Ashley’s rescue package?
Posted on February 21st, 2010 | 128 Comments |
Apparently this money has been given to us on in interest only basis to help pay the wages and cover the general day to day running costs of Newcastle United. It has been said that some of this cash was used to fund the purchases of January signings Danny Simpson, Leon Best, Wayne Routledge and Mike Williamson. Now I’m going to start running through the article so sit down for club inside knowledge and sensationalism. The ‘club source’ said to the Sport of the World:
“Mike Ashley did not want people to know about the loan. If he had not done it, who knows what would have happened. Mike has comitted more money to the club. It is a secured loan, interest free and it had to be done.”
Sounds scary doesn’t it? The source continues by stating the problem that faces heavily financed clubs such as Manchester United and Liverpool, and how our friend Mike stepped in to save us from following that path. The source said;
“The only other option would have been to arrange an outside deal and the interest rate would have been around 20 per cent – which means you’ve lost £5 million right away.”
“There is a shortfall of about £50 million because of relegation. The club had to bring some payments forward.”
Does this mean that this loan is only over a year? If that isn’t the case then when will the club be able to pay Ashley back? Or does the fact that the loan is secured mean we are effectively mortgaged to Mike Ashley? Either way, relegation is a mess Mike Ashley made for himself in my opinion, be it through poor advice or poor decision making. I will however give Ashley some credit for trying to put things right, and as has been said before on here, relegation could be the blessing in disguise this club needed to get back on an even keel financially. The source continues by explaining some of the reasoning behind this extra loan, adding;
“All the previous sponsorship money was spent on the Michael Owen deal before Mike Ashley even bought the club. That deal cost Newcastle £44 million. The TV money went with relegation, the retail income has gone and the commercial income is cut.”
Unfortunately, such is the cost of relegation. We’ve seen in the past how relegation from the money spinning Premier League can ruin a club. Suddenly all that money that was counted on is no longer coming in which leads to cuts in staff both on the pitch and off it, something Newcastle United have experienced in the past few months. Some will argue that although we have lost around £35 million a year off the wages, we are in better shape becasue of it. Others will point and say that we wouldn’t have been in the position of losing our Premier League status had our owner speculated to accumulate last season and bought in some players that could have chnaged things around.
Esentially though, the cleansing of deadwood such as Michael Owen, Obafemi Martins, Mark Viduka, Damien Duff and others had to come eventually. Our wage bill is still huge in comparison to most other teams in The Championship and matching up against a fair few teams in the Premier League, but it has been halved from the end of last season.
That is the one saving grace for me in relegation and the mess that followed. Ultimately as a club, we were spending on the credit card with no guaranteed means of paying things back. We got away with it for so long but ultimately we were always going to get caught out. We’ve just been lucky that getting caught out came at a time when we had an owner who can afford to put things right.
Sure it’s great to spend millions on players and wages and being able to watch the best of the best strut their stuff on a Saturday afternoon. In the real world though, those type of players will probably be beyond us right now, and it’s those type of marquee players that underperformed last season and nearly caused a financial meltdown that may have left me with without my home-town team to support.
Look forward 3 months and imagine we do get promoted. Back in the Premier League with all that money coming in, and comparatively very little going out on wages. We could be in a strong position, paying cash up front for players whilst others struggle to find the cash to finance deals over x amount of years.
We can only dream eh?
Of course much of this is speculation that will only be confirmed when the club publish the accounts, something I assume workyticket and Stardust amongst others are eagerly awaiting so they can see if the figures stack up.
Anyway, let’s live for the now. We are top of the league!
NUFC Blog Poll.
if its true cheers mikey ;)