Will Mike Ashley Ever Loosen The Purse Strings At Newcastle?

The Deloitte Annual Review of Football Finance has shown that for the first time ever, the combined revenues of the 20 clubs in the English Premier League have broken past the £3B mark.

mike ashley white shirt

Newcastle owner Mike Ashley – will he loosen the purse strings?

But the Premier League clubs also pay out huge wages to their players, which will have an impact on the profits, and the average wage of a Premier League player in the last financial year was £1.6M a year.

The new TV deal for Premier League clubs was worth over £3B, and it results in clubs in England’s top division getting anywhere between £60M and  £100M, depending mainly on where each club finishes in the league table – and that’s up from £40M to £60M in the previous three-year TV deal.

That means each club is getting around 1.6 times more money than they were in the previous three years – an average increase of £30M, so now we all know why there’s so much panic when teams are lingering near the bottom of the Premier League – it’s all about money – just in case you didn’t already know that.

Dan Jones is a Partner at Deloitte and he said this in the report:

¨Once again the global appeal of the Premier League has continued to drive commercial revenue growth, particularly at the highest ranked Premier League clubs. Match day revenue also increased by 6% with fewer unsold seats at Premier League games than ever before.¨

‘The entry of BT Sport into the market to compete with BSkyB has applied huge upward pressure to broadcast revenue – from the 2013/2014 season onwards each domestic live game on average generates broadcast revenue of £6.5M.¨

¨The signs are that most clubs are adopting a more financially robust and balanced approach to the way they run their businesses, and they must continue down this path if they are to safeguard the long term financial health of the game.¨

And in the US,  NBC Sports has done a deal to broadcast all the Premier League games live for the next three years, and the Premier League games seem to be catching on in the US, and – dare we say it – are even becoming popular.

Deloitte’s senior Sports Business Consultant Austin Houlihan has predicted Premier League revenues will surpass £4B for the 2014/2015 financial year, as extra broadcasting money is being added.

The average wages for all Premier League clubs was  71% of revenues, which is high, and why a number of PL clubs do not make a profit, although in the last financial year Newcastle made £9.9M in profits on revenues of around £95M.

Newcastle was one of 13 of the Premier League clubs who made a profit in the financial year 2012/2013 compared to only 10 in the previous year – Newcastle made a profit then as well.

Deloitte said that the aggregate (total) net debt of the clubs grew by £139M  to around £2.5B, and like in Newcastle’s case that was driven up by interest free loans from Billionaire owners, and the total of those loans was £1.6B.

£2.5B in debts means the average of the 20 PL clubs is around £125M, and Newcastle have around £130M in interest free loans from Mike Ashley, and that’s our total debt.

UEFA’s Financial Fair Play rules will soon ensure that PL clubs break even,  otherwise there will be penalties to be paid.

And we have recently seen Manchester City were fined close to £50M, and had their European squad reduced from 25 to 21 for next season, for not abiding by the FFP rules over the last three years.

But given they have spent £1B Gross on their players over the last six years,  and won two Premier League titles in the last three years – they will think it was all worthwhile.

They should have been banned from playing in Europe next season, which is what UEFA President Michel Platini said the punishment would be,  when he first introduced FFP a few years ago.

Newcastle are in  a terrific position financially, as good as any club in the Premier League, but we are nowhere near the top six as far as league position is concerned.

Saying there’s something wrong with that is a huge understatement.

And here’s the big question – will Mike Ashley ever loosen up the purse strings at Newcastle?

If there was ever a time to do it – it’s this summer – especially when we have received close to £100M in revenues this year – almost £80M from the Premier League last month, and £20M for Yohan Cabaye in January.

And given our costs have remained largely unchanged from the last financial year, those increased revenues this financial year – should go to the bottom line – and show up as profits..

And what do we do – we bid a measly £6.5M for our top transfer target – Remy Cabella. 🙁

Comments welcome.