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Why is Lee Charnley not shouting from the rooftops?

7 years ago

As the club have announced their trading figures for 2013-14, we try to make sense of the Newcastle United accounts under Mike Ashley.

Gone are the days when avid supporters could own shares in Newcastle United.

(To feature like Rex N, send in your articles for our website to [email protected] – all views those of the author etc etc)

It will be remembered that Sir John Hall floated the club on the Stock Exchange, allowing us to be a part of the ownership of the club, entitling us to receive the accounts in full. This gave us insights into how the club funded developments, including the famous loans for building the stands which now dominate the Newcastle skyline.

In taking over the club, Ashley reverted to private limited company status. From the accounting point of view, figures have to be submitted for tax purposes. However, what is in the public domain is more restricted, the key source for information being the club website. This is of course controlled by Ashley’s minions.

There are a variety of further sources for information, notably examination of what is filed by the club through corporate channels. Eventually, this will feed through to comparisons by Deloitte and other enthusiasts. Similarly, the club has to submit accounts to football authorities to show compliance, or otherwise, with both domestic and UEFA fair play rules.

This preliminary article concentrates purely on what has been revealed to supporters through the club website. In itself, looking back at the last few seasons contains interesting revelations, specifically, what does the club want us to know. Looking back a year, it is worthy of note that the accounts for 2012-13 were released not as a separate announcement but through the minutes of the Fans’ Forum.

£000,000 2014 2013 2012
Turnover 129.7 95.9 93.3
TV 78.3 51
Commercial 25.6 17.1
Matchday 25.9 27.8 23.9
Costs 21.6 21.6
Wages 61.7 64.1
Operational profit/loss 4.7 -0.6 -5.1
Player trading profit 10.6
Profit after tax 18.7 9.9 1.4

The table demonstrates the lack of consistency in the figures that the club chooses to release to the public. Looking back, some of the gaps, such as TV revenue for 3 seasons ago, are known and can be found through multiple sources, such as Deloittes and the Premier League.

Certainly, there has been some surprise expressed at the figures released, that the bottom line is lower than expected.

There is one obvious factor that has not been revealed, that of how much tax has been paid. Other sources have shown that in previous years, tax has not been paid, due to the premium which Ashley paid for the club over and above its asset value. It is likely that Corporation Tax had been paid this time around.

The striking things that the club has chosen not to disclose this time are the cost structure and player trading profit.

The first point that becomes obvious is that turnover has increased by almost £34m. Operating profit has increased by £5.3m according to the club’s statements. The unexplained gap is around £29m.

Ashley is known to contain costs, in part evidenced by the rumbling tummies of local journalists on match days. It appears almost inconceivable that these could have increased by such an amount. We could have a look at other factors, such as fees paid to agents. A cursory look at other sources suggests these fees were £3.8m for the latest accounting period covered. In the previous year they amounted to £7.3m. Clearly we have to look elsewhere. Match day costs may also have come down without a Europa League campaign.

Coming down to wages, the most significant signing is that of Loic Remy on loan as well as Luuk de Jong later. Conceivably, Remy’s loan fee could have been attributed to costs, however, this fee was widely reported as £2m. It seems unlikely that the wage bill actually increased by £29m plus the difference in agents fees, i.e. a total of £32.5m, particularly when Cabaye was sold during the January window.

That having been said, yes, wages will have risen. The previous accounts include only 6 months of wages for the signings in January; Debuchy, Mbiwa, Haidara, Sissoko and Gouffran. Offset against those will have been Cabaye, Harper, Simpson, Jonas on loan and others.

Player trading may provide a different clue to where costs increased. The signings mentioned above, assuming an average duration of contracts as 4 years, suggests that we should allow a further £4m for amortisation, the process where a player’s contract is written down over the life of that contract. The sale of Cabaye would correspondingly decrease that allowance for amortisation to around £3m. Also, we do not know how much amortisation was allocated for the new signings in 2012-13.

This brings us to the final gap in the club’s announcement, the profit/loss on player sales. The key figure to be sold in the latest accounts was Cabaye. His sale, along with those of Tavernier and Perch, account for £14m plus whatever Corporation Tax was due.

This leaves us still with around £26m of costs to find. It then becomes a mystery as to why, Lee Charnley has failed to shout from the rooftops about how the club has put so much into the academy and how generous Mike has been in increasing the wages of support staff at the club, as well as improving the infrastructure at the club, the sort of things that we would like to see from a responsible employer.

Some of these secrets will unravel over time. In the meantime, some of us will be left scratching our heads.

Rex also runs his own website ( which you can visit HERE and you can follow him on Twitter @ToonToonCoUk


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