Analysis: The moment Sir John met his match
Sir John Hall had a dream. He wanted to turn Newcastle into the `Barcelona of the north', with a company that led the field in every sport from football to ice hockey. So what went wrong?
Wednesday 03 March 1999
In 1995 the ebullient Sir John Hall, controlling shareholder of Newcastle United Football Club, announced creation of the UK's first all-encompassing sporting business empire.
He would support the successes of the team he had resurrected by buying rugby, ice hockey and basketball sides.
Sir John offered vision, imagination, and hyperbole. He said his Newcastle Sporting Club might have 100,000 members by Christmas. British sport would be reinvented through his enterprise, based in the north east, and parallelling the one spawned by the mighty Barcelona football club.
The construction tycoon played shamelessly on regional pride, and long- standing bitterness over the north-south divide. The new Sporting Club, he promised, would play a crucial part in the struggling region's economic regeneration.
Sir John - "I like to be referred to as a capitalist with a social conscience" - even compared "the Geordie nation" to the Catalans of Spain.
In four years John Hall's dream has died. The Newcastle Sporting Club is said to be pounds 9 million in debt and its rugby, ice hockey and basketball teams have been cut loose, or are on the lookout for buyers.
The first crack appeared a year ago, with the Geordies baying for the blood of Douglas Hall, 39, Sir John's son, after he grossly derided the faithful fans and the morality and looks of northern women. To pile injury on his insults to the soccer-mad city, Douglas Hall is now selling the family's controlling share in Newcastle FC to NTL, an American cable company.
Sir John's son, head of the family's Cameron Hall Developments, had been caught in a Spanish brothel with Freddy Shepherd, then chairman of the football club. A tape recording revealed them describing north- east women as "ugly dogs" and United fans as gullible "mugs", for buying tens of thousands of replica Newcastle strips for pounds 50 apiece when they had cost a fiver each from an Asian sweat shop.
But exactly how did Sir John Hall's dream go so sour? During the Thatcher era, his touch seemed golden. He was born into a socialist mining family and spent his twenties underground as a surveyor for the National Coal Board.
He branched into small-time development in 1981 and bought 100 acres of wasteland at Gateshead for pounds 100,000. What followed undoubtedly required imagination. The death of mining and shipbuilding led to long dole queues and violent picketing over mine closures, but Hall was turning his acres of ash into the MetroCentre, the UK's first shopping mall. Enterprise Zone subsidies helped the "miracle".
The MetroCentre opened in 1986 and thrived, a relief not just to Sir John but Mrs Thatcher. It was sure evidence that Thatcherism was working, though it hurt.
A year later Sir John sold the MetroCentre and pocketed an estimated pounds 35m. Then he moved into Wynyard Hall, a grand country estate near Middlesbrough, owned by the Marquis of Londonderry, whose ancestors had controlled the local collieries. The miner's son had bought out the pit owners. Anyone could claw their way up in Maggie's Britain. She bestowed his knighthood in 1991.
So even before he descended like an angel on St James' Park to save the Magpies (Newcastle FC) from bankruptcy and humiliating relegation to the third division, Sir John had a halo of myth. And he burnished it assiduously.
He told reporters the MetroCentre and Wynyard Hall were built on "visionary powers", comparing them to those of Martin Luther King.
His battle for control of Newcastle football club had begun in 1988. The myth maker found a perfect match in football, with its inexhaustible supply of legends and dreams (almost always impossible), its surplus of saccharine sentimentality and the tendency of fans to hero worship.
He said he was "fighting for the Geordie nation". In the giddy years that followed Sir John lured the much-loved Kevin Keegan back from Marbella and early retirement to manage Newcastle's triumphant comeback.
The days of glory began to fade that day in 1997 when Mr Keegan, apparently fed up with Sir John, the Sporting Club, and the transformation of the game into a cash cow, staged his exit from St James' Park by helicopter, to the roared regrets of a broken-hearted crowd.
The stock market flotation of the football club that followed made a fortune for the Hall family, largely at the expense of Newcastle fans, for few City institutions dared invest.
As joint owners of Cameron Hall Developments, Sir John, wife Mae, Douglas and a daughter Linda, shared a 57 per cent stake in Newcastle United. The fans who jostled to buy shares have not made a penny. The shares sold at 135p. This week they were trading at less than a pound.
Sir John, now 67, has spent much of the last year at his luxury home in Spain. He made a brief return as chairman of the football club after his son's fall from grace. There are rumours of ill health. But some believe his heart went out of sport when he realised his Sporting Club was only a pipe dream.
The "man of the people" who regularly popped in for a pre-match pint with the punters at the Strawberry Pub next to St James' Park, had missed the point. The dream failed because Sir John never understood Geordies weren't interested in rugby or ice hockey, never mind basketball. Football was the one and only Geordie sporting passion.
A local businessman agrees. "I think Sir John thought Newcastle would turn out for tiddlywinks, as long as the team was wearing black and white (Newcastle FC's colours)."
One local reporter says: "He didn't even really like football. There are stories of him with his back to the pitch when the Magpies scored."
