Newcastle Lost £3.9M Last Year – Revenues Up To £88.4M

Newcastle United have today published its annual accounts for the financial year ended 30th June 2011, and the results are good.

Derek LLambias – announces excellent financial results for Newcastle

The overall loss for the year (after amortization) was reported to be just £3.9M, less than the £4.5M estimate given some months ago, and that compares to a loss of £33.5M in 2009/2010 and £37.7M in 2008/2009.

Promotion to the Premier League resulted in a 69% increase in revenues, from £52.4M to £88.4M, and that was due to a three times increase in TV revenue.

Ticket sales revenue rose 16%, from £20.9M in 2009/2010 to £24.3M this financial year, based on an increase in corporate hospitality income associated with Newcastle’s return to the Premier League.

Just under a million fans attended St. James’ Park in 2010/2011, which was the the third highest attendance in England.

Another important factor over the last few years is that Newcastle have worked to bring its wages-to-revenue ratio down to a long-term sustainable level.

As an example 2008/2009 wages accounted for 82.7% of revenues, rising to 90.5% in the Championship season, and for the last financial year wages accounted for only 60.6% of  revenue.

The net cash spend on player transfers to June 2011 was a plus of £5.4M, which includes the £35M fee from the sale of Andy Carroll to Liverpool FC in January of 2011, and Newcastle have since spent a further £25M in cash on players and their wages.

When Mike Ashley bought the club in the summer of 2007, he inherited outstanding deferred transfer payments totaling £36M for players both in the squad and those who had already  left the club, and now the club is owed £5M from other clubs.

Newcastle have now cleared all of its third party debts, which stood at £76M in 2006/2007 and at that time  the club incurred finance costs of £6.5M.

The debt owed to owner Mike Ashley remains at £140M, which continues to be provided interest-free by the Newcastle owner.

The Club secured a new two-year shirt sponsorship deal with Virgin Money in January of this year, and they earlier announced plans to sell the full naming rights to the stadium in order to help  maximize revenue.

Newcastle United’s Managing Director Derek Llambias had this to say about the results:

“The Club’s financial results for the year end June 2011 are extremely strong. We can now count ourselves amongst very few clubs across the UK and Europe who are operating at close to break-even.”

“What is particularly pleasing is that we have achieved this whilst also ensuring we have a strong squad sitting firmly in the top third of the table and currently pushing for a European place.”

“Some of the key financial principles we set in place when Mike bought to the Club back in 2007 are now beginning to reap rewards. Most notably, our adherence to a strict transfer policy which avoids, or limits wherever possible, the acceptance of dated payments for players bought or sold.”

“We believe it is a far healthier financial model to settle full transfer fees for players up front, not dated over a period of years.”  “We have dealt wisely in the transfer market and reinvested the income received from player sales into improving the squad. “

“Our net cash spend on player transfers to June 2011, which includes the sale of Andy Carroll, was a receipt of £5.4M, with a further £25M  in cash spent on transfers and players’ wages since June 2011.”

“We have also worked hard to address an inherited wages-to-turnover ratio which was unsustainable. Wages now account for just over 60 per cent of turnover and we feel this is a healthy and affordable level.”

“A further significant achievement has been to clear all of the Club’s interest-bearing debt, which in 2006/2007 was costing £6.5M a year just to finance the debt. Mike Ashley continues to provide loans totalling £140M interest-free, for which we are extraordinarily fortunate. Once again, Mike has not taken any money out of the Club.”

When Newcastle now buy players in the transfer market they pay the full amount in cash up font, and that in itself is a very positive thing for Newcastle in the transfer market.

That’s because other clubs pay for the fee in yearly installments, as Newcastle did under Freddy Shepherd, simply because they don’t have the money to pay the full fee up front.

The selling club therefore gets the full transfer fee up front when they sell to Newcastle United – that’s a huge advantage for Newcastle.

These are excellent financial results for the club, and while Arsenal are undoubtedly the best run club financially in the country, Newcastle could well become the second best run club in England  very soon, if we are not there already.

That’s got to be good news, and here are the updated revenues and profit (all losses)  figures for Newcastle United  over the last four financial years:

Finally if Newcastle do make profits in future years, Derek LLambias has said the profits will be reinvested into the club, and can be used for example to buy new players – so the intention is indeed to operate Newcastle as essentially a non- profit business.

That’s great and for those readers not savvy in these financial things, believe me when I say that  Newcastle have done a great job over the last couple of years to put their financial house in order, there is just no way of getting away from that.

And that’s whether you love or hate Mike Ashley, the owner.

And if you believe the Daily Telegraph, they reported yesterday that it’s their understanding Newcastle will make a profit of close to £10M for this financial year, which ends on June 30th this year.

How much is that Lionel Messi worth again? 😀

Comments welcome.

