I thought long and hard about doing this and truth be told, I really wasn’t going to…but there just seems so much confusion out there with respect to how much money Newcastle United will get this summer.
Many fans appear to be under the mistaken belief that we are given the parachute payment for this season. I have argued on numerous occasions that many clubs cut costs, staff and wages because they do not believe they will be promoted.
It is a self-fulfilling prophecy really because they get rid of their highest earners, which more often or not are their best players, then replace them with lower league players on lower wages. They then end up with a lower league team and struggle to go up.
The last time Newcastle were relegated, we did exactly that. The difference was that we had some good younger players (plus the established/experienced ones) who we would have loaned out to championship teams anyhow, if we had stayed up. So in effect we didn’t have to really spend much as we already had quite a few ‘championship’ players with premiership potential. A good mix for any team going up.
This of course brings us to now. This season is like no other. We will earn around £70 million for last season and it’s due to be paid soon. It is just slightly less than if we had escaped relegation. This means there is no need to cut jobs, wages, staff or even sell players.
To emphasise my point, When Fulham suffered relegation in 2014 they received £67 million for their Premier League standing including TV.
So, we are in more or less exactly the same financial position as if we had stayed up.
As we are now a Championship team, this brings us to the whole parachute payment thing.
At the end of our first championship season we will receive a parachute payment.
The parachute payments work as follows under the new deal…
From the 2016-17 season relegated clubs will receive 55% of the equal share of broadcast revenue paid to Premier League clubs in the first year after relegation, 45% the following year and 20% in year three. Clubs relegated after a single season will receive 55% and 45% over two seasons with the third payment eliminated entirely (yo yo clubs).
So this year we get around 70 million and the summer after our first Championship season has been completed (hopefully first and last), we will receive 55% of 81 million which is £44,550,000.
This will bring a deficit of approximately £25,450,000 compared to what we will receive this season.
Funny enough, £25,450,000 is more or less what we paid in transfer fees for Thauvin and Cabella.
Two players we felt we didn’t need. So it really shouldn’t affect us too much.
The reason why everyone is panicking is because the premiership clubs will all receive £81million tv money plus approximately £18million from overseas broadcasters.
But, if you had to be relegated this season is the best one to do it. Players are under contract and on wages that suited the old TV deal. That won’t be the case in a couple of years.
We are also in the fortunate position that we don’t owe money to the banks and so our income is just as it says on the tin.
There is no reason to sack anyone or even sell a player if we don’t want to. As long as we get promoted at the first attempt.