Finances under Shepherd

by • October 9, 2017 • Finance, Opinion, UncategorizedComments (5)1397

Former NUFC chairman, Freddy Shepherd, sadly passed away on 26th September, aged 75. The reaction to his death on social media suggests that Freddy very much polarised opinion amongst Newcastle supporters.

There are some who thought he and the Halls milked NUFC dry; that he presided over the club going into a financial meltdown; and that he dragged the proud name of the club through the gutter with the News of the World exposé.

Others point out to his undoubted love for the club, the achievements on the pitch under his tenure and compare his ambition for NUFC to those owners before and since he took over.

This article will take a look specifically at the finances during Shepherd’s ten year tenure as Chairman of the club from July 1997 to June 2007. The perceived wisdom is that he left a financial basket case for Ashley to clear up. That the club could have ended up in administration.

However, Shepherd always defended his stint at St James’ Park, saying: “It’s absolutely ridiculous to say the club was in a mess and going to the wall. It was in good shape when I left.”

So who is right? We will attempt to do a balanced analysis of the finances during Shepherd’s tenure as Chairman and in particular what he left as his financial legacy to NUFC.

The table below shows some key figures that give an indication of the financial health of a club.


Let’s pick out the good, the bad and the ugly from those figures.

The Good

There’s actually quite a lot to admire in the numbers, particularly over the Robson era (99-04) where Shepherd ran a rather tight financial ship. A wage to turnover ratio below the generally accepted benchmark of 50%; turnover consistently one of the highest in Europe; impressive commercial revenue generated through lucrative deals with Adidas, Northern Rock, S&N etc (Ashley has not managed to match this commercial revenue since); a big rise in gate money as a result of the stadium expansion; and a relatively low debt despite the ground redevelopment (that Shepherd reckoned would have cost £450m in 2008); and unlike now, we weren’t over reliant on TV money.


The Bad

But despite all the “good”, it would be disingenuous to suggest that Shepherd didn’t leave anything but a financial basket case when he sold up in June 2007. A record £34 million loss; £27 million owing on transfer fees; extremely limited borrowing capacity, as all assets and income streams had already been used to secure loans; and a bloated wage bill of ageing mercenaries on generous long-term contracts. It was always going to be very difficult to turn that around quickly. Enter Mike Ashley.

There can be little argument that Ashley initially dipped deeply into his pretty deep pockets to turn the situation around. He repaid the expensive bank loans (£70m) which were payable upon transfer of ownership, a fact that he was purportedly unaware of after failing to undertake due diligence. He also provided a further £41m working capital on top of that (plus £25.5 million subsequent to the books closing) trying to put the club on a sound financial footing.

As a result, the debt (albeit mainly loans from Ashley) spiralled to £150m by 2009. This debt, albeit slightly smaller, still plagues the club now. Like the previous loan, it becomes payable on a transfer of ownership, effectively adding the debt to the purchase price and deterring potential buyers.


The Ugly

Whilst it can be argued that “the bad” was as a result of Shepherd’s naïve ambition in returning NUFC to Europe’s elite, what is more difficult to defend is the money he and the Halls took out of the club in the form of salaries and dividends. The Shepherd family made over £50m from their years at St James’ Park (£38 million Ashley sale, £7 million dividends and £5 million salaries). Additionally, the accounts show that between 2003 and 2007, the club paid £1.6m to rent warehouse space and houses from Bruce Shepherd’s company, SMP Services. In 2007, Newcastle paid £82,000 to Triple S Sports Consultancy, a company run by Freddy Shepherd’s son, Kenny, who rented office space in St James’ Park.



My personal view on Shepherd is that he was a flawed but ultimately well intentioned owner. He wanted NUFC to be amongst Europe’s elite. He was basically a supporter.

But supporters don’t always make the best owners. They can let emotion cloud their decision making. The day Shepherd sacked Robson was the day things started to go horribly wrong, both on and off the pitch. He brought in a hopeless manager and backed him with stupid amounts of money. But I don’t remember many of us complaining about the spending at the time. It’s easy to look back in hindsight at the finances and ask what on earth he was thinking.

Some of the criticism aimed at the state that Shepherd left the club is difficult to refute. There can be no dispute that the club was mortgaged to the hilt and owed a shedload on transfer fees when he sold up to Ashley. But as Shepherd pointed out “Yes, they were still paying off the tail end of Owen’s deal and possibly one or two others, but we’re not the first to have done that,” he said.

And Ashley should have known that. It was his decision to buy the club, warts and all. He can hardly complain about the state of the club he inherited. If he didn’t do due diligence, that’s his problem.

With regard to the salary and dividends that Shepherd took out the club, it should be pointed out that he worked unpaid until 1996. By that time, Newcastle’s financial fortunes had turned around and it could be argued that the Directors salaries were justifiable.

