Lee Charnley Explains The Huge Financial Cost Of Relegation


The financial results have just been released for the 2015-2016 financial year for Newcastle United,  which is the year before this one – so we were still in the Premier League.

But Lee Charnley has taken the opportunity to prepare fans for the huge drop in revenues we will get in this current financial year which ends on June 30th and the results of which will be announced next year at around this time.

If we can get back to the Premier League this season then things will not be so bad and we still expect Rafa Benitez to be given sizable funds to strengthen the squad in the summer.

Lee Charnley with Mike Ashley

Rafa will sell players and reinvest that money in new players coming in as well as getting transfer funds to spend directly on new players.

This is what Newcastle’s Managing Director Lee Charnley has said on the web-site today after the financial results though June 30th, 2016 were released:

“The 2015/16 season was extremely disappointing for everyone connected with the club.”

“Significant sums of money were spent to strengthen the playing squad in the summer 2015 and January 2016 windows, which also resulted in an increase in our annual wage bill.”

“In the context of this spend, relegation was both unacceptable and totally unexpected.”

“The financial impact of relegation is difficult to overstate and this will become evident in our next set of financial results for the year ending June 2017.”

“The biggest impact by far is the dramatic reduction in centrally distributed income that comes with dropping down a division; the reality being our income in this area is forecast to fall by over £30M compared to 2015-16.”

“To highlight the differences, our 16 live TV games last season earned us £12M in revenue. Contrast this with 2016/17 EFL live fees which, based on our current number of confirmed appearances (12 away and 6 home), will earn us a total of £720K.”

“To illustrate further the cost of relegation, 2016/17 marks year one of the new Premier League TV deal and the team that finishes in 18th place this season is expected to receive in the region of £30M more revenue than we did for the same place finish last year.”

“Our approach, following relegation, was to make further sizable investment in our playing squad in preparation for the EFL Championship season ahead and our annual wage bill is, we believe, still above and beyond many current Premier League teams.”

“Whilst not without financial risks, this strategy was adopted in order to maximize our chances of promotion at the first time of asking.”

“Outgoing transfers will ultimately generate a significant net player trading surplus for the summer 2016 transfer window but, due to the cash profile of the deals, this will result in a net cash outlay in 2016-17.

“Our adopted strategy has therefore only been made possible by the cash injection from our owner, who continues to provide interest free funding to support the club’s operations, never more important than during this financially challenging season.”

That’s well explained by Lee Charnley and  we have done really well to survive in the Championship from a financial viewpoint and hopefully we will soon be back in the Premier League.

Very soon – hopefully.

What do you think?

Comments welcome.



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38 comments so far

  • catchy in norway

    Apr 6, 2017 at 1:24 PM

    Comment #1

    Gave my mom to Mbemba, i thought Richie was outstanding again , but the shear fact that Mbemba came in from the cold and still looked out best defender is a huge credit to the lad, his stats from last night also had him as our second best player.

    my pairing would be Clark and Mbemba but Rafa gave the captains AB to the wrong guy at the start of the season.

    not long now until we are back in the big time boys

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  • Lindisfarne

    Apr 6, 2017 at 1:47 PM

    Comment #2

    Wally McBrolly was an expensive mistake Lee.

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  • AncientC

    Apr 6, 2017 at 2:15 PM

    Comment #3

    “Outgoing transfers will ultimately generate a significant net player trading surplus for the summer 2016 transfer window but, due to the cash profile of the deals, this will result in a net cash outlay in 2016-17.”

    That confirms it then. Some of the income from sales is being paid in installments, so even though the club is showing a profit on sales/buys, the money isn’t yet in the account.

    “Our adopted strategy has therefore only been made possible by the cash injection from our owner, who continues to provide interest free funding to support the club’s operations, never more important than during this financially challenging season.” It’s not interest free though is it. SD and its shareholders receive free advertising. It’s all very nice talking up the interest ‘free’ loan, whilst not mentioning the revenue stream being taken away from the clubs finances.

    Charnley’s update leaves more questions than answers in all honesty. What everybody wants to know, is, how much money will be made available for players this summer.

