Business Directory

Browse the Directory

Sign Up to the Directory

FC Business Twitter
FC business Linked in
FC Business facebook
FC Business Youtube

Ashley's £25m emergency loan

Mon 22nd Feb 2010 | Money & Finance

MIKE ASHLEY had to make an emergency £25million loan in December to keep Newcastle going according to a report in the yesterday’s News of the World.

The article states that Newcastle owner Ashley arranged the interest-free deal to meet player wages and the general running costs of the Championship leaders.

It further highlights the precarious nature of the club's financial situation despite a campaign that has seen them largely lead the Championship.

Newcastle's wage bill remains around £40million despite a huge cull of personnel in the summer.

Last season’s relegation from the  Premier League seen the club’s turnover drop to around £50million and the hush-hush refinancing deal enabled the club to not only secure its short-term future but also strengthen their squad with four permanent signings and two loan deals arriving in January.

However, it’s understood that the loan has effectively been offset against Newcastle's second and final parachute payment from the Premier League and the outstanding deferred fees to be paid on the outgoing transfers that took place in the summer.

That means the £11million parachute payment that will arrive in August has already been spent, as has a sum believed to be around £9million that was owed from the sales of Obafemi Martins, Damien Duff and Sebastien Bassong.

"Mike did not want people to know about the loan he put into the club in December," said a club source.

"If he had not done that, who knows what could have happened? The only other possible option would have been to have arranged an outside finance deal and the interest rate for that would have been around 20 per cent, which means you've lost another £5million straight away.

"Mike has committed more money to the club. It is a secured loan, interest free and it had to be done.

"There is a shortfall of around £50million because of relegation. The club had to bring some payments forward. That is not unusual.

"Doing this was the only way the club could operate. All the previous sponsorship money had been spent on the Michael Owen deal before Mike Ashley even bought the club.

"That deal alone has cost Newcastle £44million. The TV money went with relegation, the retail income has gone, the commercial income has been cut. The money has to come from somewhere and that is why there had to be an injection of £25 million at the end of last year.

Despite crowds staying around the 40,000 mark, turnstile income has dropped to £14million and hospitality has similarly been more than halved to around £3million.

An immediate return to the Premier League would bank the club around £40million in television revenue alone.

Add to: Google Google | Yahoo Yahoo | Live Live | del.icio.us del.icio | Digg Digg |

Related Articles

Shrewsbury Town’s Safe Standing Crowdfunding Campaign Success

Tue 17th Oct 2017 | Money & Finance

In an historic achievement, Shrewsbury Town Football Club are one step closer to being the first club in England and Wales to introduce safe standing at their Montgomery Waters Meadow stadium,...

Average Premier League Ticket Costs £32

Fri 13th Oct 2017 | Money & Finance

The average price of watching a Premier League match costs £32 according to research released today. The Premier League, working with professional services company EY, has conducted in-depth...

FC Barcelona to become world’s top earning sports club

Thu 12th Oct 2017 | Money & Finance

FC Barcelona announced on Wednesday the financial reports that it will present at the Club’s Ordinary General Assembly on 21 October, when it will share the annual report with member delegates...

Premier League clubs must sell over 2 million tickets to earn back total transfer spend this season

Thu 5th Oct 2017 | Money & Finance

Each year, the summer transfer window is the most highly awaited time of year for football fans, and clubs alike. It's an opportunity to sign top-quality players to heighten the club's chances of...