Mike Ashley

THE state of Newcastle United’s finances is today laid bare.

Accounts prepared for the first time by the club’s new regime reveal:

Director Douglas Hall was given a golden handshake of £1.1m when he left the club;

Mike Ashley had to plough £75m into the club to keep it afloat;

More than £1m was spent on sacking Glenn Roeder;

The club pocketed £6.7m from the FA while Michael Owen was injured;

Nearly £3m was spent preparing the club for takeover bids that never happened and refinacing before the buyout;

The club has had to pay back £5m after plans to build a super-casino fell through

The accounts relate to the last year of the Shepherd and Hall families’ reign at the club.

They tell a tale of huge debts, a massive wage bill and poor performances on the pitch forcing gate receipts down and hitting the club heavily in the pocket.

Richard Slack, who lectures in finance at Northumbria University, said: “The club was making a loss and owed more than it was worth.

“If the club had been a human being, they would never have been given credit and its house would have been repossessed by bailiffs.”

Fans’ groups told of their anger at learning controversial non-executive director Douglas Hall was personally paid £1.17m in compensation for loss of his job when Mike Ashley took control at St James’s Park. Hall, never forgiven by many supporters for his involvement in the “Toongate” scandal, pocketed more than 25 times more than any other director who left the club in June last year.

Steve Wraith, editor of fanzine Players’ Inc, said: “Chris Mort has been on record saying they found a lot of debt when they took over the club and they didn’t realise the full scale of it beforehand. A lot of cracks were papered over.”

Former chairman Freddy Shepherd was being paid £500,000 a year, along with private health benefits of £3,617, before being replaced by Chris Mort. Compensation paid to him would not show up until next year’s accounts.

Shepherd’s brother Bruce had been on a £34,372 salary and, on top of that, received a £38,096 golden handshake. In total, Douglas Hall was paid £1.62m by the club, which included his compensation, his £448,654 salary and a private healthcare allowance of £1,136. The report reveals all salary levels and compensation agreements were decided by a remuneration committee made up of Bruce Shepherd and fellow non-executive director Timothy Revill.

Chairman Chris Mort said in his 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 outlines the club ambition as “securing its position among the top teams in England and competing in Europe on a regular basis”.

He goes on: “Success on the pitch brings financial reward, in terms of enhanced gate receipts and increased broadcasting and other revenues.”

He concludes: “Following the changes in ownership and team management, the group has invested significant sums in the playing squad and infrastructure of the club.

“The FA Premier League’s new broadcasting agreements, which commenced in season 2007/08, will generate higher turnover and we will continue to look for improvements on and off the pitch to help develop the club further. I would like to say a special thanks to our loyal supporters, who are the foundation 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 means 72% – nearly three-quarters – of the money earned by the Magpies is shelled out in wages. Experts say businesses should have a wage bill of no more than 50% of revenue. And the situation could have been even worse had the FA not paid £6.7m in compensation to United after the £17m striker Michel Owen was injured.

Last April, the Chronicle revealed plans to extend St James’s Park, incorporating plans for a super-casino.

The accounts 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.

Last year also saw the departure of Glenn Roeder and, while it is reported that he resigned from his post, compensation totalling £1.1m has been attributed to “changes in team management”. The accounts also show the club is still counting the cost of getting rid of previous boss Graeme Souness, with the sacking costing £3.2m.

Another so-called “extraordinary cost” incurred in 2006/07 was cash squandered on a refinancing project and preparations for various failed takeover bids. The accounts show £2.9m was paid for this.

The report reads: “Throughout the second half of 2006, and early part of 2007, the company was the subject of various approaches from a number of potential purchasers and incurred legal and professional fees in connection with these.

“None of these initial approaches resulted in a formal bid being made for the company.”

On gate figures at St James’s Park, Mr Mort’s statement says: “The average attendance for home FA Premier League Games was 50,686, resulting in an occupancy rate of 96.9%.

“The average attendance for all home FA Premier League and Cup games was 42,253, resulting in an occupancy rate of 80.7%.” The 2006 overall average was 49,148 - a rate of 93.9%.

Mike Ashley takeover of the club last year sparked a clause that meant loans of £45m had to be paid off within 60 days, which Ashley did. The club also doubled its overdraft to £10m.

The accounts also tell how the Toon’s poor performance on the pitch hit the club in the pocket. It says: “Media revenues of £25.9m were significantly impacted by the club’s 13th place in the FA Premier League, which resulted in a fall in central distributions of 15%.”