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.
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.