Malcolm Dix, the club's honorary vice-president, says that is rubbish. "Sir John would get so tensed up during a game that he was almost kicking the ball."
Fans ask how come everyone else knew the Sporting Club was a non-starter, except Sir John? Journalists remember Douglas Hall laying bets that the Newcastle Falcons rugby team would soon be filling the then-36,000-seat St James Park. Attendance averaged between three and four thousand people.
When the Halls bought the Durham Wasps ice hockey side in 1995 they changed the name to the Cobras and shifted "the product" to Newcastle. "There was uproar among Wasps fans," says Simon Rushworth, sports writer for the Newcastle Evening Chronicle.
Mr Dix believes the Sporting Club floundered because Sir John failed to bring all the sports onto one site. Environmentalists fought plans for a 55,000-seat football stadium on Leazes Park on the edge of cherished Toon Moor. Plans to move the other sports into the old stadium were shelved and a Barcelona-style multi-sports site never materialised.
City financiers showed no confidence in the Sporting Club. In 1997, at the height of the City's hot, brief, passion for all things football - the Premier league, sale of broadcasting rights and expansion of merchandising had sent football revenues rocketing - Newcastle Football Club was welcomed by the Stock Exchange, but without its sporting siblings.
In Newcastle, few care why the Sporting Club failed. But Sir John's football legacy is a very serious matter. With the Hall family about to trouser an estimated pounds 100m profit from the pounds 3m it cost Sir John to take control of Newcastle United more fans are asking who benefited from the club's flotation in April 1997, other than the Halls and those who were paid vast sums - including bonuses of pounds 300,000 - to mastermind flotation.
"The Halls have benefited far more from the club than the club has from the Halls," says John Regan, secretary of the Newcastle United Independent Supporters Club.
Only a few of the host of clubs floated on the Stock Exchange, including Manchester United and Celtic, have registered share-price rises. Newcastle's showing has been particularly bad. Some say the flotation was overhyped and the club over-valued. Vinay Bedi, of the Newcastle stockbroker Wise Speke, says: "The high original flotation price is almost certainly connected to the problems which followed."
The City sees the company as a corporate governance mess of heroic proportions. Nine directors have left since flotation. Three - including the then-chairman Denis Cassidy - resigned in protest after Douglas Hall and Freddy Shepherd muscled their way back onto the board only months after being forced to resign over the Spanish brothel scandal. Though the vast majority of shareholders were against their reinstatement, a poll vote, based on size of shareholding, easily ensured the men's return.
That bad feeling about the son has also damaged the father. And the image of Sir John generously ploughing his own money into the club is increasingly contested. "I know for a fact it was his own money that went in," says Malcolm Dix. "I saw the cheques."
But more fans - admittedly a minority - snigger at the notion that Sir John put in any of his own cash once the club was his. "He is no Jack Walker," says Mr Regan, referring to the philanthropic mentor of Blackburn Rovers. "He has put in a little of his own money then borrowed. He came into this to make money, and he has."
Some fans now feel Douglas Hall told the truth on the brothel tapes - they are mugs. Gate sales and the season tickets brought pounds 12m a year. The special Platinum Club's 3,000 fans paid pounds 3,000 each to join, the revenues going for a new stand named after Sir John Hall. And, of course, those pounds 50 black and white strips. All that money. And yet so little shareholder power that Douglas Hall and Freddy Shepherd walked back onto the board.
For Mr Dix that misses the point. He says Sir John led the way back to football glory and commercial success. "If Sir John had not got involved in Newcastle United it would not be where it is now," he says. "The north- east owes him a tremendous debt."
Mr Dix had been struggling for years to wrestle control of the club from the old-fashioned, autocratic dynasty under which it was stagnating.
Then Sir John showed an interest, and things began to happen. In the subsequent takeover campaign, the Magpie Five (which included Mr Dix) worked for months, with private detectives and genealogists, to trace "missing" shareholders, often relatives of fans who had bought some of the 2,000 10-shilling shares originally issued by the club in 1892.
The Magpie Group traced the "missing" as far as Australia and bought their shares.
"Sir John led with inspiration," says Mr Dix. "He is a motivator, a catalyst. A man who has a plan or dream and then gets a lot of other people involved to make it happen."
In two weeks the Secretary of State for Trade and Industry, Stephen Byers, will receive the Monopolies and Mergers Commission report into Rupert Murdoch's proposed takeover of Manchester United.
If Mr Murdoch, through BSkyB, gets the green light, then the way is open for broadcasters to own football clubs.
NTL, the cable company which recently bought a 6.3 per cent stake in Newcastle United from Cameron Hall Developments, will almost certainly exercise its option to buy a further 51 per cent from the Hall family. Newcastle United will have new owners.
Already Barclay Knapp, 41, the American head of NTL, is buttering up the Magpie fans with the rhetoric taken to the limits by Sir John, one- time champion of "the Geordie nation", now almost permanently resident in Spain.
Again the fans are being assured that this not just about commercial opportunities. NTL is also interested in the game.
Yet Mr Knapp has never been to a football match. That should come as no surprise.
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