Deloitte & Touche Report Shows Newcastle’s Problems


The Deloitte & Touche Report has been issued for season 2006 -2007 and it has some eye-openers for Newcastle fans.

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Mike Ashley – he should be dismayed with wage bill

In the season under review (2006-2007), the Newcastle wage bill was the 5th highest in the Premier League. behind those only of Chelsea, Man United, Arsenal and Liverpool, in that order.

However it seems that the top 4 teams actually got some value from their players’ high wages, because they finished in the top 4 in the Premier league in the order of Man United, Chelsea, Liverpool and Arsenal.

Newcastle however, even though 5th in the total wage bill, finished in 13th position in the Premier League with 43 points, a full 25 points behind 4th placed Arsenal.

That was both our worst points total ever, and lowest position ever in the Premier League – not good and Glenn Roeder paid the price for a poor season.

We equaled that points total this season, while finishing in 12th position. 🙁

You cannot blame Mike Ashley for wanting to reduce that wage bill, because he’s obviously not getting value for money from his players.

Note that Mike Ashley was not in charge of the club for the season under review (2006-2007), but our wage bill went up £10M for last season, and we improved to 12th place in the league, still on 43 points – again not good. 🙁

In 2006-07 Premier League wages costs rose overall by 13% – which were just marginally ahead of an average 11% rise in revenue (or turnover), to £969M. Those revenues are almost certain to have broken the £1B barrier in the season just finished.

Clubs paid an average of £48.5m in wages, with Chelsea having the biggest wage costs at £133M and Watford the smallest at £17.7M. That means Chelsea’s wage bill was more than seven times that of Watford.

Newcastle’s wage costs were £62.5M and that was a 20% rise on the previous season. Since we are told the wage costs this season just completed grew by £10M, we have to believe our wage bill for last season was around £72.5M.

Here are the wage costs for the Premier Clubs, with the positions they finished in the PL for 2006-2007.


Club           Wage  League  Wage  Change
               Rank   Pos   Costs
                              £M   

Chelsea          1     2    132.8   17%
Man Utd          2     1     92.3    8%
Arsenal          3     4     89.7    8%
Liverpool        4     3     77.5   13%
Newcastle        5    13     62.5   20%
Prem Lge avg     5.5  10.5   48.5   13%
West Ham         6    15     44.2   41%
Tottenham        7     5     43.8    8%
Aston Villa      8    11     43.2   13%
Everton          9     6     38.4    4%
Middlesbro      10    12     38.3   n/a
Portsmouth      11     9     36.9   49%
Blackburn       12    10     36.7   10%
Man City        13    14     36.4    6%
Fulham          14    16     35,2   17%
Charlton        15    19     34.3    0%
Bolton          16     7     30.7    8%
Reading         17     8     29.8  109%
Wigan           18    17     27.5   34%
Sheffield Utd   19    18     22.4   48%
Watford         20    20     17.6   76%

Notice the big increase in wages for the teams who were promoted to the PL, yet they were still at the bottom of the wage table, and Watford and Sheffield United were still relegated.

Only eight Premier League clubs showed operating profits for the season, namely Manchester United, Arsenal, Liverpool, Tottenham, Newcastle, Reading, Sheffield United and Watford. So at least we were still able to make a profit, even though the wage costs were so high.

Now that Newcastle United is a privately owned company, it’s unlikely the club will publish their operating results in the future.

However, this brief look at Newcastle’s finances does give us an interesting look into why Mike Ashley and the board want to reduce the wage costs at the club.

Comments welcome.



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58 comments so far

  • Marat18

    May 29, 2008 at 7:23 PM

    Comment #1

    NUFC underperfoming??? what a surprise!

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  • Leo

    May 29, 2008 at 7:29 PM

    Comment #2

    its like a business lesson on my favourite business site, i just finished a degree in the subject damn i cant get away from it lol

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  • Leo

    May 29, 2008 at 7:30 PM

    Comment #3

    favourite business site????

    damn i am obsessed i meant football site lol

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  • nomis_jade

    May 29, 2008 at 7:34 PM

    Comment #4

    I think having the wage stucture may ahve been ok but we have not really had a manager to good enough to match it since Bobby. It really all started with souness with him bringing in owen and luque.

