NEWCASTLE UNITED hit back hard last night at claims that they had forced Kevin Keegan to resign, criticised his approach in the transfer market and said he had refused to abide by the terms on which he took the job.

The board, who are suing Keegan for £2m for alleged breach of contract, issued a strongly-worded statement, insisting that he had been allowed to manage the team “without interference”, and that he had agreed on his appointment in January to report to a director of football.

The statement accused the League Managers’ Association, who are acting on Keegan’s behalf, of “giving rise to a misleading impression” among the club’s fans. One of the directors told The Sunday Times last night: “Right from the start, at his interview for the job, it was made perfectly clear to him the way the club wanted the job done. There was not going to be a Chelsea scenario, with Newcastle paying big money and massive wages for established stars.

“The club was going to be run like Arsenal, and the emphasis would be on scouring the world for the best emerging young talent, like Arsène Wenger has done with Nicolas Anelka, Patrick Vieira, Cesc Fabregas and Emmanuel Adebayor. We talked of building the club up over the next three to five years. Kevin sat there, agreed and took the job on those terms.”

Instead, told in the summer that he had a budget of £12m, Keegan proposed signing David Beckham, Ronaldinho, Frank Lampard and Thierry Henry. “It was so bizarre that you had to wonder if he was doing it on purpose, to try to get sacked,” our source said. “There was no getting through to him. What he wanted would have cost the club £200m in transfer fees and wages, and he had been told over and over again that he had around £12m to spend. It is common knowledge that we have been looking for a centre-half. Kevin’s suggestions were Jonathan Woodgate, Sami Hyypia and Richard Dunne. Where’s the residual value in them?

“On the James Milner issue, the truth is that Kevin sat in on a meeting where the sale was discussed. Kevin reckoned James was worth £7m-£8m, and the plan was to use that cash to buy Sebastian Schweinsteiger [from Bayern Munich]. Tony Jimenez [vice-president in charge of player recruitment] did the negotiations with Villa and managed to agree a fee of £12m with them, which was brilliant. Everyone thought it was too good to turn down, so the deal was done. Unfortunately, Schweinsteiger then said he wouldn’t come.”

The board reject suggestions from the Keegan camp that they tried to sell Michael Owen behind the manager’s back. Our source said: “The situation is clear. We didn’t try to sell Michael or speak to any club about him. On the contrary, we have made him a good offer to stay. It is an extended and improved contract, the richest ever offered to any Newcastle player. He has sent a letter back, saying he appreciates the offer, and talks are ongoing.”