Inside Football - David Conn: Newcastle mortgaged to uncertain future Premiership club owe £109m while property company owned by major shareholders, the Hall family, is £46m in debt

15 February 2002

They were until so recently Masters of the Universe, or, at least, Kings of the "Geordie Nation" – remember that? – but now Sir John Hall and his family, Newcastle United's major shareholders, are struggling with their company's financial crisis. As Kevin Keegan, whose charismatic management helped build the Halls' fortune, returns to St James' Park with his revitalised Manchester City for Sunday's sixth-round FA Cup tie, he will find his former employers in much reduced circumstances. How this might affect the club, who owe £109m following the stadium's redevelopment, remains to be seen.

Cameron Hall Developments, the Hall family's property development company, are late filing accounts; they were due last September, then two extensions were granted but the last one ran out at the end of December. The previous accounts, for, curiously, only four months to September 1999, showed a £4.9m pre-tax profit but debts of £46m. The company's Newcastle United shares, now a principal asset, are mortgaged, to Barclays Bank and Sir John personally. The company now has no known ongoing projects and its property agents confirmed that its assets are up for sale.

This decline in fortunes has been remarkably rapid for the company and for Sir John himself, who, when he and Keegan's Newcastle were in their 1996 pomp, was arguably the most powerful man in the North-East. After 20 modest enough years he finally made big money in 1987 by selling to the Church Commissioners half of the Gateshead Metrocentre, the indoor shopping complex which Cameron Hall had developed. He followed this by developing the Wynyard Hall Estate; Sir John, a miner's son, bought it from the mine-owning Marquis of Londonderry. The handover was portrayed as highly symbolic, a transfer of power from aristocracy to a Thatcherite entrepreneurship which would regenerate Newcastle. Sir John, knighted in 1991 for services to Newcastle, was constantly associated personally with reviving the depressed North-East.

He bought Newcastle United between 1990 and 1992 for around £3m after a bitter battle with Gordon McKeag, an upper middle-class solicitor who had run the club for years, unpaid, an old-school football chairman. Hall, whose campaign had been backed enthusiastically by the local newspaper, the Evening Chronicle, did not initially want control and offered to hand Newcastle over to supporters via a public share offer. It flopped in December 1990 and he walked away. He returned the following year, announcing his intention to take control and see Newcastle into the Premier League, whose breakaway had just been announced, on the threshold of the first £305m deal with BSkyB.

With Newcastle sliding to the bottom of the Second Division, the Halls' masterstroke was in February 1992 to entice Keegan, the former playing hero, back from the golf courses of the Costa Brava, where he had retired after a glittering and lucrative career. He returned to revolutionise the mood, club and team, replacing the likes of Mick Quinn and Brian Kilcline with such exotica as Faustino Asprilla and David Ginola.

The St James' Park rhetoric was overblown and relentless. Sir John, dubbed "Mr Newcastle", talked of regenerating the North-East, via a "Sporting Club" including rugby, ice hockey and basketball clubs, which would rival Barcelona. When Newcastle broke the then British transfer record by signing Alan Shearer from Blackburn for £15m in August 1996, the national media trooped to a press conference hosted by Sir John himself, who boomed: "We have found the right player. More especially, he's a Geordie. I take a great pride in bringing him back to the North-East. Because this region is a great region."

In 1995, Sir John was appointed a Millennium Commissioner, and the following year became a Governor of the Bank of England. Small beer among his interests was the philanthropic sponsorship of Gateshead FC, a local non-League club, to the tune of around £100,000 per year. This certainly pleased John Gibson, Gateshead's chairman and also the Evening Chronicle's chief football writer, although he denies it created a conflict of interest in his coverage of the Halls.

The Premier League breakaway, Sky millions and resurgence of the game's popularity gave football shareholders an opportunity, for the first time, to cash in, because the Stock Market had become suddenly convinced of top clubs' potential to make money. Keegan's flairful team had finished second in the Premiership in 1995-96, famously pipped by Manchester United's victorious Alex Ferguson. The directors had determined to float.

In January 1997, Keegan sensationally resigned. The club have never publicly explained it, but Keegan himself said he was considering leaving at the end of the season but Newcastle did not want to risk going to the Stock Market with such uncertainty hovering over their most important employee. According to Keegan, Mark Corbridge, a NatWest Markets finance executive who arrived to organise the float, told him either to commit to the club for two years or leave then. Keegan left, bitterly.

Newcastle floated on the Stock Market in April 1997. Like the other floating clubs, they had transferred all their assets to a holding company, specifically stating that this made them free of historic rules imposed by the Football Association designed to prevent shareholders and directors profiting out of football clubs. That culture, symbolised by nobody more than McKeag, was supplanted by football's own version of Thatcherism.

The company stated it was raising £47m, mostly to pay off debts, including £4.4m to Cameron Hall. The star-struck City valued the company at £180m. The Halls' then 57 per cent was worth £102m. Freddy Shepherd, the current football club chairman, owned 7.3 per cent, worth £13m. Corbridge left the following July, having been paid a £300,000 bonus for a successful flotation.

