Mike Ashley vs Freddy Shepherd – Who’s better?
Posted on May 25th, 2012 | 64 Comments |
Well, Newcastle United have finally managed to finish in the top half of the Premiership under current owner, Mike Ashley.
This is our first top ten finish, and qualification for European competition, since Glenn Roeder’s Intertoto “Dream Team” managed seventh, and Europe, after a storming finish in the 2005-06 season.
However, we fans are constantly reminded that this can only come at a very high cost, that the name of the club’s traditional home, St James’ Park, must be sacrificed to become a free publicity vehicle for Sports Direct, that we must also be subjected to a myriad of fit inducing signs publicising Sports Direct throughout games, that we must pay a £25 membership fee to purchase a season ticket, or even just one away ticket and so on…
Mirroring the spin department of the current administration at 10 Downing Street, everything is blamed on our previous administration for allegedly taking us to the edge of the financial abyss, with neither the world economic crisis, nor relegation to the Championship playing any part whatsoever. Even after five whole years, when controversial decisions are made, the spectre of the Byker Beelzebub himself, Freddy Shepherd, is constntly raised, and the club’s current owner is hailed as a messiah who has somehow led the club from the verge of complete extinction. So, now that the club has completed it’s fifth season under its current ownership, I thought I would put this to the test, measuring the performance of the current owner, both on the pitch and on the balance sheet, against his predecessors under the leadership of Shepherd.
This is no defence of those predecessors, who looted the club mercilessly under it’s former incarnation as a Public Limited Company, paying themselves massive salaries and bonuses as members of the old board of directors. However, the statistics seem to show that the club still has a little way to go before it returns to the state it was in before Ashley’s takeover of the club in the summer of 2007, with Ashley and the current Managing Director of the club, Derek Llambias, still lagging considerably behind their predecessors on terms of performance on the pitch, and in some respects, even finances.
Below is a table comparing ten years of Freddy to the first five under Ashley’s ownership. In it I’ve looked at the club’s league positions over the seasons, with average league positions for both Shepherd and Ashley, along with financial results and also debt. So here goes!
|Shepherd vs Ashley on the pitch|
|Fat Controller||League Positions (Points)||APtsPS||APosPS|
|Shepherd||13 (44), 13 (46), 11 (52), 11 (51), 4 (71), 3 (69), 5 (56), 14 (44), 7 (58), 13 (43)||53.4||9.4|
|Ashley||12 (43), 18 (34), Relegated (N/A), 12 (46), 5 (65)||47||11.75|
APtsPS – Average Points Per Season, APosPS – Average Position Per Season.
Well, even without some kind of handicap to Ashley for getting the club relegated, that’s still a victory to Shepherd. Four years (out of ten) in european competition, including two top four finishes for the Champion’s League, whereas with Ashley, we’ve qualified once for the Europa League in five years. Despite our recent very crditable fifth placed Premiership finish, in terms of our average league position Shepherd’s 9.4 beats Ashley’s 11.75.
Half time: Shepherd 1 – 0 Ashley.
But of course, on the financial front it’s what our cousins in the US might refer to as a “no brainer” surely? After all, we are constantly reminded by Ashley’s PR machine that our current owner has singlehandedly saved the club from huge debts and almost certain extinction, and has “taken no money out of the club.” Let’s see. The debt figure given for Shepherd is the club’s level of debt when he left the club and Ashley took over, and the one for Ashley is from the last set of published accounts.
|Shepherd vs Ashley on the balance sheet|
|Fat Controller||Pre tax profit / loss||Average Prof/Loss||Net debt|
|Shepherd||98) 5.0m, 99) 1.4m, 00) -18.9m, 01) -8.9m, 02) -3.1m, 03) 4.4m, 04) 4.2m, 05) 0.0m, 06) -12.0m, 07) -32.9m||-6.1m||71m|
|Ashley||-20.3m, -15.2m, -17.1m, 32.6m||-5.0m||130.5m|
Well, despite Ashley and Llambias’ relentless propaganda, it seems that Ashley could only manage to scrape a draw here. Whilst Ashley just beats Shepherd in terms of pre tax profit and loss figures, the net debt figure (gross debt minus cash on the bank in this case) is now almost double what it was when he took over the club. This is despite the the huge sums spent on inflated fees and wages for “marquee” signings under the previous administrations, the immense divvies trousered by the Shepherds and the Halls when the club traded as a Public Limited Company, and finally, the immense amounts of interest which was being paid on third party debt.
On the Shepherd side, there is also the contentious issue of the mortgage on the club’s stadium, St James’ Park. This would have the debt figure when Ashley took over the club to more like £124 million, though this is still lower than the current net figure of £130.5 million (£140 million – £9.5 in the club’s coffers). Also, commercial revenues are still considerably down on what they were under Shepherd. At the time when Shepherd left the club, it generated £27.6 million in commercial revenue, but in the last set of accounts it was almost halved to only £15.8 million. On the other side, the current administration have a huge advantage in the amounts paid the the club for it’s maedia rights in the Premiership. For the year the Shepherds and the Halls left, the club only received £25.9 million in media revenue, but in the last figures it was a far larger £48.5 million, almost double.
Full time: Shepherd 1 – 0 Ashley.
So, it’s still a 1-0 victory to Shepherd in the above comparisons. Despite the constant propaganda guff coming from the Ashley / Llambias camp about the club’s finances, there is still some way to go. The figures under the Ashley regime could have looked far worse too had it not being for one man, Andy Carroll, who singlehandedly lifted last years figures out of the red, and into a £32.6 million pre tax profit, most of which has gone into the club’s “reserves” (cash reserves, not the second team players!). Unless the club can sell an ex Academy player who cost next to nothing for a sum of around £35 million every year, the figures for that previous year cannot be sustained. So, the club will either have to start winning major trophies, be a “selling” club like the one Mike Ashley based his current model on, the black and white club from the North East (of Italy) called Udinese, or it will have to stop being a free publicity vehicle for Ashley’s largest business interest, Sports Direct International PLC.
In the final analysis, this may go against the conventional “wisdom”, but it seems real difference in Newcastle United’s previously precarious fianancial position hasn’t been so much the profligate spending on has been players with long, huge packages. Although the deals for players such as Geremi, Cacapa and Alan Smith were started under the previous regime, they were all sanctioned and completed under Ashley’s ownership, and he had a horror or two all of his own, remember Xisco? It hasn’t even been the huge amounts trousered in wages and dividends by the previous regime. Although they were all, beyond a doubt, huge factors, it has simply been that Mike Ashley is considerably richer than the previous incumbents. This has given him the abilty to absorb the debt and stop the huge interest payments to third party lenders. However, it IS still debt, and it IS considerably larger now than it was when Ashley assumed control of the club. The mistake the current owner made by failing to do due diligence before purchase will NOT be paid for by Ashley himself in the long term, it will be paid by the club itself.
I will leave the final word to the site, NUFC Finances, as I can’t really put it any better myself:
“No one should ever underestimate the mess that Shepherd left the club in. This does not excuse anything Mike Ashley may, or may not have done subsequently.”