It looks like it may well take the announcement of £50m profits for Mike Ashley from Newcastle United before the remaining doubters realise just what is happening at our football club.

Mike Ashley’s banking profits of £50m? From Newcastle United? Surely not?

mike ashleyEverybody knows you can’t make money out of a football club…

An explanation.

Some clubs have already announced their financial results for the 2013/14 season, Newcastle United haven’t.

Last year it was February when Mike Ashley allowed the financial results of the 2012/13 season to be announced and I doubt he is rushing to do it any earlier this time.

The results for that 2012/13 season were that Newcastle had a turnover of £95.9m which was broken down into Media £51m, Matchday £27.8m and Commercial £17.1m.

The normal running of the club meant costs were very slightly higher than the money coming in and an operating loss of £616,000 was made.

However, after players bought and sold were taken into account, it meant there was overall a £9.9m profit made, despite more transfer spending than money coming in for players let go.

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This came about because of amortisation, which is the accountancy process where the profit equates to the sums received for players in relation to what the Club initially paid for them, with outgoing players’ values having increased during their time at the Club.

Anyway, back to figures that are much easier to understand.

One of the clubs to have already released their financial figures for 2013/14 are Everton.

They are a club not dissimilar to Newcastle in terms of size and expectations, though United have had a bigger turnover in the modern era and will continue to do so unless Mike Ashley manages to totally ruin the club with relegation…again.

Everton’s turnover for the 2013/14 season is £120.5m, which is a 39% increase in turnover and sees them show profits of £23m, which increased to £28.2m after player trading.

What a well run club…well maybe, maybe not.

Their turnover the previous season (2012/13) was £86.4m (£9.5m less than Newcastle’s) and in these latest 2013/14 figures, the broadcast/media revenue is higher by itself – £88.5m.

The bottom line is that the new TV deal which kicked in for last season, has solely transformed Everton’s finances, their wages as a proportion of turnover dropped from 73% to 58% and this was achieved despite staff wages going up by 10% through buying players!

Over to Mike Ashley and Newcastle United.

In 2013/14, pre-season Newcastle got rid of Steve Harper, Danny Simpson and James Perch off the wage bill, with a fee of just under £1m for the latter and then sold Yohan Cabaye for around £20m in the January.

When it came to purchases not a single first team player was bought and only loan fees were paid for Loic Remy and Luuk de Jong.

So basically, compared to the previous 2012/13 season, the costs for 2013/14 must be very similar, with no players bought.

So what we are looking at, by following what Everton have shown, is that their turnover increased by £34m in one year, almost solely down to the new TV deal.

For round figures, United’s total broadcast revenue will have increased by a very similar figure, Everton’s figure of £88.5m for broadcasting media included £85m from the share out of TV money for the 2013/14 season.

Newcastle share out for 2013/14 was £77.4m (figures released by Premier League at end of last season) but will be topped up by other media money, just as Everton were with an extra £3.5m on top of that basic payout from the big TV deals.

So if we accept costs will have been kept more or less the same at Newcastle when comparing 2012/13 and 2013/14, then an extra £30m broadcast money will be in the accounts.

We can then add the fee received for Yohan Cabaye of around £20m, which added to the extra £30m TV money gives us £50m extra.

mike ashleyNo doubt Newcastle United/Mike Ashley will turn around and tell us they have achieved an economic miracle by bringing the ratio of wages to turnover down from 64% in 2012/13 to 50% or even less? Well getting loads of extra TV revenue (like everybody else) and then not spending it on the squad (not like everybody else) makes it a reality. Though not great for the long-term (or indeed short and medium-term) health of the club moving forward.

Now I know we are working on limited information in terms of exact details but the bigger picture can’t be denied. It might be £50m, it might be £45m or indeed it might be £55m, but when those 2013/14 Newcastle finances are eventually revealed by Mike Ashley – it will show a phenomenal amount of profit made.

So what will have happened to the money? Well Ashley could allow it all to be taxed and stay in the club but this is where he has the option of lifting tens of millions straight out of the club due to the paper loan he has put in there, owed by the club to the owner. So that £50m could have been paid direct to Ashley as part of the costs showing in the accounts, to repay the ‘debt’.

While people like Ashley are fabulously rich, they don’t necessarily have lots of cash easily to hand because they like to have it working for them, earning even more money.

It was revealed just before Christmas that Mike Ashley had loaned Sports Direct £40m in October to buy stock for the Xmas period, the loan at cheaper rates than would have been the case from banks.

Maybe that SD loan was a total coincidence but what is not in doubt is that Newcastle United turned over a vast profit in the 2013/14 season and the club have as yet seen no benefit.

The 2014 Summer spending on players will be included in the 2014/15 Newcastle United accounts and of course that has been offset by the £12m for Debuchy and this season’s circa £30m extra TV money would easily make up any shortfall.

We now approach a massive period of uncertainty at St. James’ Park that includes no permanent manager (or ‘Head Coach’!) and of course the January transfer window.

It is truly astonishing the profits made last season and especially to a backdrop of all the free advertising to Ashley’s brands AND next to no chasing of outside commercial deals.

Newcastle United tick so many boxes to be a successful football club but ambition is one that is a glaring omission under Mike Ashley.