Latest Newcastle United Accounts revealed – Tells a story
The club have released the headline figures for the latest Newcastle United accounts.
These are for last (2015/16) season and relate to what happened in that Premier League year, not what has happened since we have been in the Championship.
The club’s official statements are always going to only tell part of the story and these Newcastle United accounts can’t be seen in isolation, rather they have to be taken as a package with previous seasons.
The latest figures show that turnover dropped and NUFC say that is down to TV money dropping. However, this doesn’t explain the failure to make any progress with commercial revenue, something that the club have previously said in past years was an area that was crucial to the growth of NUFC.
Much is made of Mike Ashley allegedly bailing the club out after relegation, just as he did supposedly seven years earlier on the previous relegation.
However, that can only be taken in light of the fact that his disastrous running of the club was responsible for relegating the club both times.
If somebody throws you in the sea and then eventually pulls you out just before you drown, you can only be grateful up to a point!
Much is made of Mike Ashley’s/Lee Charnley’s shock that the spending in summer 2015 didn’t ensure safety from relegation as a minimum. Well the stupid ongoing transfer policy that allowed the manager/head coach to have no say in signings and insisting on bringing in young inexperienced players with a future sell-on value was always likely to lead to short/medium/long-term misery.
The previous season (2014/15) saw Newcastle only survive relegation on the final day of the season, yet a (relative) fortune was spent on two 20 years olds (Mitrovic and Mbemba) who were playing in the very weak Belgian league, a 22 year old (Thauvin) from the weak French league, with the only signing that made sense being Wijnaldum who had more experience than the other three put together but still far too much was asked of him.
Yes there was spending in summer 2015 and January 2016 but once again we only saw realistic (if chaotic) spending happen when Mike Ashley was suddenly confronted with a very real risk of relegation.
Back in 2012 after that breakthrough 2011/12 season of finishing fifth, only Vurnon Anita arrived and that was financed by selling Leon Best and future England goalkeeper Fraser Forster.
Then we had summer 2013 and January 2014 when not a single player was bought, incredible.
Even the summer of 2014, whilst more money was spent it still saw really bad decisions and not nearly enough cash invested on signings. A cut price £6m Emmanuel Riviere was a laughable answer to our dire striker shortage, whilst the focus was overall also very much on getting ‘bargains’ from weaker overseas leagues – hence the arrival of Cabella, de Jong, Perez, Janmat, Ferreyra and Riviere.
This also has to be taken alongside the fact that Yohan Cabaye was sold for £18m the previous January, whilst the sales/departures of Debuchy, Shola, Remy, Gosling, Luuk de Jong, Amalfitano, Marveaux, Ben Arfa, Yanga-M’biwa brought in more cash and massively slashed the wage bill.
Yet again Mike Ashley was doing things his way and trying to ‘cheat’ the system, thinking he could run Newcastle United in a new/different way that would produce Premier League survival each season but on a budget.
Then when getting desperate and realising the writing was on the wall, gambling on (relatively) big money (with future potential profit) signings was the final straw that broke the camel’s back (again!), especially when appointing another patsie in Steve McClaren who was so desperate for the job he accepted it on humiliating terms with no say on anything important such as the players he would be relying on!
It is Mike Ashley’s business and he is simply protecting his very valuable asset which he has gained massively from in his 10 years at the club, we as fans have nothing to be grateful to him for.
The future health of any football club is inextricably linked to how it performs on the pitch and that is dependent on employing the right people on the football and business side and having the correct structure to run the club.
Newcastle have employed Rafa Benitez which is a massive first step but there is so far little evidence that the other pieces of the jigsaw are going to be made available.
Official Newcastle United statement on release of 2015/16 accounts:
‘Newcastle United Limited has filed its annual accounts for the year ended 30 June 2016.
The club recorded a profit after tax for the year of £4.6m, down from £32.5m in 2015.
Whilst the results mark a sixth consecutive year of recorded profit, the club had a hugely disappointing 2015/16 season, which ended in relegation to the EFL Championship.
Key financial performance indicators:
Turnover £125.8m (2015 – £129.7m)
Operating profit £0.9m (2015 – £19.1m)
Profit after tax £4.6m (2015 – £32.5m)
Wages to turnover ratio 59.4% (2015 – 50.1%)
Loans/Debt £129.0m (2015 – £129.0m)
Cash at year-end £1.7m (2015 – £48.3m)
Average home league attendance 49,754 (2015 – 50,349)
Turnover fell by three per cent, the most significant element of this being a £4.5m drop in media income, down from £77.2m to £72.7m. In addition to the impact of an 18th placed finish on the merit-based payments received by the club, there were four fewer matches screened live (16 compared to 20).
Operating expenses increased seven per cent to £96.5m and amortisation of players’ registrations increased by £7.8m to £28.3m.
In both cases this reflects the significant spend on additions to the playing squad in the summer 2015 and January 2016 transfer windows, which included the purchase of Georginio Wijnaldum, Aleksandar Mitrović, Florian Thauvin, Chancel Mbemba, Jonjo Shelvey, Andros Townsend and Henri Saivet.
The total net cash spend on players in the financial year to June 2016 was £70.7m, compared to £23.8m in 2015.
The significant increase in the wages to turnover ratio, up to 59.4 per cent from 50.1 per cent in 2015, again reflects the spend on the squad, combined with the change in first team management personnel in March 2016.
Net debt increased from £80.7m at 30 June 2015 to £127.3m in June 2016, representing the reduction in the company’s cash position at the year end.
Term loans from the owner, Mike Ashley, and companies under his control, remained unchanged at £129.0m and continue to be interest-free.
On 21 December 2016 St James Holdings Limited, a company controlled by Mr Ashley, provided a further loan of £33m. £18m was used to repay Mr Ashley his outstanding personal loan with the remaining £15m providing additional essential funds for operating activities.
Managing director, Lee Charnley, said:”The 2015/16 season was extremely disappointing for everyone connected with the club.
“Significant sums of money were spent to strengthen the playing squad in the summer 2015 and January 2016 windows, which also resulted in an increase in our annual wage bill. In the context of this spend, relegation was both unacceptable and totally unexpected.
“The financial impact of relegation is difficult to overstate and this will become evident in our next set of financial results for the year ending June 2017.
“The biggest impact by far is the dramatic reduction in centrally distributed income that comes with dropping down a division; the reality being our income in this area is forecast to fall by over £30m compared to 2015-16.
“To highlight the differences, our 16 live TV games last season earned us £12m in revenue. Contrast this with 2016/17 EFL live fees which, based on our current number of confirmed appearances (12 away and 6 home), will earn us a total of £720k.
“To illustrate further the cost of relegation, 2016/17 marks year one of the new Premier League TV deal and the team that finishes in 18th place this season is expected to receive in the region of £30m more revenue than we did for the same place finish last year.
“Our approach, following relegation, was to make further sizeable investment in our playing squad in preparation for the EFL Championship season ahead and our annual wage bill is, we believe, still above and beyond many current Premier League teams. Whilst not without financial risks, this strategy was adopted in order to maximise our chances of promotion at the first time of asking.
“Outgoing transfers will ultimately generate a significant net player trading surplus for the summer 2016 transfer window but, due to the cash profile of the deals, this will result in a net cash outlay in 2016-17.
“Our adopted strategy has therefore only been made possible by the cash injection from our owner, who continues to provide interest free funding to support the club’s operations, never more important than during this financially challenging season.”
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