It was confirmed on 16 January, that Kevin Keegan had made a sensational return to Newcastle as manager, eleven years and eight days since leaving the club on 8 January 1997. A popular choice amongst many Newcastle fans Further appointments in January 2008 saw Dennis Wise join the club as Director of Football, as well as Tony Jimenez as Vice President (Player Recruitment) and Jeff Vetere as Technical Co-ordinator. The idea was to complete a continental-style management structure working in support of Keegan. Wise and Vetere should make the initial assessment before calling in Jimenez to do the deal. In addition to this David Williamson was appointed Director of Operations in April 2008. Mort decided to step down as chairman in June and he was replaced by Derek Llambias who is a long-term associate of Ashley.
Keegan's return initially did not live up to expectations as the club went 8 games without a win, made an FA Cup exit, and briefly looked at relegation, but Newcastle were playing the likes of Arsenal, Manchester United and Liverpool. The remaining 8 games of the season saw the club's fortunes turn around and won enough matches to ensure survival in the Premier League, finishing a respectable 12th place. As the season drew to a close, Keegan publicly criticised the board claiming they were not providing him the financial support necessary to break into the Top 4. His accusations caused controversy for owner Mike Ashley who was already battling reports that he had lost millions in a disastrous stock market venture.
As the summer transfer window closed weeks into the 2008–09 season after three days of talks between the board and Keegan on 4 September Keegan resigned after 232 days in charge stating he was unable to continue as manager if he was not in control of who was bought by the club. He said upon leaving "It's my opinion that a manager must have the right to manage and that clubs should not impose upon any manager any player that he does not want". Major protests occurred against the board outside of the ground St. James' Park, in particular against the owner Ashley and Director of Football Wise and during the next league home fixture against Hull City on 13 September.
Owner Mike Ashley and managing director Derek Llambias were warned by the League Managers Association on 5 September 2008 to satisfy the next manager who took charge of the club to avoid a similar situation happening again and damaging the clubs image. The club's board hit back at the warning claiming Keegan was aware of the structure when he joined back in January but Keegan was firmly backed by Richard Bevan, Chief Executive of the LMA, claiming a contract agreement had been broken between Keegan and the board. It was reported in December 2008 that a legal dispute was in brewing between Keegan and Mike Ashley,with Keegan claiming for breach of contract during his time at the club and Ashley claiming damage to his public image. In a long official statement the following day, Ashley announced that he would be putting the club up for sale while outlining the state of the club when he found it, the financial limitations his regime was under and the changes he had made to provide a stable future for the club. While making clear that his statement was not intended to be seen as an attack on Keegan and that he was "still a fan" of Newcastle United and "did not buy Newcastle to make money", in light of safety concerns over attending future matches, he was "no longer prepared to subsidise" the club.
On 24 September, the club registered their lowest attendance of 20,577 for a competitive match since the 1993 promotion to the top flight,a drop of over 4,000 from previous lows. Though the 20,577 crowd was still the sixth-highest attendance in a round with 32 teams including the likes of Manchester United, Arsenal, Liverpool, Chelsea and Aston Villa. This was for a League Cup visit of Tottenham Hotspur, which Newcastle lost 2–1. At the time, Tottenham were bottom of the Premier League with just two points from eight games, while Newcastle themselves were second-bottom on four points.
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