newcastle's £90m debt

liverbird04 · January 12, 2006

Newcastle's £90m debt

By Mihir Bose (Filed: 12/01/2006)

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Graeme Souness's future may be in doubt as Newcastle manager, but can the club find the £5 million they might need to pay him off and get a replacement - it cost £1.65 million to bring Souness from Blackburn - let alone the £20 million needed to replace an ageing team?

Newcastle, the second-best supported club in the country with 50,000 fans every home game, rarely make a profit, they have just lost their best asset, Michael Owen, for most of the rest of the season, they will probably not play in Europe next year, and mid-table mediocrity beckons. Their debt is around £90 million.

The only people doing well at St James' Park are the directors.

Sixty-four per cent of the club is owned by the Hall and Shepherd families and the one executive director, Freddie Shepherd, is also the major shareholder. Two of the four non-executive directors are members of the Hall family. Last year Douglas Hall was paid £496,000, and Shepherd £552,000.

They also get handsome dividends. Although the club have recorded retained losses of £48m as at June 30 last year, the directors declared a total dividend of £3.95m, the same as the previous year. Net debt at June 30 was £66.7m, including £47m of senior loan notes secured against future season ticket sales and corporate hospitality receipts.

Add to this the net £20m spent on players last summer. Owen cost £16m, twice what Liverpool offered Real Madrid, Luque cost £10m and Nobby Solano £1m. Take away Jermaine Jenas, sold for £7m, and this still leaves outgoings of £20m.

This means the average net debt position is probably close to £90m. This is matched by the value of £93m put on the stadium.

The playing staff is valued by the directors at £40m. For 2004-05 turnover was £87m, of which £50m went on salaries, £23m on other operating expenses £23m and £14m on writing down the value of players in amortization. With interest of £4m a year there was a loss, but dividends were still paid, and this means Newcastle have a net asset value of 22p per share. The share price is 47.5p and it has gone as high as 60p.

But who would want to buy the club? Hall and Shepherd would probably be looking for 60p a share, valuing the club at £75m. This maybe one for rich Russians, but not for others.

http://sport.telegraph.co.uk/sport/main.jh...12/sfnnew12.xml

January 12, 2006

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