Outlook: A fine old mess at Newcastle United

NEWCASTLE United are not having much luck on the pitch this season. But last night the supporters of good corporate governance were savouring a resounding victory at St James' Park after the departure of Douglas Hall, the aptly titled vice-chairmanof the football club, and its chairman Freddie Shepherd.

That was how it was being presented, anyway. The trouble is that in reality it wasn't really this at all. The scoring partnership of Shepherd and Hall has been broken up not because of their poor stewardship of the quoted company, of which they are also both directors, but because of unguarded and offensive remarks made and recorded in a Spanish brothel.

It will probably suit the record books to show that the two men quit after running up against the defensive back line of Sir Terence Harrison, Dennis Cassidy and John Mayo. But the truth is there was a deafening silence from the independent non-execs for more than a week after the allegations first appeared in the News of the World.

Shareholder pressure only resulted in the departure of the two men in so far as most of the minority shareholders are also supporters. The better parallel is with the fate that befell Gerald Ratner after his ill-judged comments about the quality of his goods at the Institute of Directors. Those remarks ultimately cost Mr Ratner his job and his company.

Ultimately, the same may happen to the Hall dynasty. But in the meantime it remains in control. The patriach, Sir John, comes out of retirement as caretaker chairman of the football club. Meanwhile Douglas may have quit with his tail between his legs but his holding company, Cameron Hall Developments, continues to hold 57 per cent of the shares and the right to nominate a director to the board. Likewise Shepherd Offshore, which controls a further 8 per cent of the shares.

While the two men seemed intent on staying put the shares rose by 10p. The talk now is of CHD selling down to below 50 per cent. Long term that may help the shares. But short term the overhang may further depress the price, leaving the average shareholder/supporter feeling as ripped off as if he had bought one of the Magpies' replica shirts. All very unsatisfactory.