In December 1997, Sir John Hall retired and has since spent most of his time some distance from the North-East, in Marbella. On and off the field, Newcastle's performances since have been turbulent. Most notoriously, Shepherd and Sir John's son, Douglas, were exposed by a tabloid in March 1998 in a Spanish lap-dancing bar, making derogatory remarks about Newcastle fans' gullibility and Geordie women's physical attributes. The succession of managers – Kenny Dalglish, Ruud Gullit, then, in September 1999, Bobby Robson – has been matched by a revolving boardroom door.

As with all football plcs except Manchester United, the City became quickly disillusioned with football's management and mushrooming wage bills and the share price plummeted. Newcastle could not raise money on the market to redevelop St James' Park and instead borrowed £55m, effectively mortgaging future season-ticket sales.

Despite these debts, consistent losses, directors and shareholders have been given huge pay-outs. Most controversially, last October, Newcastle announced a £8.9m loss, but paid £4.5m in dividends: £2.1m to the Halls. The chief executive, David Stonehouse, resigned, leaving with a £221,000 pay-off on top of his £206,000 salary. Shepherd was paid £233,000, including a £150,000 bonus. Douglas Hall, a part-time non-executive director, was paid £110,000. The Halls have managed to cash in on their shares, selling 9.5 per cent of Newcastle for £15m to ntl, the now troubled cable company.

Last December, the share price having crashed to around 25p, Newcastle plc was relegated to the Fledgling Company section, the Stock Market's lowest division. Cameron Hall is clearly in trouble, late filing its accounts and with no known current developments. Projects in Portugal are believed to have stalled – the website was last updated in 1997. Alan Sanderson, Cameron Hall's property agent, confirmed yesterday that land and the Wynyard business park are up for sale. In December, Gibson, announced that Cameron Hall had pulled the plug on Gateshead, after 10 years of sponsorship. He was, he said, "shattered"; the club faces an uncertain future, the wage bill has been slashed and two of the best players have left.

Sir John is at present back in the North-East, but nobody from the company would answer questions this week. Although the Newcastle shares are mortgaged to Barclays and to Sir John himself, the Hall family are perhaps still hoping for an increase in value, boosted by the remarkable playing turn-around achieved by 68-year-old Bobby Robson. If Newcastle reach a Champions' League pay-day, Robson will be greatly helping the Halls.

As Keegan returns to the place were he is still a fans' hero, he will find the atmosphere much changed. The Sporting Club has long gone. They mostly talk football there now. Nobody has mentioned the "Geordie Nation" for a while.

davidconn@freeuk.com

Comments?

-- Anonymous, February 15, 2002

Answers

At that price I think I'll buy some more shares.

-- Anonymous, February 15, 2002

The last paragraph is the most telling. The 'geordie nation' thing was John Hall's fanciful idea, it was never embraced by the people of Tyneside. Football was all that mattered during the Keegan era, football is all that matters now. As long as we're pulling in 52000 for home games the debt will be servicable.

-- Anonymous, February 15, 2002

Getting the crowds in will keep the repayments on the ground expansion program going, but IIRC has nowt to do with SJH's shares being used to borrow money for Cameron Hall.

I do think this is a question more suitable for Mr Gregoire to answer though..

-- Anonymous, February 15, 2002

preferably our own Mr Clark, any jobs gannin Toon forst on here lyeuk. only joshin, nowt wrang with Roland adding his tuppenceworth. Open the broadsheets, standby, here we go, here we go, here we go

-- Anonymous, February 15, 2002

Spearing of bad press (which we prabably weren't) did anyone see this little Gem from yesterday's Time (online)?

Newcastle drunk on success of title challenge by Alyson Rudd LEEDS United are 11 points off the lead of the FA Barclaycard Premiership. Newcastle United are just two points behind the champions. David O’Leary’s team seem tired. Too tired, in fact, to get up to any mischief. Bobby Robson’s side, however, are bubbling with energy and their recent run of fine form has coincided with tales of misdemeanours, culminating in Jamie McClen, the midfield player who has recently been awarded a place in the first team, receiving a caution from police for being drunk and disorderly. Have Newcastle become the new Leeds? A club where, by virtue of various off-the-field incidents, we hear more from the club’s chairman than we do the manager? A club where there seems to be a drinking culture and a yobbish attitude? A club that thrives the more negative publicity it receives? Where the players rally round the miscreants and win against the odds? McClen has been hanging around for the past couple of years waiting for a chance to impress and was close to leaving the club. Selection problems in midfield at the end of January, though, saw him start the match away to Tottenham Hotspur and Robson, pleased with McClen’s contribution to Newcastle’s second win in London in four years, picked him again. What incredible timing on McClen’s part to advertise his oafish personality now and to force his chairman, Freddy Shepherd, to have to apologise for the slight to the club’s image.

