Newell played for Liverpool's youth teams as a schoolboy, but was released without being offered an apprenticeship. He made three league appearances for Crewe Alexandra in 1983 before signing for Wigan Athletic of the Third Division in October of that year. After scoring 25 goals at this level, Newell moved up to the First Division in January 1986 when he joined Luton Town for £85,000. On 26 October 1986, he scored a hat-trick in a 4–1 league win over Liverpool – the defending double winners and the dominant English league side of that time.