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  • scrotty

    Apr 6, 2017 at 2:19 PM

    Comment #4

    Sounds like he’s explaining why the club won’t be spending much in the next window.

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  • expatmag

    Apr 6, 2017 at 2:32 PM

    Comment #5

    Scrotty

    my thoughts exactly

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  • hibbit

    Apr 6, 2017 at 2:34 PM

    Comment #6

    scrotty
    he can try and explain what he likes but it was his mismanagement that got us in this hole to start with
    if the club don’t release sufficient funds even with Rafa in charge we will be straight back in the relegation zone and heading back to the championship

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  • AncientC

    Apr 6, 2017 at 2:43 PM

    Comment #7

    If I remember rightly, Charnley confirmed around this time last year, that the club would make a net-spend on players – that coming summer. A similar statement this time around would have been music to my ears. Here is hoping…

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  • Hail Wor Ashley

    Apr 6, 2017 at 2:44 PM

    Comment #8

    Nah, just sounds like he’s saying exactly the reality.

    So Mash loaned £33m to allow us to break even this season.

    Next season, assuming PL status, even if we were to finish 20th we’d receive £25m more in prize money than 15/16, then there’s more for each televised match compared with last season.

    15/16 we still managed a small profit despite spending £80m net.

    Assuming our wage bill goes back up to roughly the same amount, you’d therefore expect operating profits to be £30m+ better than 15/16 – prize money and tv coverage money per match.

    New sponsorship deal should be considerably more than the current one given how the PL has grown. The fact we have a globally recognisable manager, guaranteed packed stadiums unlike the tumultuous time Wonga were signed. We’re a much better package now to be affiliated with.

    So operating profit comparable to 15/16 with same wage bill + guaranteed minimum £30m better off from tv and prize money + new sponsorship deal = £35m+ before player sales, if they want to be less cautious and assume a midtable finsish that can easily become £45m.

    We spent up front summer 2015/16 to try and make sure we were in the PL for the new lucrative deal, hence the £80m net spend, I see no reason why Rafa won’t be afforded the same.

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  • kimbo

    Apr 6, 2017 at 2:45 PM

    Comment #9

    Well the £30 Million surplus from selling players in the summer 2016 will not be made available to buy players when we start 17/18 season. So players need to be sold…Lazaar,Krul,,De Jong, Mitro, Thauvin, Anita, Handley,Perez,Diame, Colback, Dummett, and with this we might be able to buy 3 players that could make a difference. Atsu isnot worth £5 million better off keeping Sammy A for free.

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  • hibbit

    Apr 6, 2017 at 2:49 PM

    Comment #10

    kimbo @9

    sell 11 players and buy 3 give your head a shake will ya !!!

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  • LewSpi v2.0

    Apr 6, 2017 at 2:53 PM

    Comment #11

    16 premiership TV games = £12m in revenue
    18 championship TV games = £720k in revenue

    Am I reading that right? Tells you everything you need to know about modern football if so.

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  • kimbo

    Apr 6, 2017 at 2:57 PM

    Comment #12

    Well Hibbitt if you read what I said properly, then have a look at your comment and please re do. I said selling 11 players would only get us 3 decent players and we really need alot more.

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  • hibbit

    Apr 6, 2017 at 2:59 PM

    Comment #13

    kimbo
    maybe that’s what you meant but that’s not what you said

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  • Mister Tuff

    Apr 6, 2017 at 3:10 PM

    Comment #14

    So it looks like we do not have any spare cash – will have to rely on the generosity of Mr Tubb.

    Rafa might control all things football – he clearly does not control Mr Tubbs purse.

    I do not think the financial matters are a warning of being skint for the summer- as the financials -I think are published this time of year anyway. But it does look like we are skint.

    Mr Tubbs…………………………………………..OOT
    Penfold…………………………………………….. OOT.

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  • magspuggy

    Apr 6, 2017 at 3:29 PM

    Comment #15

    Looking at what penfold said I read that we will have around fifty million to spend plus what ever we gain from selling what’s on the books atm.

