much as I would prefer to keep only the name SJP I think we have to be realistic and look at what cash it will bring into the club

  • Indian Magpie

    Sep 15, 2010 at 12:54 PM

    Comment #10

    geordielad880 – smith has to go – he is a sqare peg in a round hole. Perch too, 4 matches 4 yellow cards he is always under pressure of getting sent off and leaving us down to 10. I think Newcastle will beat Everton if we start with the same line up that u suggest only taylor for perch

  • geordielad880

    Sep 15, 2010 at 1:07 PM

    Comment #11

    there is no way we will beat everton, no matter what side we put out, sorry! I watched them against man utd, their midfield will over power ours easily, and thats where the battle is won, nolan, tiote, barton, smith etc vs arteta, cahill, fellaini, rodwell, pienaar etc, i think a side is going to get hammered of them shortly, hope its not us though:-(

  • geordielad880

    Sep 15, 2010 at 1:09 PM

    Comment #12

    and i agree about alan smith, tiote has to replace him, we need guthrie back aswell. I’m not sure about perch, he is decent going forward, i think there isnt much between taylor and perch, just taylor is handy for set pieces, and comes up with the odd goals, both are poor in defence, we still need a right back, as simpson, taylor and perch, are all very average

  • Indian Magpie

    Sep 15, 2010 at 1:11 PM

    Comment #13

    Rodwell is out but i think we have a good chance. it is easy to get onself motivated against Man Utd. wolves showed what can be done. ithink we have more than a decent chance.

  • geordielad880

    Sep 15, 2010 at 1:14 PM

    Comment #14

    I hope your right indian magpie, but really cant see it, we have to get at them from the first minute, they start really slowly, we need to get crosses in the box, its something we didnt do against blackpool, or much this season at all, routledge and jonas always come inside, we need crosses in dangerous areas for carroll to get on the end of

  • geordielad880

    Sep 15, 2010 at 1:20 PM

    Comment #15

    when everyone is fit we can have a really good side:-



    ben arfa—————————————-jonas


    subs:- krul, s.taylor, guthrie, nolan, lovo, routledge, ameobi

  • G

    Sep 15, 2010 at 1:24 PM

    Comment #16

    Not a bad line up at all geordielad880. Looks canny on paper (or html?) and I reckon it would give most sides a decent game of football. Perhaps time will tell.

  • geordielad880

    Sep 15, 2010 at 1:44 PM

    Comment #17

    i think we would fair quite well with that side, it would be even better if we had a decent right back, would love newcastle to sign kaboul from spurs, really good defender and great going forward, and would fit well into our squad, and is a good age

  • geordielad880

    Sep 15, 2010 at 1:46 PM

    Comment #18

    he can play centre back, right back and also as a central midfielder, and is only 24, i think we could get him for 7m ish, i would try and get him in the summer, if he isnt getting a game at tottenham, maybe on loan, with a view to perm deal

  • sweendog

    Sep 15, 2010 at 2:09 PM

    Comment #19

    geordielad880 .. kaboul .. he’s a bit slow though .. personally we’ve better CB and CM than him .. a good right back though wouldn’t go a miss .. but I wouldn’t want a slow RB like Kaboul..
    could do with another Striker and RB though .. and LB cover ..

  • steve1980

    Sep 15, 2010 at 3:58 PM

    Comment #20

    For Everton, i’d go for it, we’re expected to loose:

    Goal – Harper
    Right Back – Ryan Taylor
    Centre Half – Campbell, Coloccini
    Left Wing – Enrique
    Right Wing – Routledge
    Centre Midfield – Barton, Tiote
    Left Wing – Ben Arfa
    Forward – Carroll, Lovenkrands

    He won’t though. It’ll be the same starting 11 he’s played the last 4 games.

  • G

    Sep 15, 2010 at 5:08 PM

    Comment #21

    2 left wingers steve, presume you mean jose Left Back. About as good a team we could feild at the minute, but CH will go for 451 again away from home.

  • GeordieGerman

    Sep 15, 2010 at 6:38 PM

    Comment #22

    Why do you keep on leaving out Nolan? It won’t happen. The captain won’t be dropped unless he’s injured and I’ll say it again. Nolan is slow but he has the habit of turning up in places where he’s not expected and putting the ball into the net, even if it’s a rebound, or setting up a shot at goal, even if Carroll misses, and that is what counts.

  • baro

    Sep 15, 2010 at 9:52 PM

    Comment #23

    Chris Hughton did a wonderful job in the transfer market this year. He bought the best out of the least.

  • Solaidback

    Sep 16, 2010 at 11:11 AM

    Comment #24

    Ed mate, we know already that Ashley doesn’t want the £111m he’s given us in interest free loans until he sells the club on, if he sells the club that is….

    All the funds gained by promotion seemed to have paid off all the other debts we’re gotten in the last 2 years, so what ever revenue we get next season by staying in the PL will be the clubs to spend ie wages, new players etc etc… so we should get around £25m after all pther payments are done 🙂

  • Davies

    Sep 16, 2010 at 12:20 PM

    Comment #25

    Can’t see £25m being made available for players next season. I think we’ll be looking at adding quality without busting the bank and I’m all for that. We’ve done well this time round with very little spent and I think it can be done again.

    I’ll be interested to see what happens in January.

    What really pleases me is that we have had the same manager for over a year and I reckon he’ll get a new deal soon. I don’t remember this much stability at the toon for a long time. Even the most ardent of the Ashley OUT! brigade have to admit he’s getting it right now.

    Of course, there’ll always be some who will never forgive him and blame him for anything they can. Over to you Ericles.


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