The latest Deloitte report on European football has just been published, and the Premier League is top of Europe’s money charts, and that is due to record TV deals that produced £2.4B in revenues in the last financial year.
Mike Ashley – Newcastle owe £267M
Next in line was the Bundesliga, with nearly £1.4B generated, according to the Deloitte annual report, but also the Premier League clubs had a massive total debt of £2.4B among its clubs.
Newcastle made an operating profit in the last financial year, but over half of the clubs in the Premier League still lost money.
And from this August, when the new TV deal takes effect,each Premier League club will receive an extra £25M on average and that of course will help clubs balance their books – which is what the UEFA Financial Fair Play Rules will demand in the future.
This quote is taken directly from the report:
“Achieving a more sustainable balance between their costs and revenues and thereby generating more profits provides opportunities or, some might say, a culture shock for clubs,'” ‘Increased profitability will allow greater longer-term investment in stadia and training infrastructure, youth development and community programs.”
Newcastle United’s revenue of £93M in the last financial year, was enough to get us back in the Deloitte Football Money League Top 20, in 20th position, after a three year absence, so we are going in the right direction.
There’s also £1.4B in interest-free (soft) loans from the PL clubs’ owners, with Roman Abromovich leading the way with a massive £895M.
Next is line is Newcastle with £267M owed to owner Mike Ashley, but that’s a little bit misleading, because it includes what Mike paid for the club back in 2007, which was around £133M – so he loaned Newcastle almost as much again since that time.
We know he paid off £100M in existing loans to cover debt the club already had when he took over at Newcastle, and he didn’t know about because he didn’t do too much due diligence on the club, and Newcastle were paying interest on that debt.
And then for the Championship season, he paid the rest out to help pay the wages, so that’s largely where the extra £34M came from – so it seems to add up at a cursory level.
The loan is at zero interest rate, and that has saved Newcastle millions of pounds each year – but remember these are all separate businesses – with their own financial books.
And Mike formed a company to buy Newcastle United in 2007, and that’s where the loans are coming from – it all helps – and Newcastle are now in a much better financial situation than when Mike too over.
It’s great that we managed to stay in the Premier League last season, and we’ll get anything from £60M to £100M from the Premier League next year, and that compares with the £45M we got this year for finishing in 16th place.
You may love or hate Mike Ashley, but he’s been very savvy at putting Newcastle on a very solid financial footing, and that’s got to be good for Newcastle’s future.
You can also reach Ed at firstname.lastname@example.org