Craig Bellamy, Newcastle’s nippy and increasingly potent striker, received a police caution for common assault last week but was on the teamsheet for the match at St James’ Park on Saturday and proceeded to terrorise Southampton. Afterwards he said that the episode in which he was out drinking with three other players and which involved a female student would not affect his performances. “I want to play football, that’s all I know about,” he said.

Remind you of anyone? Lee Bowyer, the Leeds midfield player, played out of his skin while the trial proceedings, relating to a vicious assault, against him dragged on — in fact, he won much reluctant admiration for his ability to put what should have been a draining and belittling experience on one side — and his team-mates rallied to the general mood of Leeds being the team we love to hate to make a Yorkshire tilt at the Premiership seem plausible.

Newcastle’s real blast at the title started with their remarkable 4-3 defeat of Leeds just before Christmas, not long after four of their players, including Bellamy, were sent home in disgrace from a club trip to Spain — an event overshadowed by the drama unfolding at Leeds and how they opted to deal with Bowyer and Jonathan Woodgate.

Newcastle beat O’Leary’s team again last month and Alan Shearer looks as he did when he won the title with Blackburn Rovers: uncompromising, determined and a veritable goal machine.

In the space of a few months, Newcastle have been transformed from a rather silly outfit that could not travel to London without feeling a quiver of trepidation at the bright lights and big buildings to a ruthless team hellbent on winning, whatever the postcode.

Newcastle are the team everyone quite likes really. If your club cannot win the title, then who would you like to see succeed this year? Newcastle have a huge, loyal fan base and have underachieved under the stewardship of various likeable managers, Robson being the most lovable of them all. Funny, then, that their greatest achievement of all could come at a time when their reputation takes a battering and no one loves them any more.

-- Anonymous, February 15, 2002

That should be "Times" of course.

-- Anonymous, February 15, 2002

Let's all jump aboard the band-waggon, eh? Might be a bumpy ride, but there's plenty of journos on already and you don't wanna be left out.

Despite the recognition in Ruddy Alyson's piece that we may (my emphasis) be pushing for honours, maybe it's not such a bad thing that the press are jumping on this "loutish Newcastle" bandwagon instead of concentrating on the football?

-- Anonymous, February 15, 2002

2 points - why are the makems so enthralled by our financial situation? I think they hope somehow the club will be bankrupt or something. I accept that Cameron Hall's situation is dodgy but NUFC are NOT Cameron Hall. Yes the club are mortgaged but very few clubs do not carry debt. Leeds United have mortgaged on the basis of future Champions League football AND they haven't even built their new stadium. I can't lose any sleep over this.

2nd point - Cheap journalism from The Times. I do not condone anything Bellars or McClen has done but to compare them to the Leeds players is bloody ridiculous.

-- Anonymous, February 15, 2002

I think it was also the Times this mornin that had Howey talking about the Man City pub team talk, and the fact that they were in his opinion unfairly treated because team spirit was good and they did like going out together - not necessarily even drinking heavily, but having a laugh together. Perhaps we are suffering a little of the same.

-- Anonymous, February 15, 2002

The subject article is a fanciful mixture of fact and supposition, written for effect, and there's not really a lot more to add.

CHD looks to be in serious financial difficulties - but that is old news, almost history. The company has fallen apart since SJH retired and handed over the reins to Drugless - but was he handed a poisoned chalice? I simply don't know.

The Toon plc is not in good financial shape - fact, but again old news.

My own read, without knowing all the facts, is that the situation is tenuous but not terminal. As long as we remain competitive on the pitch, maintain good ST and overall gate revenues, we should be OK. However, we have gambled virtually everything on players like CC, Dyer, CB, Robert, and now JJ to make us competitive again in the PL. Right now we look well set, we are in the mix at the top of the PL, are still in the FAC, and should qualify for European competition next season.

My main concern is that this has largely been the product of Bobby Robson's acumen: the really critical challenge will come when BR comes to hand over the reins.

My guess is that we really need 4 or 5 successful seasons, including competing regularly in Europe, and without massive investment on the playing front, to get the finances back into even reasonable shape.

If BR's handover were to go badly, if we had to contemplate really major investment on players in the short-term, and/or if ST sales dropped off significantly, then we could be in serious jeopardy. However, in truth could you say anything differently about most other PL Clubs?

-- Anonymous, February 15, 2002

The North East didn't react to the 'Geordie Nation' quote because we already know it exists. Jingoism isn't our way.

I also suspect that the people who support NUFC aren't the same ones who watch Rugby/Netball etc.

Sir John has given me the best footballing experiences of my life. We mustn't let a few cockney journalists knock it just so their beloved MU can win the league.

Arsenal are getting hammered for the sendings off. Liverpool trying to undermine Thompson by saying Hooly is being missed. O'dreary's lot by being criminals.

Whats being said about the darlings of London @ Old Trafford ?

-- Anonymous, February 15, 2002

Josh, interesting that you should mention 'their beloved MU', David Conn list his birthplace as Manchester in his CV. Bias ? I'm sure that couldn't be true.

-- Anonymous, February 15, 2002