Your reading a pre 2010-11 archived article

Reading the national press over the last few months you’d be forgiven for thinking that Newcastle United were owned by a idiot who found the club in a lucky bag. You wouldn’t know Ashley was one of the most successful British businessmen of this decade or that his Newcastle are actually in a more stable financial position than before Sheppard sold. Stories of impending administration compete with Steve McMahon’s public relations operation to paint a picture of chaos and incompetence. This picture is starting to wear very thin and as is disguising some realities that could paint a different picture of the situation.

Before I list some examples of where I think Ashley is misunderstood we need to remove the biggest myth around, the question of why did Ashley buy the Toons in the first place? The Times North East Football Correspondent has this question as his mantra and yet the answer isn’t rocket science. A man who made his millions buying declining famous names or up and coming brands simply took that formula and applied it to football. When you examine which of the 100+ professional football teams with a history, fan base and unfulfilled potential meet that criteria Newcastle is up their at joint no1 with you know who. If you then ask the question which were available to Ashley for purchase two years ago it becomes no contest, in order to have both the prestige and kudos every new owner since Abramovich has been after, Ashley had to buy the magpies to join the game (and shove one up Dave Whelan). Yes you can question why his “due diligence” wasn’t more effective but perhaps your underestimating how well Sheppard played his hand once Hall sold up (as much as that statement annoys Geordies).

Having completed his take over Ashley gets a lot of stick for what he then does with the club. Now maybe my lack of a City financial career is showing here but why is settling crippling debt, to the tune of around £130m a bad thing. Even having done all that the club still has a rumoured £40m operating overdraft. That level seems to me no great issue given the turnover of Newcastle (at around £100m in 07-08) and with debt reported at £106m in 07-08 (working on a assumption that is post Ashley largesse and includes a £100m loan repayable to Ashley on sale) is again more stable than the Sheppard era figures. If Newcastle had gone down under any other ownership i suspect administration would already have happened. Sheppard used to boast that Newcastle spent its Sky monies of improving the infrastructure, but that is only partly true, take the burden of debt away and you maximise the income potential of the ground for the benefit of the club rather than of bankers (and bankers will always be..)

This brings us to the post relegation situation and the rather interesting decision not to sell any of the contracted “big boys”. For reasons that make no sense to a Leeds fan with a long memory the papers and blog experts seem to think the club should have given the players away to get rid of the crippling wage bill and to some extent there is a simplistic truth in that. However the realities of the contracts the players have make that an exercise in futility. Let’s take my old cause celebre Alan Smith, signed under the Allardyce reign. His contract stipulates he has to paid up the value of the remainder of that contract before he moves, basically costing more than he is likely to bring in from the transfer fee. Magnify that by the 25 first team players that got relegated (average £45k a week) and that becomes an expensive fire sale ala Leeds United. Ashley is perhaps smarter than we give him credit for: he understands that in order to make any sales worthwhile he needs the players to request moves, this means the aforementioned stipulations don’t apply. He also knows that if he is stuck with the club for the next few seasons those contracts will start to expire, he knows his pockets are deep enough to play hard ball and whilst it’s not a perfect strategy to write-off potential transfer income it actually makes sense not to throw good money after bad. Joey Barton’s agent can be as stupid as their client with statements about staying but in the end if players think they are premier league class they will submit the transfer request inevitably.

Also related to the above is the Shearer/manager situation. The line out of St James’s Park is that whilst any discussions about purchasing are taking place it would be inappropriate to appoint a long term manager. Whilst i don’t fully buy this again I sense a piece of cunning thinking here. Should the club still be in Ashley’s hands come kick-off expect an announcement that the club has been taken off the market, followed by the appointment of Shearer as manager and a £10m transfer fund to be used before September 1^st. Obviously those with a more tuned level of cynicism would see some issues with that but equally we all know most fans would just shrug and carry on (known as the spineless Leeds fan syndrome), another 15k season tickets would be purchased and Toon Towers would once again ring to the deluded tones of the Geordie nation. Now factor in the players still at the club and you can make a case (not a stick on but a case) that Newcastle has a shot at a quick return, although whether Shearer can manage only time will tell.

One of the lasting memories Ashley will leave in football is of him wearing the Newcastle shirt, both when sitting in the board seats or with the rest of the “canny lads” at away games. Two aspects to this, firstly it was a strange move for a man who previously had a reputation for privacy similar to that of Howard Hughes in his later years, secondly it generated some of the best free publicity that helped not just with shirt sales of the black and white but also for Ashley’s business concerns. Clumsy in execution, priceless in column inches.

Now I wouldn’t want to leave you with the impression that I consider Ashley to be the perfect football club owner: that would be far from the truth. The mistakes he did make, backing Dennis Wise, losing Kevin Keegan, his misplaced faith in Mort and Llambias, failure to check the books before purchase, the poor bastards on bugger all money sacked in May, selling, not selling, selling etc, but he is no Mark Goldberg, he won’t be turning up a few years later as Bromley manager. In the end you have to ask what is the worst case situation for Ashley. Well it’s not as bad as others would make out. Yes the club will either lose money under his ownership for a couple of years or he will take a hit on selling (although again not as big as others make out). If he stays he owns one of the biggest grounds in England, a home support still likely to average over 40k in the CCC and is the highest profile English club owner. All he needs to do is decide to take those advantages seriously and be “hands on” and just maybe he will get some of the credit he deserves if they turn it around. Alternatively this could all be overtaken by events before 10 people read this, and if so, that’s football. Tin hat on.

July 29th 2009.