    I would not be against NUFC trimming the wage bill at all. Even if it meant that some players dont come to us. We have got to look to the future. We ahve tried the ‘give good players, whatever they want just sign for us’ and it hasnt really worked, so lets try a different tact.

    Arshavin and that greek defender tom_toon loves and arda turan and i would be happy!

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  • sparetheman

    May 29, 2008 at 7:40 PM

    Comment #5

    I don’t think we really needed a table to tell us we’ve underachieved in the past.

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  • Tom

    May 29, 2008 at 7:46 PM

    Comment #6

    Its not a surprise, although we’ve wiped clean our debts of £69.9 million since ashley took over, and we took a fair few of the big earners off the wage bill and replaced them with players who were all on about £20k less than their respective replacement.

    I think the 2008 numbers will be lower as we sold alot of big earners.

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  • Toon1978

    May 29, 2008 at 7:52 PM

    Comment #7

    More doom and gloom, we CAN fight for europe next year IF Ashley lets KK make some good signing and thats IF we can get them which i’m sure we can ie Turan(anyone heard anymore about him?), Nicky Shorey,Cuellar,Gomis OR Gomez.

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  • Andy1

    May 29, 2008 at 7:54 PM

    Comment #8

    I bet West Ham’s was a lot higher this season. They signed Dyer, Parker, Bellamy etc.

    I don’t really think we can afford to try and cut the wages of or sell our best players. The top players at the club are one of the only things – and the suppoters, that can convince decent players we aren’t just another mid table side.

    Many players would love to play with the likes of Owen, I am sure and if we didn’t have these, the club would be harder to sell to the players we are aiming at. Hopefully holding onto top players shows ambition and attracts top young players, like Turan, who won’t purely be coming for the money, and will improve the squad significantly – without increasing the wage bill so much.

    Hopefully the youngsters we’ve got already will develop enough so we can throw them in and are able to sell the likes of Smith and Duff if they cannot prove they are worth the wages. But at the moment I feel we need to hang on to all our players really. The squad is small and if we let players go we might need 10 or 11 in to make up the numbers. This would only unsettle the team.

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  • Chris F

    May 29, 2008 at 7:59 PM

    Comment #9

    er, Ed, the reports i read said the £10m increase was for the 2006/7 season being reported on, not this season just completed.

    i can’t see how it will have gone up £10m in the past year, ok we signed 9 new players, but not all of them will be on ‘mega money’ and we also got rid of a few of our, at the time, high earners in Parker, Solano, Dyer, etc.

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  • Toon_Ksk

    May 29, 2008 at 8:00 PM

    Comment #10

    At least we can say that the club is now more stable than before. Shepherd’s way of running the club could have got us busted like Leeds. Fear not, the club is now in good hands.

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  • Tom_Toon

    May 29, 2008 at 8:01 PM

    Comment #11

    Duff – 80k
    Smith – 60k
    Ameobi – 30k
    Rozehnal – 40k
    Cacapa – 40k
    ———————————–
    Carr – 60k
    Ramage – 20k
    Troisi – 5k

    No problema.

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  • The Entertainers

    May 29, 2008 at 8:02 PM

    Comment #12

    Hang on, did’nt we make a profit?????…..The one thing Newcastle have always offered new players is a good wage packet. We cant compete with the top four for prestige, we cant compete with the glamour of the bright lights of London, so we offered bloody good wages. If this attracts the creme de la creme, then we get good football, big crowds and hey presto a profit. This cycle can be said for the opposite, average wages, average footbal, average crowds and guess what……in a time when we are competing with other top teams for a slice of the pie in Asia, Africa and the Americas, do we not have to look attractive on the football front. Speculate to accumulate!

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  • Tom_Toon

    May 29, 2008 at 8:09 PM

    Comment #13

    We should offer players top wages but get rid of the currently average or rubbish players on top wages.

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  • Marat18

    May 29, 2008 at 8:11 PM

    Comment #14

    I bet fat sam had pay-cheque as fat as the man himself!
    and jail-bird Barton, Smith and Viduka are high earners too.
    don’t forget Sam almost doubled size of back-room staff, i.e. one who is responsible for ball travel distance checking, one who is responsible for checking if ball travels at the right height during the matches, etc.

