Some of Newcastle United financial results have been reported this morning and generally they lead to some grim reading, but that was to be expected once the club was relegated two years ago.
Mike Ashley – his interest free loans were a life-saver
There are a couple of things that jump out from what we’ve been able to understand from the club’s financial figures.
One is that the club was managed very well financially in the Championship season, and the second is the club couldn’t have survived but for the interest free loans given over by owner Mike Ashley, when the club needed them.
Here are some of the major financial figures that we’ve been able to gather so far, in no particular order:
- Revenue (Turnover) went from £86.1M in the relegation year to £52.4M due to a big reduction in TV rights – that;s a 39.5% drop
- Television fees fell by by 57%, from £37.6M to £16M – so you can see how important it is to be in the Premier League
- The wage bill was cut from £71.1M to £47.5M – a cut of around a third.
- Wages – £47.5M – were a massive 90.6% of the total revenue of£52.4M. which of course was unsustainable without Mike Ashley’s loans
- Newcastle ow a total of £150M, and £139.8M of that was to the owner. The Ashley loans are interest free, and will continue that way
As an example at 5% that’s savings of around £9M a year, and that’s a low interest rate.
- Corporate hospitality revenue fell to £2.8M from £6.7M – about a 58% drop
- The club made an overall loss of £17.1M, up only slightly from the £15.2M in the relegation season, and that shows the excellent financial management
- Commercial income, including sponsorship and catering, dropped by around 20% to £15.4M from £19.4M
- Total operating costs were cut from £98M to £74.4M – around a 25% decrease
- Revenue from season tickets dropped by £4.6M, but that’s all we know so it’s hard to know the percentages
- Wages to revenue (turnover) increased by only 8%
The accounts show very clearly, that although Mike Ashley is not liked my most Newcastle fans, there is no way Newcastle could have kept their good players last season, and in so doing got promotion at the very first attempt, without Mike Ashley’s financial help.
And notice the man is not making one cent of interest on the massive loans he has given to the club.
The accounts also show that Mike Ashley came in and paid off £25M that that was owed to banks, and also advanced the club £13M in transfer fees it was still to receive for players sold in the summer of 2009.
It even seems to us the very difficult situation was actually managed very well by the club, because it’s hardly an easy thing to do, when your revenues are cut by almost 40%.
So that’s the nightmare of relegation for you – let’s hope we win on Saturday.
Managing Director Derek Llambias said this today:
“Our overriding aim in 2009/10 was to secure promotion back to the Premier League at the first attempt. Relegation presented a considerable challenge for us financially.”
“With such a marked reduction in turnover, largely due to reduced TV and media revenue, we needed to cut our operating costs accordingly without jeopardizing our ability to return to top-flight football straight away.”
“We succeeded in reducing our wage bill considerably whilst maintaining the basis of a Premier League squad.” “It has been a significant achievement to keep our overall loss at a level similar to the year before despite the impact of relegation.”
“And our ability to do this has been helped immeasurably by the continued financial support of Mike Ashley, who injected a further £42M into the club last year interest-free.”
The Newcastle club was also helped enormously by the attendance at home gates last season, with the average attendance being 43,388, and that was the 4th highest attendance in England, while Newcastle were a second division side, and more than one million fans visited St James’ Park during the Championship season.
That’s an amazing statistic that clearly shows the support of the Newcastle fan base.
We had always thought the club should have sold more of their players in the summer of 2009, just so they could make ends meet, but we didn’t know at the time that Mike Ashley was willing to loan the club big money to keep them above water.
The fact that happened and that Newcastle got back to the big money league, in their very first season down below, is now a terrific good news story.
It’s sometimes hard to praise Mike Ashley, that’s true, but if it weren’t for his timely loans last season, the club could never have prospered as well as they did last season.