Derek LLambias has opened the books on Newcastle United a little today, and has said the club is currently paying out £40M in wages when the revenues coming in are only £50M.
Managing Director Derek Llambias said today:
“That is a lot of money to find. Season tickets we have been really lucky in that we had 28,000 this season which was good.”
“But you need to be up around the £100M mark to be able to afford the wage bill we have.”
“Mike has admitted he has made mistakes with some of his appointments which have caused all sorts of problems within the club and within the city.”
“We are where we are. He is staying.”
“It is not a normal business. You can run a business when 80 per cent of your revenue is down to payroll. Football needs a wake-up call.”
But surely if Newcastle do get promoted things on the financial side will be a lot better next season.
The club has a £40M wage bill and £50M revenues this season. which is why Derek is talking about an 80% wage bill compared to incoming revenues.
But next season the wage bill may not be too much above £40M. We expect Nicky Butt to retire (£3M a year wages), and the new players shouldn’t raise the wage bill that much.
We have to say that we keep wondering if Mike Ashley is thinking of selling Coloccini this summer – Fabricio is on a reported £3.5M in wages on Tyneside.
So if we make the Premier League and get back to £100M in revenues, then our wage bill could be just 40% of revenues next season.
That’s a wage bill that is cut in half when compared to incoming revenues.
This season is certainly a non-sustainable business model in terms of finance.
The club can afford to drop to £50M revenues and still pay out £40M in wages, but not for long.
Which is why it’s absolutely crucial to be promoted in May.