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  • toonbully

    May 29, 2008 at 8:13 PM

    Comment #15

    Value for money is a difficult question . ?
    1) Firstly we pay them far too much money anyway but £ 62.5 million, say divided by 40 players is about £1.5 million each annually , thats about £135,000 per month , or about
    £ 34,000 on average , per player .
    2) Considering Michael owen’s on about £110,000 per week , I read somewhere it means others are probably on about £60 – 70 k , and the bottom earners are on £15 – 20 k.

    3) When you take into account the average eraner in the North East is on about £15 – 20,000 per annum ITS A LOT OF MONEY.

    4) Then these persons pay £40 odd pounds per ticket per match then they should expect value for money .

    5) I believe all the players even Michael OWEN and Oba should be on a standard wage of say £20,000 k per week .

    6) They should get incentive bonuses to top their wages up ..i.e. goals £2000 each , assists £1000 each , keepers would get £5000 for saving penalty , and £2000 for making goal saving saves , defenders goal saving tackles etc etc…

    7) It could all be based on the OPTA ratings which we see so often , and is highly fair .

    8) Additionally if everyclub took up this scheme it would work in the lower leagues as well .

    9) Players would not necessarily want to move to Chelsea and sit their arse on a bench as they would not be getting their incentive bonuses..

    10 ) Equally players would not be playing injured as so many have in the past as they would need to get their money , additionally injured players would have their wages reduced in increments the longer they are unfit , an incentive again to get unfit . It could be offset by players taking out insurances against loss of wages..

    11) Finally with all these conditions in place you would see real heart and passion back in the game , and supporters who pay so much of their disposable beer money to watch a game getting ….REAL VALUE …

    UP THE TOOOOON………..

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  • Bill F

    May 29, 2008 at 8:23 PM

    Comment #16

    The fact is is that all of the clubs in the various leagues are paying out far too much on wages and transfers. And this is a worldwide problem. It would need FIFA or someone to put a cap on both. Its doubtful if this will happen so the rich clubs will get richer and every one else will struggle. It just needs one money bags owner to totally screw up the whole system by spending far to much on players and wages. Its not a level playing field and I expect to see a world wide super league at some point and the rest of us will be picking up the crumbs from their table.

    Until the revolution that is. 😉

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  • GEORDIE69

    May 29, 2008 at 8:31 PM

    Comment #17

    TOM TOON Ramage 20k ha ha ha ha
    Your mad!

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  • The Entertainers

    May 29, 2008 at 8:33 PM

    Comment #18

    I completely agree with Bill F. FIFA needs to get involved, for any wage cap etc to be introduced. No one team or even league would be the trail blazer in wage caps. It would leave the individual or league at such a disadvantage to all the others offering higher wages. On a similar note i dont think Owen’s wages are the problem at the Toon. After all he is the countries best striker, captain of our club and when fit! a damn fine player for us. If the going rate for wages are 100,000 pw for the best then give Owen that wage. However its the Smiths, Bartons who are doing nothing for us and WILL be on high wages. That goes for the Marcelinos and Vianas in the past. These are the players that hurt the clubs finances, not the Owens and Martins. Here at Newcastle we are not alone in this problem, just think of Kewell, Saha, Mendieta and a whole bunch at Chelski…..

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  • nate dawg

    May 29, 2008 at 8:38 PM

    Comment #19

    carr was on 60k! i think i have just lost all hope in the world
    if he can get 60k for doing nothing then wow

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  • chuck

    May 29, 2008 at 8:58 PM

    Comment #20

    The owners and teams will have to reach a compromise, A percentage of profit will have to be reserved for the owners and the rest to the players.
    In other words a salary cap, whereas a designated lump sum ,equal in amount, will be used by each club to pay player salaries, resulting in an enforced equality of talent.
    Naturally all salaries will not be equal, star players receiving more money.
    Its a system employed by the NBA in the US
    which is acceptable to both parties and has the effect of creating a type of parity in talent levels, meaning the wealthiest clubs can`t out buy the less wealthy teams.
    Its time will come when player wages reach more than the owners are willing to pay.
    Guaranteeing the owners a defined profit %.

