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Newcastle United – Paying Interest On A Loan That Never Goes Down

8 years ago
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I’ve spent a lot of time pretty confused lately (it’s not uncommon).

My confusion seems to usually intensify around the time the fans forum minutes are released.

The thing is, after the recent set of fans forum minutes were released, my feeling of confusion has turned to worry. The more I think, the more I worry that the long-term future of Newcastle United could be under real threat.

I’d always imagined that one day someone would come along and buy Newcastle off Mike. Now that feels further away than ever.

The minutes read ‘Mike Ashley is not actively looking to sell the club’.

That was probably the most accurate statement made at the forum. If someone came along with a hugely overpriced offer he’d sell, if not he won’t.

The main problem is the meantime and after that if the offer still doesn’t come.

It’s widely reported that in 2007 when Mike Ashley purchased Newcastle United for £134m, our debt stood at £77m, with interest payments of £6.5m per year.

It’s also been reported since then (by the club), that debt now stands at £129m.

It is said that if we paid interest on our loan now that the cost to the club would be £11m per year.

Back in 2007 our commercial turnover was about £12m per year above West Ham, they were the team directly below us in the commercial revenue table. If we fast forward to 2013, West Ham’s turnover in this area has grown by around £3m per year. Ours has dropped by £8m.

Maths was never my strong point but I’m making a difference there of about £11m per year…you know, about the same £11m mentioned earlier as what our projected interest would be now without Mike’s ‘interest free loan’.

You see this is the problem, the problem that one day could threaten Newcastle United’s future. We pay interest on a £129m loan that doesn’t go down, we just don’t pay it in the conventional way. Why? Well the indications show that Mike isn’t here for the long-term, the example of the attempted quick sale of the lease of land behind the Gallowgate offering proof of that.

The club’s minutes stating:

‘It was explained that the club had not pursued expanding onto the site as it did not make commercial sense to outlay approximately £30m – £40m to expand for the sake of an extra 6,000 – 8,000 seats.’

Well an extra 8000 seats is at least £5m per year (to a well run club that’s challenging).

Chelsea, Man City, Spurs, Liverpool and even West Ham seem to believe that the largest possible stadium is needed. But not us?

That tells me that Ashley has no intention of ever getting us into a challenging position. Not to mention the continued stance of 1 or 2 signings per year, as well as cups not being a priority.

This all leads me to my real worry.

The day will come when Ashley has got out all he can with minimal outlay.

Maybe that day will be relegation, when the gamble backfires, the 1 or 2 signings didn’t work. What will happen then?

Well I worry that administration will happen then, tied down with debt of £129m that the creditor wants back.

Would anyone be that surprised if Ashley just dumped the club, his wealth has grown by £1.45bn this year alone, would he care? No he wouldn’t. If he did he’d attend matches and with his huge wealth could easily become a popular owner. He just doesn’t want to. He wants money and will use Newcastle United to get it.

Rob Lee said this week :

‘Ashley knows they’ll keep renewing their season tickets and filling the ground, no matter what. They are the most loyal bunch around, but it is to their own detriment sometimes and that is such a shame.’

Well if in a few years time what I said above comes true,  then we maybe will just have ourselves to blame. I certainly don’t want to take the risk. We need answers or we need to stay away. If you simply can’t, then you have to make your voice heard.

If you fancy getting into the World Cup mood in style, then get in soon to pick up one of Campo Retro’s classic England 1982 & 1990 (Gazza era) shirts.

They sold out quickly and this latest supply won’t last long.

Only £25 – get yours before they all go at www.camporetro.com

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