    Hopefully we can actually sell players for cash and not on the never,never and we could have a few quid to spend.

    That’s unless the policy has changed but i see nothing that suggests it.

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  • LewSpi v2.0

    Apr 6, 2017 at 3:30 PM

    Comment #16

    With all due respect, I’ve never wanted someone to have a mental breakdown and spunk all their money away more. Haway mike you’re worth £2.5 billion man, what’s £200mil?

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  • Tsunki

    Apr 6, 2017 at 3:35 PM

    Comment #17

    Photo caption:-

    “Think about it Mike, up the salt content of the balti pies, put a ‘booking fee’ on the reserved half time pints and here’s the best part ha ha charge the fans by the litre for the half time bog dash…”

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  • ron burgundy

    Apr 6, 2017 at 3:36 PM

    Comment #18

    He is still a sad little git penfold is.

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  • Tsunki

    Apr 6, 2017 at 3:41 PM

    Comment #19

    Nice soon Lee. Making it sound like Mike’s bridging loan was a transfer spending gift. So the incoming player fees are in instalments? Great, they’ll still be coming in next year just like you hedged in case we didn’t get out of the Championship when you could write down year one and have cash flow year two.

    Next time get your incoming payment policy to match your outgoing and don’t play daft.

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  • JamesToon

    Apr 6, 2017 at 3:46 PM

    Comment #20

    Ashley will know these losses that have been made from relegation, he won’t want it to happen again. He knows he must give rafa his full backing otherwise this club could turn toxic very quickly.

    We have everything in place to become an established premier league club, like southampton in some ways. We have a world class manager, we have a squad with a spine of young, hard working english players who will only improve, and will soon have great sell on value i think, rafa is starting to change our youth policy, the way we develop players, i think we have all the foundations, ashley just needs to continue backing rafa and handing him the reigns.

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  • chicousa

    Apr 6, 2017 at 3:50 PM

    Comment #21

    Echoing what Lindisfarne at 2 said, not only was Wally McBrolly an expensive mistake in his hiring, but the decision to fire him was delayed far too long. Indecisiveness is expensive! Had Wally been fired 5 or so games sooner then Rafa would likely have managed to keep us up.
    Decisions have consequences. Indecision also has consequences!

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  • stuart no9

    Apr 6, 2017 at 4:09 PM

    Comment #22

    to be honest , im not bothered about their loss last season. I just hope charnley and ashley listen to the fans a bit more in the future instead of being pig headed and think they know best .i hope this is an expensive lesson learnt but somehow i dont think it will be. It sounds like he is priming us for some bad news come close season , however i dont think Raffa will care either as long as he gets what he wants , i’m happy but you know what ?ive just got a horrible gut feeling . We can only wait and see.

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  • WWSBRD

    Apr 6, 2017 at 4:11 PM

    Comment #23

    magspuggy
    Where do u get 50 mill from?

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  • Lee Charnley Bunga Party

    Apr 6, 2017 at 4:15 PM

    Comment #24

    Well I hope Charnley and Ashley have finally learned lessons!! Rubbish management choices, policies and not investing properly has cost us so badly that we are quite a bit behind the likes of Southampton and Everton!

    Every other team pays in installments we will have to do this in the summer to get players until the tv payout the next season its the only way that we will get quality players! Madrid , Chelsea and the Manchester clubs don’t pay for players up front so why should we !?

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  • BenArfa the magician

    Apr 6, 2017 at 4:18 PM

    Comment #25

    Surely IF we go up this year isn’t worth over 100 million?. The championship playoff is said to be the richest game in football, Hull last year earned 110m going up as they had to subsidise a parachute payment so surely we’ll get the same? Don’t think we need to be asking for a collection anytime soon.

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  • WWSBRD

    Apr 6, 2017 at 4:23 PM

    Comment #26

    BenArfa
    It’s worth that much because u will get atleast that at the end of it PL season but its nor paid up front

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  • magspuggy

    Apr 6, 2017 at 4:23 PM

    Comment #27

    25 minimum from sky , sponsorship, what’s in the pot atm.
    We have just spent eighty million and didn’t lose money on players, touvan, sissoko,Townsend, .

