Newcastle United have today made available the latest set of accounts for the year ending 30th June 2011.
The headline figure is that is a small loss of £3.9m was recorded during this period – our lowest loss since the days of Champions League football!
Turnover increased from £52.4m to £88.4m largely due to our return to the Premier League and the increase in TV revenue that promotion to the Premier League brings with it. Ticket sales are also up 16% with the club citing an increase corporate hospitality income being the main reason behind this, which figures as season ticket prices were frozen on our return to the Premier League.
Player wages are currently running at about 60% of our turnover (60.6%to be precise) which brings us roughly to what is considered to be a “safe” level of wage commitment. In the Championship wages accounted for 90.5% of our turnover while wages in our relegation season wages accounted for 82.7% of our turnover.
In terms of player sales, which is what most people really want to know, we made a profit of £5.4m.This includes the sale of Andy Carroll, so even after the famous £35m we only made £5.4m by the time we paid for everyone else. The club say that since then they have spent a further £25m on fees and wages for players. We’re also owed £5m from somewhere (Andy Carroll probably) and do all of our buying and selling in cold hard cash, which may explain partially why we get good deal for players as we pay everything up front.
The debt level is the same – £140m owed interest free to one Michael James Wallace Ashley although we have now cleared all third party debts such as the rather large overdraft we had during the Championship season.
I haven’t been able to check this all out by looking at the accounts myself yet. They’ve been submitted to Companies House today and usually take a while to appear as available on their website. Once they are available though I’ll get my £1 out and have a look to see if it all matches up or if there is anything hidden in the detail. In my experience the headline figures usually match, but there are usually some hidden bits that don’t get published, such as any plans for debt repayment. The devil is inevitably in the detail.
Derek Llambias was suitably pleased with the results however. he took time out from kissing Ashley’s rear end to say this to the club website. Please note, it’s quite long-winded and basically says everything that I’ve said anyway.
“The Club’s financial results for the year end June 2011 are extremely strong. We can now count ourselves amongst very few clubs across the UK and Europe who are operating at close to break-even.”
“What is particularly pleasing is that we have achieved this whilst also ensuring we have a strong squad sitting firmly in the top third of the table and currently pushing for a European place.”
“Some of the key financial principles we set in place when Mike bought to the Club back in 2007 are now beginning to reap rewards. Most notably, our adherence to a strict transfer policy which avoids, or limits wherever possible, the acceptance of dated payments for players bought or sold. We believe it is a far healthier financial model to settle full transfer fees for players up front, not dated over a period of years.”
“We have dealt wisely in the transfer market and reinvested the income received from player sales into improving the squad. Our net cash spend on player transfers to June 2011, which includes the sale of Andy Carroll, was a receipt of £5.4 million, with a further £25 million in cash spent on transfers and players’ wages since June 2011.”
“We have also worked hard to address an inherited wages-to-turnover ratio which was unsustainable. Wages now account for just over 60 per cent of turnover and we feel this is a healthy and affordable level.”
“A further significant achievement has been to clear all of the Club’s interest-bearing debt, which in 2006/7 was costing £6.5 million a year just to finance the debt. Mike Ashley continues to provide loans totalling £140 million interest-free, for which we are extraordinarily fortunate. Once again, Mike has not taken any money out of the Club.”
You can say whatever you like about Mike Ashley, but the fact is that he is turning the finances of our club around. He may have done it in a ham-fisted way with a sledgehammer approach, but you could argue that tough approach has been needed. The results speak for themselves. We’ve gone from losing £37.7m a year when he first took over to losing £3.9m now, via a stint in the much less lucrative Championship.
The gutting thing is that our loss would have been less that £1m for the year had we not collapsed against West Brom in the final game of last season! Fine margins…
The promising thing is that next season could be even better. With a new sponsorship deal with Virgin Money to add to the mix, higher gates with more corporate revenue, more TV games, higher prize money for finishing higher in the league and chance of European qualification to boot we could in actual fact reach break even or even better next season.
Things, financially, are looking up!