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Mike Ashley Claims Great Newcastle United Financial Figures But Reality Is Somewhat Different

5 years ago
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The latest financial figures have been released today by Newcastle United and while the club are claiming the 2012/13 figures are a great success, the reality is somewhat different.

The club made a small operational loss of £616,000 but the figure the club are leading with, is making a profit after tax of £9.9m.

However, this profit figure only shows up after the accountancy practice of ‘Amortisation’.

newcastle united financial figuresWith sums received for players showing in relation to what the club originally paid for them – the outgoing players’ values having increased during their time at Newcastle United.

So because of this accountancy practice of ‘Amortisation’, a £10.6m trading profit on players appears, even though Newcastle spent more (£28.7m) on incoming transfers than they received (£11.1m)

So a £616,000 operating loss, then has a £10.6m player trading profit added, to give the £9.9m profit. However, in purely money in and out, Newcastle spent more (£616,000) than they got in, but once the accountancy magic was worked, they can present that £9.9m profit.

On top of the above loss/profit, the club also announced that it had slashed the wage bill from £64.1m to £61.7m.

They then made the following statement as part of their report;

“Matchday and commercial revenue is a key driver because that is where the club can compete with – and outperform – its competitors to enhance its spending capabilities.”

This is where things really fall apart, the turnover and the split as follows;

The 2012/13 turnover is £95.9m, with the split being £17.1m Commercial, £27.8m Matchday and TV/Broadcasting £51.0m.

However, if we go back to six years before and the last season before Ashley arrived, the income was as follows;

In 2006/07 the turnover was £87.1m, with £27.6m Commercial, £33.6m Matchday, £25.9m Broadcasting.

In other words, if you added the TV windfall to the 2006/07 figures, Newcastle United would now have a turnover of £112.2m, instead of the £95.9m figure released today

Even ignoring inflation, the club’s latest revenue figures are shockingly low for a club of Newcastle’s potential. To be claiming the Commercial and Matchday figures as great successes when Newcastle are bringing in £44.9m for those two areas compared to £61.2m six years before is unbelievable.

Even taking into account certain things the club have contracted out, these figures are disastrous, and for Mike Ashley to claim that Matchday and Commercial income is where Newcastle can gain an advantage year after year over other clubs is laughable.

In terms of Matchday revenues – the long-term fixed price deals for fans, combined with low interest in buying Corporate seats and the ever expanding cheap family section (numbering 8,000 at the minute already) make it almost impossible for this area to increase in any significant way. That is before you even come to thousands of fans who have cancelled their season tickets in recent weeks.

As for Commercial turnover, free advertising for Mike Ashley’s family of brands (Sports Direct, Karrimor, Sondico, Dunlop etc etc) at St.James’ Park, on the training kit, at the training ground, at press conferences and so on, helps leave a massive gap in the financial turnover/profit, plus of course the fact that there is no significant management team in place at Newcastle United to go and chase all the worldwide commercial deals that every Premier League club is chasing on the back of the ever more penetrative TV deals.

Companies around the world falling over themselves to be associated with Premier League clubs. Of course the more companies paying in money to Newcastle United would equate to a dilution of promotion for Ashley’s brands, with obviously those other companies wanting to see their company names promoted….instead of the free advertising hoardings etc that promote Sports Direct etc.

These latest figures show yet again that Newcastle United are going nowhere under Mike Ashley, the room for growth is almost non-existent unless the club make profits by selling players.

The extra tens of millions that could and should be there from Commercial and Matchday revenues could have seen Newcastle clear of everybody else and chasing the top six revenue earners. Instead we are becalmed without a puff of wind – no ambition other than to remain in the Premier League and promote Mike Ashley’s business empire.

Depressing times with no light at the end of the tunnel.

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