Newcastle Financial State Looks A Little Worrying

Newcastle should be able to recoup about £10M from the previous sales of some of their big-name players, who were also on enormous wages.

The Guardian is reporting that among the payments expected this summer is almost £4M from Aston Villa for James Milner – apparently due on 29th August this year.

In addition to that two £1.4M payments from German club Wolfsburg for Obafemi Martins, the first to be received on 31st August this year and the other payment next August.

Newcastle received £3.25M from Wigan Athletic for Charles N’Zogbia in January of this year, and another almost £800K for David Rozehnal from Rome club Lazio.

So the total of money coming in between last January and next summer will be around £10.85M

But Newcastle have apparently already borrowed money against that security from Barclays Bank, and when that money does come in, it will go directly to that bank to pay off that loan.

We had hoped that money would be available for new players coming in over the summer – but it shows just how strapped Newcastle were for money last summer, as they tried to weather the financial storm surrounding their relegation.

The Guardian is reporting Newcastle’s balance sheet showed their overdraft at Barclays Bank last summer had jumped to close to £48M.

Since that is in addition to Mike Ashley’s interest-free loan of at least £111M, as far as we can make out, Newcastle are now under a mountain of debt.

That’s one reason potentially no money is available to bring players into the club this summer, but of course that will not alleviate the concern of Newcastle fans.

That’s all the fans really care about, but the above financial state is a little worrying,  if true, given the reported poor financial state of clubs like Portsmouth, Crystal Palace, Preston and Hull City are under right now.

Newcastle don’t seem to be in any better shape, from what we can tell.

Hopefully the significantly increased revenues from the PL will allow Newcastle to pay off some of this debt, and then be in a much stronger financial state.

If  the club can survive next season in the PL, then money will surely be then available to strengthen the side next summer.

Comments welcome.

21 comments so far

  • G

    Jun 2, 2010 at 12:17 PM

    Comment #1

    Just read this on another site too. I have to say, it’s a bit worrying to say the least. My backside is going 50pence 5pence now!

  • MacToon

    Jun 2, 2010 at 12:36 PM

    Comment #2

    “a mortgage was registered assigning St James’ Park, the club’s training ground and academy centre to the bank, as well as all their intellectual property such as brand names and even Newcastle’s “trade secrets”, whatever they may be.”

    Very worrying and certainly news to me, 1 minute we owe to an overdraught and next it’s a mortgage, Ashley seems to have cash flow problems!

  • The Entertainers

    Jun 2, 2010 at 1:16 PM

    Comment #4

    I’m not saying we’re in the ‘black’……….but read this story with a huge pinch of salt, as its from our new best friend The Guardian, who for what ever reason seem to be putting the boot in when ever they can……….

  • G

    Jun 2, 2010 at 1:30 PM

    Comment #5

    Hope you are right TE, because unfortuantely, it all sounds far to feasable to me!

  • BeeGuy

    Jun 2, 2010 at 1:48 PM

    Comment #6

    This sounds like lots of us, but on a far grander scale!

  • Thump

    Jun 2, 2010 at 2:48 PM

    Comment #7

    I’m in the same position as G here – my a*se is going like a rabbit’s nose!

  • Mr Books

    Jun 2, 2010 at 2:52 PM

    Comment #8


    Depends how you define close. The balance sheet states the overdraft as £35,781,000. Certainly big, especially if you add on the £111M Ashley loan and take into consideration that both of those are repayable on demand.

    Mac – Ashley doesn’t have cashflow problems – NUFC (like every other premiership club and most championship ones too) has cashflow problems. The main problem being most of the clubs cannot really afford to pay the massive transfer and wage bills and need banks and sugar daddies to keep them ticking over.

    There is however a more telling item on that balance sheet. Matchday revenues were down £3M on the year before and commercial revenues down £6M. Not only that, but both those figures were down on the year before that too. In 2007 we got £25M in TV money and had total revenue of £87M in 2009 we got TV money of £37M and had total revenue of £86M. So those screaming that the higher attendances and increased TV money should have meant money for transfers – afraid not, it has merely replaced the fans not spending as much through the recession/boycotts.

  • Thump

    Jun 2, 2010 at 3:12 PM

    Comment #9

    Mr Books is the administrator waiting to pounce on the Toon, lads!

  • John

    Jun 2, 2010 at 3:18 PM

    Comment #10

    If this is true we need to start cutting our cloth accordingly the high earners should be asked to take a pay cut or be shipped out then we will see who really gives a toss about the club, I saw in an article that Danny Guthrie is on 6 or 8k a week compared to others who are on 50k plus at this rate we will never break even. When was the last time nufc got a huge transfer sum for a player? like Everton with Lescott, Blackburn with Santa Cruz, Bentley, wigan with valencia, why? because traditionally nufc players are over paid and clubs wont pay huge fees and wages. Its time all NUfc players earn the same wages and they shud be small amounts with players who excel being rewarded with wage increases based on preformances in NUFC shirts not past lifes. The basic’s have to be put right from now on or we will never learn from our mistakes.

