The Financials Of Relegation Are Still Not Good


Last week Newcastle reported an operating loss before taxes of £90.9M for the financial year 2016-2017,  when we were in the Championship.

The loss after taxes was £41.3M million following the sales of Andros Townsend, Moussa Sissoko, Georginio Wijnaldum and Daryl Janmaat.

And remember those transfer fees are generally paid over four years – not in a lump sum upfront.

The figures put out last week by the club showed that the club’s wage bill was £112.2M and that was in England’s second division.

Mike Ashley also made an interest-free loan of £15M to the club – and he had done a similar (thing –  £28M) in our previous season in the Championship.

Mike Ashley with Lee Charnley

Newcastle’s financial accounts for July 1, 2016, through June 30, 2017, have been published on the Companies House website.

We have mentioned Kieran Maguire before – he’s a lecturer who specializes in football finances at Liverpool University.

He has worked out that if non-cash and one-off items are taken out, the Newcastle financials show a loss of only £19.8M.

The easy way to look at the figures is that if we had finished 10th in the Premier League in May of last year (pretend we weren’t relegated), we would have received about £125M.

But what we did receive in May of last year was about £47M  – £40M parachute payment plus £7M from the Championship.

That’s about £78M less in revenues – had we stayed in the Premier League and finished 10th – as we did this season.

That’s one way to look at relegation and that’s a huge revenue loss!

That’s the reality of getting relegated – the revenues you get from the leagues drop drastically, and it gets worse the longer you stay down – the parachute payments from the Premier League run out.

Then you have your costs and Newcastle tried to reduce them by selling four top earners, but the wages were still far too high – which led to the significant losses.

You can do anything with finances when you leave specific items out – depending on what you want to show – and that can be dangerous.

But the relegation was a big financial hit to the club – make no mistake about that.

We should be OK from now on, and it looks like Rafa will get a minimum of £50M cash from Ashley plus maybe as much as £40M from players leaving the club on transfers.

Rafa will feel a lot better with that amount than what he has received over the last three transfer windows.

It’s not okay to be relegated – but things now are definitely on an upward spiral – thanks to Rafa.

Comments welcome.

Note:

Jack Farish is currently studying for a Master’s degree in sport and exercise psychology at Northumbria University.

His thesis project looks at Premier League fans’ team identification – how well they support and identify with their team.

Jack has put together a relatively short questionnaire of team identification and satisfaction with life; it should take no longer than 10 minutes.

You can help Jack by filling out the survey here.


11 comments so far

  • Tosun A. Wobbler

    May 23, 2018 at 3:49 PM

    Comment #1

    The income from player sales is the big unknown. Hope we shift all the unwanteds and bring in as much money as is anticipated.

    0
  • Tosun A. Wobbler

    May 23, 2018 at 3:49 PM

    Comment #2

    Unwanteds…..is that a proper word?

    0
  • NUFCadon

    May 23, 2018 at 3:50 PM

    Comment #3

    l have been having a little look and think Michael Gregoritsch could be a good player for us to approach. young, technically gifted, not too small and think he would jump at coming to a club like Newcastle with Rafa guiding him to being a future star. He would fit into that number 10 position great as well and with an experienced striker infront of him would be something to get really excited about

    2
  • Essex Geordie Bill

    May 23, 2018 at 4:04 PM

    Comment #4

    Blo0dy ell the bus nearly flattened me there.

    I see that Jib and Tsunki are engaged in a round of blog insult tennis, always worth watching on quiet days.

    Keep it up chaps.

    1
  • Tsunki

    May 23, 2018 at 4:05 PM

    Comment #5

    Essex – toonbotherer is being a good chap and acting as the net ATM.

    1
  • Essex Geordie Bill

    May 23, 2018 at 4:06 PM

    Comment #6

    I’m retired so does that count as me being unemployed and the missus often treats me as lowlife so there’s a double whammy.

    4
  • Essex Geordie Bill

    May 23, 2018 at 4:08 PM

    Comment #7

    Tsunki

    Better tell him to keep all orifices tightly closed in that case.

    You don’t to lose your balls!

    1
  • JP...from The Rock

    May 23, 2018 at 4:10 PM

    Comment #8

    Thanks to Ashley we got relegated twice! Anyway Inhale…Exhale… ahhh better..if Rafa get’s 50M this summer and we ship most of the deadwood out then that will be a healthy kitty for a few quality players to be brought in. ST, CAM being essential and then if there’s still change left, anything else we can get to improve the squad is still possible. I think it will be a good window for us. Really hope Rafa finds a few gems and can break our transfer record if need be. Exciting times ahead, I can’t wait!

    2
  • Essex Geordie Bill

    May 23, 2018 at 4:11 PM

    Comment #9

    Incidentally what’s all this talk about Rafa leaving, is he?

    Oh sh!t, oh sh!t, oh sh!t, oh sh!t, oh sh!t.

    I’m starting to panic, give me some good news please.

    0
  • GeordieinOhio

    May 23, 2018 at 6:38 PM

    Comment #10

    Hi everyone, been a very long time since I last posted, I come on everyday to read Ed’s posts ….but this one UGH! I am so fed up with reading this stuff about where all the money has gone!, It honestly seems to me every transfer window has been the same for years under “he who shall not be named”, window opens, stories of how little money the club has start banging around, window shuts……quality players not signed….obviously there is more to it I guess….but is it only me that feels this way?. It just always feel like an excuse for why the club doesn’t get players over that line!.

    1
  • widowmagandapoke

    May 24, 2018 at 2:44 PM

    Comment #11

    If relegation is so costly, why would Ashley want to risk visiting there again?

    0

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