David Conn: Who does Freddy Shepherd think he is by describing footballers as overpaid?

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The Independent Football

Freddy Shepherd was already the Newcastle United chairman but still in the monumental shadow of his predecessor Sir John Hall before he made his debut on the national consciousness with his thoughts on Newcastle fans, Geordie women and international prostitutes, rolled out alongside Sir John's son, Douglas, to an undercover tabloid reporter in a Marbella lap-dancing bar six years ago. This week, the world was again treated to his philosophies, this time at Soccerex - "The Business Convention for the Business of Soccer," as it billed itself - in Dubai.

In a series of unfortunate phrases, Shepherd described football as "dog eat dog", and said there is "no sympathy" from big clubs like Newcastle for the smaller clubs, many of whom ought to go part-time.

"The others can't hold us back," he said. "The time will come, I think, when it is the Premier League running the whole show."

Describing himself and other directors as "fans", although "We're not ashamed to take a dividend out," Shepherd described some of the club's players as "overpaid".

His comments have once again infuriated Newcastle supporters, who have become used to regular embarrassments and high-handedness from the club's directors, notably including the decision to move bondholders who had paid £500 for their seats, a bitter dispute which ultimately ended up in court.

"Get one thing straight, they're not fans," said Michael Martin, the editor of the True Faith fanzine. "I see 52,000 people paying through the nose watching mediocre football at St James' Park, and away [tickets for today's Chelsea game are £40]. Yet there are two taking money out: Freddy Shepherd and Douglas Hall."

Just a fortnight ago, Newcastle's annual report revealed that Shepherd and Hall, the club's main directors, were being paid massively by Newcastle. Shepherd's salary package last year was over £717,000, while Hall's was more than £635,000. These follow £669,000 paid to Shepherd in 2003, £592,000 to Hall; extravagant payments for a club which turned over £90m last year.

A survey by the Chartered Management Institute and Remuneration Economics cites the average chief executive's salary at ordinary, non-footballing companies with similar turnovers to Newcastle's as £200,000 last year, less than a third of the packets going around the St James' Park boardroom. Newcastle themselves point out that Shepherd and Hall's packages are broadly similar to those of the chief executives of the Premiership's other top clubs, which is true: football has a culture of boardroom excess.

As in previous years, the Newcastle directors declared a dividend, and as Shepherd and Hall still own over 65 per cent of the shares the riches mostly accrue to them. Shepherd's company, Shepherd Offshore, which he runs with his brother Bruce, owns 24.5 per cent of Newcastle and was paid nearly £1m in dividends. Douglas Hall's family share of the dividends added up to £1.625m. The money going out from Newcastle United, then, was £1.7m to Freddy and Bruce Shepherd, £2.2m to the Hall family. The Shepherds were paid the same in dividends in 2003, the Halls £1.76m.

That wasn't quite all of it, though, because they also make money in other ways. Since Newcastle floated in 1996, SMP Services, a company controlled by Bruce Shepherd, has been renting a warehouse to Newcastle to store its merchandise, on a 17-year, index-linked lease. Rents last year totalled £271,000, following £316,000 the year before. Newcastle say this is a fair rent for the premises.

Freddy Shepherd was also paid handsomely as a director of Shepherd Offshore, which turned over £2.2m last year, the two brothers sharing £763,849. Footballers, though, are overpaid.

Shepherd is understood to work full-time at St James' Park, and many fans do credit him with significant achievements; overseeing the expansion of the ground to 52,000, the second biggest in the Premiership after Old Trafford, and wrestling with finances which at one time seemed ready to topple. Newcastle's debts still amount to £100m, but players' wages are below the 50 per cent of turnover advised in the Premiership, and in 2003 the club began to make a small profit, which they maintained again last year, £4.2m. That, however, was almost all swallowed up by the dividend, £3.95m - two-thirds of which they paid to themselves.

Douglas Hall's pay has been more controversial. In 2003, his salary package, £592,000, which included a bonus of £225,000, was paid not by Newcastle United plc but a subsidiary, Newcastle United Football Club (International) Limited, based in the tax haven of Gibraltar. Hall told journalists several years ago that he had become a tax exile, and he gives his address now as Ragged Staff Wharf, Gibraltar.

A tax planning accountant based on the Rock, Timothy Revill, became a Newcastle United director. Newcastle sources confirmed this week that he is Douglas Hall's own accountant. Revill now chairs Newcastle's remuneration committee, which awarded Hall and Shepherd their pay packages; Hall's again paid via the Gibraltar company. Both Shepherd and Hall have fixed contracts which would entitle them to two years' pay if they left Newcastle. Revill too has a two-year contract, for which he is paid £35,000 a year, as is Bruce Shepherd, who is also a non-executive director.

Newcastle have never responded publicly to press reports from Gibraltar that the office of Newcastle United (International) appeared to be empty, but the club maintains that Douglas Hall works full-time trying to build the "international brand" of Newcastle United.

The club can only hope he fares better than at his family business, Cameron Hall Developments, which a few years ago under his father Sir John, seemed practically to dominate the North-east but has since suffered a dramatic decline. The company built the Metrocentre shopping complex in Gateshead and developed a luxury housing estate at Wynyard, the old seat of the coal-mine owner Lord Londonderry. Sir John, who had talked of building the "Geordie Nation" through a reconstructed Newcastle United, retired to Marbella shortly after the club floated in 1996, a move which also made fortunes for the family.

Cameron Hall now, however, is a wreck compared to its former splendour: Douglas and his sister, Alison, are the only two directors, and the accounts are approaching a year overdue. In the most recent ones, for the year ending 30 November, 2001, Cameron Hall made a loss of £18m, following a £40m loss in 2000. However, the extraordinary figure which leapt out of those accounts was, with such losses being posted, that the highest earning of the three serving directors, who included Douglas Hall, received £5.6m.

At the time of Newcastle's flotation, Sir John Hall told Total Football magazine: "We have to be responsible. We take money out of our communities; we've got to put something back. I hope that pure greed does not take over and ruin everything." In the flotation prospectus itself, the club boasted to the City about the Premier League breakaway, which has so concentrated money in the hands of the big clubs.

"The formation of the Premier League was a major step by England's larger football clubs to ensure that they would benefit, to a greater extent than before, from the money generated by the game."

Martin said that the Toon Army is becoming jaded by the general excesses of the Premiership, including ticket prices of £35 and players perceived to be underperforming, and he felt shamed by Shepherd's remarks.

"What he said about smaller clubs was so wrong. Fans have fought massive battles to keep those clubs alive, and they need more help," Martin said. "We fans can remember being at the bottom of the Second Division just 12 years ago and we know that there but for the grace of God go we."

Shepherd himself has not expanded on his comments since landing back home after his performance in Dubai. Whatever the skills which justify the salary, PR has not been one of his strong points. This week, though, there was a niggling suspicion: perhaps, this time, he was only voicing what other Premier League chairmen think, but are a little too canny to say.

davidconn@independent.co.uk

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