  • Mr Books

    Jun 2, 2010 at 3:27 PM

    Comment #11

    Thump – I wouldn’t worry about the administrator (well not immediately anyway)
    First off remember that the accounts show the situation 12 months ago. Since then we have spent only £4M on the players last Jan while bringing in cash from sales and moving some very high wages off the payroll. Still not great compared to the much reduced revenues last year, but if we can stay up this year without more than a couple of million spent on the squad, we should clear the overdraft and be in much better shape.

    Ashley has no interest in putting us into administration to try and get his money back – he would get less than selling it as a going concern.

  • John

    Jun 2, 2010 at 3:31 PM

    Comment #12

    Has anyone stopped to consider whats gona happen if say nufc get a very tough start bk in the PL and lose 4 or 5 of the opening games are we gona call for CH head? Have we the money to bring in a new manager and back room staff, starting all over again? Please believe me we are gona need patience in abundence next season. 50k fans turning up at st james to see players who aint gona cut it and a manager untested in the PL it wont be boring thats for sure.

  • G

    Jun 2, 2010 at 3:37 PM

    Comment #13

    I don’t think it will be quite as bleak a picture as you paint John, but I do share your concerns. I think most fans have learned to adapt and will have that little extra patience, however, no doubt the glory muppets will be back next season demanding instant success or CH’s head. Usually wears a baseball cap and smells of cheap superdrug aftershave. If you do find one in the seat next to you next season just give them a warning before kick off to keep their noises to themselves.

  • Mr Books

    Jun 2, 2010 at 3:50 PM

    Comment #14

    Much as I despise it from a supporters perspective. The strategy Ashley is taking regarding this season is actually the best one for NUFC in the long term. If we spend now to try and retain the financial bonus of being in the premiership and fail we will be screwed. If we don’t spend and get relegated, we will be sort of ok. If we dont spend and stay up, we will be in a decent position to build on what is actually now a squad with a lot of young talent in and coming through.

  • Mr Books

    Jun 2, 2010 at 3:51 PM

    Comment #15

    Oh – forgot if we spend heavily and stay up – then we will just be in the same situation next summer

  • Mr Books

    Jun 2, 2010 at 4:26 PM

    Comment #16

    Hopefully we don’t call for the managers head either. When last seasons accounts are published they will be the first since the 2004 accounts not to include an exceptional cost line item for change in team management. That has cos us £16.5 Million over the last 5 years
    2005 2.3M (Robson)
    2006 3.2M (Souness)
    2007 1.1M (Roeder)
    2008 4.6M (Allerdyce)
    2009 5.3M (Keegan)

  • G

    Jun 2, 2010 at 4:35 PM

    Comment #17

    I still think we should take Souness to court to get that money back. That man played for the sack at the end. He knew the writting was on the wall and so he resigned himself to losing, then helped speed the process by deliberately playing loads of players out of position. We should have dismissed him for gross misconduct and saved a few million.

  • MacToon

    Jun 2, 2010 at 6:58 PM

    Comment #18

    post 8, “afraid not, it has merely replaced the fans not spending as much through the recession/boycotts.”

    No, it stems from the dire way Ashley has run the club. Budgeting on 25k attendances last season but averaged 43k! and that’s without mentioning the fact his ways got us relegated!

    Also a cash flow problem because we were told Ashley was giving the club £X amount each month (can’t remember the figure) but actually he was borrowing the money to fund the club, if he had the cash it would be cheaper as no interest would be paid on the amount!

    Also this time last year when we were up for sale and told the overdraught was £18 mil (I think the figure was around there) but it became nearly £48 mil ! No wonder he couldn’t sell the club.

    Lies, lies and more lies from this owner, makes president Nixon seem like an angel.

  • Otter

    Jun 2, 2010 at 10:22 PM

    Comment #19

    It’s important to remember that the PL is changing the parachute payment system again, giving even more money to relegated clubs starting next season. If we stay up without spending much it would be great, but even going down again without spending much could leave us in a good financial position, as the PL TV money and parachute payments pay down those debts.

    There is a significant possibility that some big-spending clubs who regard the top four places as their right could implode, and clubs run in a more business-like fashion would take their places. Liverpool’s recovery from addiction to Champs League money will make for interesting times there. They could be the next Leeds.

  • G

    Jun 2, 2010 at 11:04 PM

    Comment #20

    An ironic finishing statement there Otter@19. If what you say is true, then given the current financial status of both clubs, Leeds could well be the new Liverpool?

  • Trent Toon

    Jun 3, 2010 at 2:10 AM

    Comment #21

    Mr Books

    I 100% agree.. The no money plan is good for our future!!

    I have been saying this for weeks..
    As soon as ed posts something about the finacial state of the club everyone sides with no spending…

    We jsut have to wait it out the summer hope for one or two new faces and then when the season starts agian we will be fine…


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