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  • Tom_Toon

    May 29, 2008 at 9:13 PM

    Comment #21

    How much was Ramage on then? Im just guessing, i cant see him being on less than 15k.

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  • Slam Dunc

    May 29, 2008 at 9:13 PM

    Comment #22

    If you look at this Daily Mail watch, the unofficial communication channel of Newcastle United FC it clearly states our transfer policy.

    To sign Europes rising stars and cut the wage bill.

    It also points out that manager Kevin Keegan is at odds with this strategy and wants to sign experienced Premier League stars (on high salaries).

    So who wins there then, Ashley or Keegan, let me guess !! (or ask Jose Mourinho)

    http://www.trophy4toon.co.uk/forum/index.php?topic=207.0

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  • Rob Kirton

    May 29, 2008 at 9:32 PM

    Comment #23

    2006 – 2007 looks particularly bad. Then again we had Luque picking up 3 guys wages…..

    In light of this, the the stalling to date over Taylors new contract makes sense. Yes we should pay him the rate for the job as he is worth hanging onto; however he did try renegotiating only 12 months into a four year deal that he had been happy to sign up to.

    Tom_Toon: Ramage may have come very cheap. Taylor is reputedly on 8k per week now. When measured against others, he deserves a rise.

    It has always been club policy to pay defenders the least. having said that there are a couple of former centre halves I can think of who maybe should have been playing into club coffers just for the privilege of playing in the prem :0)

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  • Marat18

    May 29, 2008 at 9:33 PM

    Comment #24

    i cannot see ramage being on a huge wage bill, 15-20k/w is the maximum. even if taylor is on 30 (or somethin) atm.

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  • Chris F

    May 29, 2008 at 9:34 PM

    Comment #25

    ramage wont have been on more than 10k/w

    taylor is supposedly on around 5 or 6k/w still, hence him being after a new deal.

    ramage will no way have been on more than 3 times as much.

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  • NUFCFAN

    May 29, 2008 at 9:35 PM

    Comment #26

    arent we meant to have a small squad as well!

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  • ronaldeano

    May 29, 2008 at 9:39 PM

    Comment #27

    The only reason why this is true is cos ffs was a crap buisnessman and appointed the wrong people to manage the club. He went for the quick fix, and employed managers that were totaly incapable of taking NUFC to the top and keeping them there. Im glad that MA is taking the sensible buisnessmans aproach, but, MA is NOT ffs. He has restructured the club and is curently investing in talented youngsters and that is good, but, we need MA to invest a lot of money into the first team NOW. We have KK at the helm and the only way is up. All that is happening now (with signing youngsters) will all be in vain if we cant compete for Europe next season. We need the quality in NOW Mike!

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  • ronaldeano

    May 29, 2008 at 9:50 PM

    Comment #28

    HEY, FREDDY, only a complete buffoon sacks the great Sir Bobby Robson 5 years into the season and appoints Greham Souness and gives him 50 million of the clubs money to WASTE! ( not on Owen tho)! And takes 4 MILLION a YEAR out of the club for wages to pay for hookers, cos nobody elce would go near a fat ginger, greedy theiving so and so like you!

    Bad buisness

    Bad man

    Theif

    Conman

    I for one am glad to see the fat back of you Freddy!

    I hate you.

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  • Gordon

    May 29, 2008 at 9:56 PM

    Comment #29

    why do you keep saying Luverpool finished 3rd in the league and Arsenal 4th????
    It was obviously the other way around. Forgot about the season already Ed?!

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  • tommyy

    May 29, 2008 at 10:00 PM

    Comment #30

    They are on about the season before Gordon.

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  • Marat18

    May 29, 2008 at 10:26 PM

    Comment #31

    !!!Ppg (Toon Army Poland)!!!
    !!!Ppg (Toon Army Poland)!!!
    !!!Ppg (Toon Army Poland)!!!

    I missed you last post in “Newcastle maintain interest in young french blah-blah-blah…”, mate.

    we are going to make the same thing – make official fan-club from Russia. and planning to visit SJP in November too (it’s flexible anyway), so it would be great to co-operate.
    Don’t know what number, may be 4-5 lads (not a great number, but our web-site is less than one year old, so we are planning to develope well in the future).

    btw, I visited you nufc.pl site few times, looks good. and i heard that your were going to make a week-end out on Manure-NUFC match in January. that had to be bloody painfull 🙂

    P.S. OMG, that would be great to lift the roof of SJP together with fellow Polish Magpies and Geordies!

