St James Holdings Limited, the company set up to run Premier League club Newcastle United under the control of sportswear tycoon Mike Ashley, has released figures showing a huge pre-tax loss.
According to the club’s financial report discloses a deficit of £34.1 million for the year ending June 30 2008 and a wage bill of £73 million, a figure which accounts for 72 per cent of Newcastle’s income. Of the club’s annual turnover of £100.9 million, the report suggests a wage bill of around 60 per cent is generally accepted as the safe limit.
Ashley decided to put the club up for sale in September last year following discontent from Newcastle fans, but has since made a u-turn on his decision to sell.
On 30 June last year Ashley tied up £238 million of unsecured loans to buy the club. Keith Harris, the banker who was engaged to sell the club on Ashley’s behalf, said earlier this month that these “soft” loans taken out by Ashley to clear the club debts had made Newcastle a sound investment.
“One of the things that I thought was very attractive was that Mike Ashley put his hand in his own pocket and paid off all the debt,” he said.
“So in the case of Newcastle what you were acquiring would have meant not looking at having to worry about what do I do when the banks we want their money back.”