44 comments so far

  • Colo-Sus

    Mar 8, 2012 at 2:55 PM

    Comment #1

    Reading between the lines….

    haha nah only kidding

  • Ibizatoon

    Mar 8, 2012 at 2:55 PM

    Comment #2

    Reading between the lines, we’re going into administration

  • ToonIcon

    Mar 8, 2012 at 2:56 PM

    Comment #3

    Great news to see the club back on track financially a couple of good summer signings and the future is looking grear

  • bobby jay

    Mar 8, 2012 at 2:56 PM

    Comment #4

    Well played Mr Ashley !

  • Tsunki

    Mar 8, 2012 at 3:02 PM

    Comment #5

    Reading between the lines I see white space which some people like a lot. And it tells me our real name is Rangers.

  • Ibizatoon

    Mar 8, 2012 at 3:08 PM

    Comment #6

    Tsunki 😉

  • spitfire_

    Mar 8, 2012 at 3:11 PM

    Comment #7

    Well done to Ashley but if he bring back Chris Mort will be better. I just can’t stand Llamearse. Mort had comunication with the fans and he was charming… not in a gay way.

  • irish_nufc_fans

    Mar 8, 2012 at 3:16 PM

    Comment #8

    First time posting here lads! a long time watching the comments and by far this is the most level headed group going!

    just want to say that these results along with our league form show that we should reluctantly trust in the hierarchy that exists at nufc!

    results dont lie as they say!

  • Beattie25

    Mar 8, 2012 at 3:18 PM

    Comment #9

    I don’t know if this is good news or bad, someone please eliviate my fears.

    Does this mean by not breaking even Ashley will have to invest his own money into player recruitment and/or we will have to rash cash via player sales?

    Can we get 20 million for Simpson?

  • martoon

    Mar 8, 2012 at 3:19 PM

    Comment #10

    I’m still slightly puzzled about the net transfer money – roughly the money from the sale of Nolan & Enrique should cover buying Cabaye, Marveau etc. I know there are agents fees etc. for Ba but you would think there would be a good chunk of the Carroll money left especially as the Cisse transfer in not included in this.

  • Ibizatoon

    Mar 8, 2012 at 3:21 PM

    Comment #11

    Beattie…I thought I saw somewhere yesterday they were expecting us to be making a profit (think I read in the £10m ballpark) and that would be invested into players. So really not sure where this leaves us.

    Hmmm…who would be foolish enough to pay 20m for Simmo….Liverpool perhaps? Maybe Pardew needs to assure us Simpson will not be sold at any cost, then he’s as good as sold 🙂

  • Ibizatoon

    Mar 8, 2012 at 3:26 PM

    Comment #12

    Irish…I’m with you. If we can get some really entertaining attacking football going i’ll be 99% happy. Overall I’m proud once again of our great football club

  • Thump

    Mar 8, 2012 at 3:26 PM

    Comment #13

    “Once again, Mike has not taken any money out of the Club.”

    The snake doth protest too much methinks.

  • Thump

    Mar 8, 2012 at 3:27 PM

    Comment #14

    Irish: Us? Level headed? Haha you musn’t have been reading for long matey! 😛

    Is anybody off to the reserves game tonight? Mackem’s @ SJP, 7PM k/o, £3 entry (free if you’re a season ticket holder or member)

  • argentoona

    Mar 8, 2012 at 3:28 PM

    Comment #15

    If we do good in the premier league for 2-3 seasons more we will be able to pay of mike ashelys 140 million interest free loan
    I just hope uefa stick to their policy and ban clubs who operate at a lost


  • Beattie25

    Mar 8, 2012 at 3:28 PM

    Comment #16

    Would the carroll sale not have gone on last years accounts?

  • Londtoon

    Mar 8, 2012 at 3:29 PM

    Comment #17

    Bare in mind this was as of June 2011. May already be in profit over the last 2 quarters. And perhaps should we get Europe and get extra tv revenues along with the likes of Alan Smith to depart and his redonkulous wages then hopefully we could have a good summer in terms of who we buy.

    We can hope and look onward and upward.

  • Ibizatoon

    Mar 8, 2012 at 3:29 PM

    Comment #18

    Irish…On the level headed posters comment….stick around until school breaks up and then re-think 🙂

  • Ibizatoon

    Mar 8, 2012 at 3:30 PM

    Comment #19

    Beattie…Not 100% sure. I would imagine so. Must have spent a hell of a lot last year after that sale to still be at such losses.

  • Thump

    Mar 8, 2012 at 3:32 PM

    Comment #20

    @Beattie: This is last years accounts mate, they release them a year behind.