    We also have the parachute payments.

    Then if we add what we get from players leaving I hope its way over the fifty.

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  • WWSBRD

    Apr 6, 2017 at 4:31 PM

    Comment #28

    magspuggy
    What about the club losses that we’ve incurred and the 30+mill Ashley put in though the parachute payments would cover repaying that am sure if Ashley wanted it to and the club’s not got anything in the pot atm

    I wouldn’t have such high hopes tbh

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  • Lee Charnley Bunga Party

    Apr 6, 2017 at 4:36 PM

    Comment #29

    @WWSBRD

    Yeah if the coffers are empty it just goes to show how much of a shambles Ashley has caused at our club! To be penny pinching for a DECADE to then still be in a bad state of affairs is scandalous !

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  • magspuggy

    Apr 6, 2017 at 4:41 PM

    Comment #30

    Reading penfolds statement only 15 million of the latest loan went to the club the rest repayed mike Ashley’s personal loan ??

    How can Ashley lend us money to pay back Ashley?

    Am I missing something here ?

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  • Mag52

    Apr 6, 2017 at 4:43 PM

    Comment #31

    If the overweight leech didn’t realize that buying a football club has never been a profit making affair that’s his fault.
    He makes enough to live a life of luxiary from his SD operations.
    He’s had opportunities to sell the club and get out before now. If he can’t face up to the fact that it’s a hobby he’s got, not a money making venture, he should simply fcuk off and give us a chance to be something once again.

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  • WWSBRD

    Apr 6, 2017 at 4:44 PM

    Comment #32

    LCBP
    All those years penny pinching allowed us to spend 80 million to get relegated though haha the Ashley master plan?

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  • sparky55

    Apr 6, 2017 at 4:49 PM

    Comment #33

    It’s all right explaining to us fans the parlous financial position of the club but it’s only parlous because the club was managed so poorly we were relegated.

    Mikey boy has had to put more in (allegedly) but if hadn’t managed the club so badly he wouldn’t have had to put the extra money in.

    The statement is geared to make the fans think he’s doing us some kind of great favour, …but if he had appointed a better manager after letting Pardew go then we wouldn’t have been relegated and he wouldn’t have had to put the extra in.

    P!ss poor management is why we are where we are, not because Ashley is some kind of all giving christian that deserves the fans respect and thanks…he’s just a prize kn0b

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  • hibbit

    Apr 6, 2017 at 4:51 PM

    Comment #34

    surely it’s in Ashley’s own interest to get us up and keep us up
    the rewards are far greater in the prem for Sports Direct in advertising exposure alone
    the club would once again become an appreciating asset in the event of a sale which i think could be on the cards
    the premier league is quickly rising to the top of the market if you have a club to sell and Ahsley will know this he always sells at the top of the market and buys when companies are in distress

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  • Ron Knee

    Apr 6, 2017 at 5:23 PM

    Comment #35
  • LewSpi v2.0

    Apr 6, 2017 at 6:09 PM

    Comment #36

    There’s a lot of negativity in response to charnleys statement, why? We don’t know that there will be no money available, he could just be puttting us in a stronger position for negotiating deals by saying we haven’t much money.

    The only sure fire way of knowing whether or not the club will be investing is if Rafa stays or goes. If he stays, he’s been backed. It really is that simple.

    Charnley has been described as being incompetent on numerous occasions, but he’s not so useless that he’d come out and tell the world we’ve got a chest of fat mikes doubloons to toss at whoever wants em.

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  • toon kk

    Apr 6, 2017 at 6:48 PM

    Comment #37

    Charnless and MA only have themselves to blame, if we’d strengthened correctly in prior seasons and not stuck with a flawed regime not to mention our manager recruitment of Carver and the Wally with the brolly.

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  • Toon Tang

    Apr 6, 2017 at 9:55 PM

    Comment #38

    WELL MAYBE YOU SHOULDN’T HAVE LET IT GET AS FAR AS RELEGATION YOU LITTLE FOUR EYED BALDY FCUK

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