Shepherd proclaimed in 2008 – “We’ll stand by our record, the Halls and the Shepherds. We built a great stadium, we built a great training ground. We left all the tools there and a good set of players. Everything was there. We’ve nothing to be ashamed of.”

I’m inclined to agree with him.

Andrew Trobe



Related Posts

5 Responses to Finances under Shepherd

  1. oliver simpson says:

    The main problem of Shepard’s last three years at Newcastle were that once the Champions League run dried up thanks to not building on Robson’s team properly (which Robson in his book also layed out how Shepard but mostly Hall ignored his requests to improve on the training ground that was in a bad state), He resorted to doing a Leeds and splashing out on players that failed to make an impact (his deal for Owen even back then had many of us worried since Owen by then was past his best).

    Souness deserves the vitriol he gets for the mess he made of bringing in players like Bramble and driving away Bellamy, Robert, Dyer (despite their attitude problems and injuries, they were key part of Robson’s champions league run). Along with the mess he made of the training ground further with his outdated views and tactics. But Shepard helped to enable it and causing instability with changing managers ever season before and after Robson.

    Though we need to remember fans wanted Robson moved on when he got sacked, i did after at the time misblaming him for the selling of Gary Speed and bringing in Patrick Kuilvert (which happened behind Robson’s back with Shepard and Hall making both happen).

    To me, those years where we were in Europe and playing football we love happened i feel in spite of Shepard and Hall for the most part (Keegan, Robson, their staff and players deserve the credit) not because of them.

    When they often were the ones undermining the managers, the club and especially the fans in ticket prices and their views. For the constant drama happening, remember we really wanted Freddy and the halls gone when Ashely came along in 2007.

    A fan would never say the things he and Dougie said in News of the World about us, about Alan, a fan would never treated Bobby the way he got treated. For that alone is why i will not overlook Freddy warts and all. Because it’s a disservice to him and to us who lived through those years.

    But there’s no denying Freddy in his own way did want Newcastle to succeed. That he did invest in getting st James up to 52,000 and wanted to expand it further. That he brought Robson, Shearer back to us. That we saw some of the most entertaining football during that time. He deserves a measure of appreciation for that at least, as faint as it might look coming from me.

    Shepard was not a black hole like Ashley is nor the devil, but he was no saint as i have mentioned before and i think too many are forgetting his mistakes after years of Ashley stuff and his death.

    We should not let nostalgia blind us to the facts.

    As those mistakes are still affecting the club today.

  2. Bob says:

    I think both statements in the second and third paragraphs of Andrew’s article are correct. It appears to me that the club was run for the financial gain of both families, taking huge dividends even in loss making years, and they may even have had the objective of selling off the club from the start.
    I also agree with everything Oliver has said (I assume he means Boumsong rather than Bramble) and I think the negatives outweigh their “acheivements” as others deserve credit for the football success as Oliver has mentioned. Many questioned some of the signings ( as well as being past his best, Owen’s injury problems could be forseen – playing the odd game here and there in the warmth of Spain a lot different to being expected to be the main striker “up north”. Boumsong was an expensive mistake)

  3. David says:

    The ultimate condemnation is as written about paying above market rates to Shepherd family for warehousing and paying extensive funds to triple S agency run by Paul Stretford and Kenny Shepherd. Frankly, that was tantamount to stealing from the pockets of paying supporters many of which were shareholders. I cannot bring myself to look beyond that corruption and was informed, allegedly, there was a lot more skimming going on amongst the Shepherds and Halls.

    When lines of credit ran out and indebtedness was unsustainable Mike Ashley saved them with the share sales.

    I cannot tolerate any whitewashing of their tenure given these actions would be sackable offences for directors of any other business deploying shareholder funds raised in good faith.

    Why was Wayne Rooney at his funeral? Ultimately that relationship was cultivated by the Shepherds making an alliance with the extremely dubious character Paul Stretford, Rooney’s agent. Triple S sports agency is Shepherd, Shepherd and Stretford. Their testimonies to the Stephenson enquiry were singled out for “inconsistencies”, legalise for unproven lies. We must not see any of this as innocent friendship as the whole relationship was built on funds we provided and were inappropriately allocated to an agency leaching money from the club coffers.

    Spare me the eulogies. The roots of where we are now with Ashley, with a debt he wants to offload, were entirely due to the self-serving financial stewardship of his predecessors.

  4. Ashfaq Nehmet says:

    The fans wanting Robson sacked may well have been, but, that was because they thought they would get an upgrade (Hitzfeld, recent CL winner was the one I wanted).
    If any fan had thought Souness was the likely successor, then hardly any would have been for it.
    The biggest mistake Shepherd made (and is all too common) is lack to thought in appointing a manager. Souness in particular. It smacked of desperation, which he had bought upon himself by doing it in-season.
    Souness appointment and Owen purchase, sours anything and everything else because they were foreseen as disasters.