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  • Geordie Nick

    May 29, 2008 at 10:43 PM

    Comment #32

    gordan- hav u forgot how to read and count? 2006-2007 season was last season not the one just gone

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  • Przemekdwa

    May 29, 2008 at 10:44 PM

    Comment #33

    Cheers marat.maybe someday we will meet at sjp.if you want check out our site.www.nufc.pl

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  • Marat18

    May 29, 2008 at 10:51 PM

    Comment #34

    Przemekdwa

    are you the same person with Ppg (Toon Army Poland)?

    I’m desperate to visit sjp this season.
    yeah, hopefully, we will cheer together for magpies one day (hopefully finally wining some silverware 🙂 )

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  • Djr (Toon Army Poland)

    May 29, 2008 at 10:58 PM

    Comment #35

    Hi Marat

    could you give me your personal e-mail ?
    you said that you visit nufc.pl few times… can you write something about you and another fans NU in Russia on nufc.pl or our forum ? Maybe it will be beginning our partnership – for example journey to NCL together to see SJP and many beautiful places in city
    You can see photos from our trip to NCL on forum nufc.pl

    Regards mate

    PS I know PPG 🙂 he was with me and another fans in NCL 3 weeks ago

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  • Przemekdwa

    May 29, 2008 at 11:06 PM

    Comment #36

    I am just one of the polish magpies.i dont know exactly who is Ppg.i wasn`t been on sjp yet but i hope i will be on match in next season with toon army poland.

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  • Danish_Magpie

    May 29, 2008 at 11:28 PM

    Comment #37

    In my opinion we should try to get in:

    Shorey 2.5mm
    Crouch 10m
    Arashavin 9-11m
    Christian Poulsen 8-10m
    Upson 8m
    Torosidis 4m
    = 42.5m

    to give us:

    GK: Given, Harper, Foster/Krul
    RB: Beye, Torosidis
    LB: Shorey, Enrique
    CB: Upson, Faye, Taylor, Edgar

    RCM: (Barton – jail), Milner, Geremi
    LCM: N’Zogbia, Emre
    DM: Chr. Poulsen, Butt

    Deep Striker: Owen, Arashavin
    Striker: Oba, Crouch, (Viduka -inj), Carroll

    (note: Owen would be ahead of Viduka and Carroll as strikers obviously, I just didn’t want to have two Owen’s in the team. Well I WOULD like that actually but you know what I mean:-))

    This implies I would send Lua-Lua and Krul/Foster out on loan and get rid of:

    Smith 5m
    Duff 1-2m
    Ameobi free
    Cacapa free
    Rozenhal 2m
    =8m + lots of saved wages

    Net spending of 35-40m including fees, for what I think is a top quality team..

    This is assuming we stick with the 4-3-3 btw.

    What do you guys think? Fairly realistic and good targets in my opinion..

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  • Tom_Toon

    May 29, 2008 at 11:30 PM

    Comment #38

    http://www.bbc.co.uk/dna/606/A36655482

    There are my ins and outs.

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  • Chris F

    May 30, 2008 at 12:08 AM

    Comment #39

    upson is no better than what we have, in all honesty.

    shorey would be a good buy, give enrique some competition and keep him on his toes.

    i do think crouch would be an excellent buy for us, as he seems to play extremely well with Owen when they play for England together.

    Arshavin would be a quality buy, but i can’t see it happening because of how well Zenit have done, i can see him going to a side with european football, if he leaves at all.

    poulsen, not so sure, he’s a good player, and we will need a central midfielder or two to compensate for Barton’s incarceration(s) and the fact that Butt is getting on in years, and Emre is *always* injured.

    Maybe that’s why we’ve been linked with emana and veloso, though i think we’re living in la-la-land if we think we could get him.

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  • Tom_Toon

    May 30, 2008 at 12:12 AM

    Comment #40

    David Luiz for CB. Break the bank for him. If we get him i hope Drogba stay so David Luiz will teach him a lesson, aka ruff him up.

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