  • Ibizatoon

    Mar 8, 2012 at 3:33 PM

    Comment #21

    Reason for Ashleys weight loss…

    Llambias: “Mike, you’ve eaten through the profits of Andy’s sale. That’s £35m on pies mate. Shall we try some slim fast? Might costs us £3.9m on next years figures, but we’ll be close to breaking even”

  • -Tendo-

    Mar 8, 2012 at 3:33 PM

    Comment #22

    irish_nufc_fans – haha – its cos the kids haven’t finished school yet!

  • Beattie25

    Mar 8, 2012 at 3:33 PM

    Comment #23

    @ Irish

    ‘The results don’t lie as they say’

    I thought it was the hips that didn’t lie?!

  • -Tendo-

    Mar 8, 2012 at 3:33 PM

    Comment #24

    Ibizatoon took the words out my mouth!

  • Ibizatoon

    Mar 8, 2012 at 3:35 PM

    Comment #25

    Tendo…would seem so. Great minds and all that 😉

    Beattie #23….results, hips and llambias

  • Jail for Ashley

    Mar 8, 2012 at 3:38 PM

    Comment #26

    I wonder when they’ll slash the price of a plastic bottle of carling and a balti pie.

  • irish_nufc_fans

    Mar 8, 2012 at 3:39 PM

    Comment #27

    ah well thump there is always a few outlandish opinions and comments thrown about like the calls last sunday to sack pards and get avb…..but in general fairly level headed.

    If uefa ban clubs like Citeh and the likes, we can become a major european force!

    its also very refreshing to see Collo, Krul and Raylor sign contracts because it shows faith in Pardew and faith in the long term plan. Collo and Krul could go elsewhere for far more money!

  • Thump

    Mar 8, 2012 at 3:48 PM

    Comment #28

    I actually had a dream that happened, irish o_O

  • Thump

    Mar 8, 2012 at 3:49 PM

    Comment #29

    The AvB thing I mean*

  • IrishToon009

    Mar 8, 2012 at 3:52 PM

    Comment #30

    That is an incredible financial turn around and to do that while also turn around the team on the pitch……
    All i can say is take a bow Mr. Ashley!

  • JDdubai

    Mar 8, 2012 at 3:54 PM

    Comment #31

    Excllent fugures here, once Smith and Xisco hopefully leave and we get another season of 90 million revenue then we will comfortably be breking even at worst each season.

    Only reason we are at a small loss is that we are still carrying a little of the relegation baggage but this will be gone by next season.

    Hats off to Cashley though, a lot of teams would love to be where we are in the league and have our finances, hopefully this will lead to an excellent summer transfer window……

    Just need to play some better football, start the debate!!!!! HBA..blah blah blah……………………

  • ArtyH

    Mar 8, 2012 at 3:55 PM

    Comment #32

    Am I wrong in thinking the big galoot sale was £35m but £30m first then £5m later which should be coming soon so we would actually be in profit £1.1m plus the £5m still owed by other clubs. or has the A.C £5m already been used in the above accounts???

  • irish_nufc_fans

    Mar 8, 2012 at 3:58 PM

    Comment #33

    a man can dream thump! I for one would not upset the apple cart at the moment for anyone short of the special one!!

    Where u from Irshtoon009?
    Cork man myself!

  • LGFUAD21

    Mar 8, 2012 at 4:20 PM

    Comment #34

    Well done Mike Ashley.

    You have confused and enraged us many times over the past few years but your plan is working so far.

    Newcastle are now a strong team in the league and have done it off their own backs where others have bought their way to the top. We may never be title winners but we have achieved much with dignity and pride.

  • markmac

    Mar 8, 2012 at 4:39 PM

    Comment #35

    good news! we should be in a good state for a few years to come! just have to look at portsmouth to see where it all went wrong somewhere along the lines

  • Tsunki

    Mar 8, 2012 at 5:37 PM

    Comment #36

    Jail @38 😉 not happening. I think my hastily-transferred VM shirt with lettering also accounted for a fair slice of the current years revenue.

    So the reserves game is free for ST’s?

  • IrishToon009

    Mar 8, 2012 at 6:23 PM

    Comment #37

    I’m from Roscrea in Tipperary irishman eile!


    Mar 8, 2012 at 6:38 PM

    Comment #38

    We are still very much a “work in Progress”! But appear to be going in the right direction both on and off the pitch!

    That is partly down to Ashley, and Pardew and dare i say it; Llambs Arse too! even if we do all hate him!

  • ShanghaiMag

    Mar 8, 2012 at 7:10 PM

    Comment #39

    Can anyone explain why our revenues last season when we came 13th were significantly lower than 2007-08 when we came 12?

    Is that due to Puma/Adidas strip change? or what

  • bills-son

    Mar 8, 2012 at 7:46 PM

    Comment #40

    Mike Ashley – the best owner of NUFC in my 50 years as a Toon supporter.

    Said it a year ago – and I’m still saying it now.


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