Newcastle United’s debt is covered by a loan, which Mike Ashley has transferred to his holding company (MASH Holding Limited). Newcastle United do not pay interest on this loan, which represents a substantial saving for the club. However, on closer inspection the interest free element of the loan is not what it seems.
Firstly, the loan is repayable on demand, whereas prior to Ashley the significantly lower loan with Barclays Bank was only repayable on demand in the event of a change of ownership. This means that Mike Ashley can decide when the loan will be partly repaid at any given time. Secondly, whilst no interest has been charged in recent financial periods, the loan is actually registered as bearing an interest of LIBOR + 0.5%, again meaning that should Mike Ashley wish to charge interest, there is nothing stopping him from doing so (source: Swiss Ramble). That said, the club have gone officially on record stating that Mike Ashley has no intention to see his interest free loan repaid or take money (interest) out of the club (14 May 2010):
“In relation to recent media speculation following the statement made by the club on May 9, Newcastle United would like to make it clear that owner Mike Ashley is not looking for his interest-free loan to be repaid, or to take any money out of the club.”
Source: Sky Sports

Whilst the “interest free” nature of the loan is obviously a good thing for the club, it’s worth pointing out that the loan (debt) has effectively doubled since Mike Ashley has taken over. This is in significant part due to the 2009 relegation caused by a string of bad decisions made by the owner and board of directors. In the years prior to Ashley taking over, Newcastle United incurred interest payments of between £4m and £7m per year (not the £8m claimed by the club (source: Also, the vast majority of the initial loan was related to an investment in the stadium expansion; bringing in additional match day revenue to this very day and beyond. Therefore, the saving at the current debt level can be estimated to be around £13m per annum (at a commercial interest rate of 10%), which would have been £10m or less if it weren’t for the costs related to relegation; something which (to a degree) Ashley can be personally be held accountable for.

All is not as rosy as it appears, since the interest-free nature of the loan has seemingly been used as a justification by the club to allow Mike Ashley’s company Sports Direct to exploit Newcastle United commercially without paying for the privilege. This matter was put forward and answered at a recent fan forum (24 February 2014):
Steve Cole (SC): “What is the saving that Sports Direct makes on advertising around the stadium?”
“The Club suggested that while it is always proactively looking to attract new commercial partners and to sell that advertising space, in the current climate it could not command a sum for that space anywhere close to the £129m invested into the club interest free by the owner.”

This statement is problematic for a number of reasons:
The club present the ever-increasing showcasing of Sports Direct at St. James’ Park as filling the commercial space in the absence of other commercial partners’ willingness to buy it. This seems very questionable to say the least, especially considering Sir John Hall’s revelation that Mike Ashley’s reason for buying the club was to “market their sports goods in the Far East and would use the Club to help do this” (source: Toon Talk interview). Without advertising Sports Direct, how exactly would Mike Ashley have been able to market their sports goods?
Referencing the current climate as the reason for failing to secure commercial partners despite ‘always proactively looking to attract’ them, it’s very interesting to note that Newcastle United is the only Premier League club that has not overseen significant commercial revenue growth in the seven years since Mike Ashley’s takeover of the club, instead realising a commercial revenue decrease of £10m. On average, Premier League clubs have seen their commercial revenue increase by £24.5m during that period. If the club’s commercial revenue development would have been on a par with its Premier League competitors, this additional revenue would have far exceeded the savings generated from the interest free nature of Mike Ashley’s loan.
The relationship between Mike Ashley not spending a penny on advertising Sports Direct at St. James’ Park and the interest free loan as being laid bare by the club is completely artificial and nonsensical. Despite being compared to an investment in an asset, nobody that pays for advertising would ever be considered an ‘investor’. Advertisers are buying a service and receive none of their payment back from the company they buy the service from. The £129m mentioned is not payment for a service over the duration of a sponsorship agreement, it is a loan principal which sooner or later Newcastle United will have to repay to Mike Ashley. The mere fact that Ashley took over the debt from various financial institutions should not prevent him from paying a fair price for the commercial space.

The simple truth of the matter is that Mike Ashley’s loan is only technically “interest-free”. The club uses it as false justification for the non-payment by Sports Direct for commercially very attractive advertising space; the value of which far exceeds the savings from not having to pay interest on the loan by some £24.5m, if the club had developed its commercial revenue on par with other Premier League clubs. Don’t even just take our word for it – this is what Mike Ashley said himself at a recent Sports Direct AGM when pressed on the subject. After taking no less than 27 seconds to reflect on the question what the advertising would be worth to another company he had this to say (10 September 2014):
“Those relationships are very beneficial to Sports Direct and its shareholders. And I think that nothing else needs to be said.”