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Newcastle United Accounts – Mike Ashley could easily have had more cash going in than out if doing 1 of 2 things

4 years ago

The Newcastle United Accounts made headlines on Friday.

You are always working more or less a year behind, so these were the accounts for the 2016/17 Championship promotion season, not the Premier League one just ended.

This time though, Mike Ashley really took it to the limit and beyond, the accounts filed some seven weeks after the deadline at Companies House. This means a fine but just peanuts to Ashley.

Very difficult not to think that the timing of their release isn’t coincidental, coming as it does just as the summer transfer window opens and in the middle of a stand-off with Rafa Benitez on a new contract and pleas/demands from the manager for backing in the transfer market.

Many/most in the media just went for the lazy option of reproducing what the club had put out (see below), rather than looking properly at what had happened.

So Newcastle ‘losing £90m’ in 2016/17 became the much repeated headline.

This totally ignored the fact that more than two thirds of this was actually a paper loss, with some £65m of amortisation and ‘onorous contract provisions’ (NUFC choosing to put future wages of unwanted players in that season’s accounts as well as the wages NUFC were paying in 2016/17),  this meant an accountacy loss of £90m but these are just financial instruments, not cash that could buy players.

In actual fact, when it came to actual cash, at the start of the 2016/17 season Newcastle had £1.7m in the bank and ended it with minus £8.3m, so £10m worse off in that respect.

Mike Ashley did put some of his money into the club to cover losses in the Championship season but that figure is £15m. So when it comes to actual cash going in and out in the Championship season, it was actually £25m more going out than in (showing £10m worse off at the bank at the end of that 2016/17 season, plus the £15m Ashley put in).

Not ideal but not quite the disaster people are being led to believe.

In actual fact, Mike Ashley could very easily have made it so Newcastle United actually had MORE actual cash coming in than going out, even in a Championship season.

By doing one of two things he would have ensured this happened, if he had done both…Newcastle would have had a very healthy bank account by the end of that 2016/17 Championship season.

This simply comes down to the way Mike Ashley chooses to buy and sell players.

For whatever reason(s), the owner always pays the full transfer fee up front but when selling, he is happy (or insists?) on the fee being paid over the course of years in instalments. The club have never given any explanation as to why Ashley wants to do this.

So in the 2016/17 season, Newcastle confirmed they had sold players for a total price of £40m more, putting a special note (see below) in the 2015/16 accounts.

Players worth an estimated £50m were bought, whilst players worth an estimated £90m were sold.

However, in that special note, it also explained that the majority of that £90m wouldn’t come in until after the 2016/17 season, when future instalments would be due.

Indeed, they said that in 2016/17 there would be actually a ‘net cash outlay’, so if all £50m worth of players bought were paid for up front, it means you are looking at a minimum of at leats half the fees for players sold not arriving until those future seasons – but in reality probably far more. For instance, it was widely reported that the Moussa Sissoko £30m fee would be paid by Spurs over the course of five seasons at £6m a time.

So coming back to the 2016/17 accounts, if Mike Ashley had insisted on buying clubs paying all the money up front, then Newcastle would have banked £90m from sales rather than the probable £20m – £30m, putting the club easily in credit at the bank, when compared to the £25m deficit on cash they did end up with. Plus of course the owner wouldn’t have had to put in that £15m.

Likewise, if Ashley had insisted Newcastle paid for their £50m worth of buys over the course of the next ‘3-4 years’, then the same would have applied. Shelling out maybe £10m/£15m on players in 2016/17, with most of the cash to be paid later. That would also have put NUFC in credit at the bank when it comes to cash, with once again Mike Ashley not having to put in the £15m.

Even if NUFC get advantageous terms (lower buying prices/higher selling prices) by doing it the Ashley way, there is so much leeway on the amounts that Newcastle would have been better off in terms of cash whatever the buying/selling figures.

So the bottom line is, Newcastle might have ended up £25m worse off in terms of cash in and out in 2016/17, but the transfers in and out in that season, mean there would be some £60m-£70m to come into the club in future seasons.

So moving forward, I would argue that when you include this (2017/18) season’s Premier League level money and the guarantee of similar in 2018/19, as well as the transfer cash surplus generated in 2016/17, Newcastle United are actually in a very good position cash-wise, rather than the doom and gloom the club and media put forward on Friday.

11 April 2017:

Extract from Newcastle United accounts for period up to 30 June 2016:

‘Subsequent to the balance sheet date the club has generated a net surplus of around £40m in respect of changes to the playing squad, a substantial proportion of the player sales are on deferred terms and will be received over the next 3-4 years, with the result that in the year ending 30 June 2017 there will be a net cash outlay with respect to these transfers.’

Official Announcement by club of Newcastle United Accounts 2016/17 – Friday 20 May 2018:

The results reported below reflect very clearly the financial consequences of relegation and the approach we adopted to help secure a return to the Premier League.

(These are the 2016/17 headline figures with in brackets the equivalent ones for 2015/16, then the change between the two seasons)


£85.7m (£125.8m) £40.1m worse off

Operating (loss)/profit

£90.9m loss (£0.9m profit) £91.8m worse off

Loss/profit after tax

£41.3m loss (£4.6m profit) £45.9m worse off

Wages to turnover ratio

130.9% (59.4%) 71.5%


£144.0m (£129.0m) £15.0m worse off

Cash at year end

-£8.3m (£1.7m) £10.0m worse off

Average home league attendances

51,108 (49,754) 1,354 better off

Wages & salaries

£112.2m (£74.7m) £37.5m higher

Playing squad costs are the most significant cost in any football club. There is probably no better evidence of the financial impact of our approach than the wage cost we are reporting for last season.

Whilst the headline figure of £112.2m includes promotion bonuses and onerous contract provisions totalling just over £30m, the underlying annual wage cost remains the highest ever seen in the EFL and is comparable with many Premier League teams for the 2016/17 season.

It is far in excess of Brighton (£40.4m) and Huddersfield (£21.7m), who were promoted alongside us.

Managing director, Lee Charnley, said: “After an at times challenging season in the Championship, everyone connected with the club was delighted when, with two league games remaining, we secured automatic promotion.

“Even taking into consideration the fantastic levels of support during our Championship season, such is the huge disparity in central broadcasting and commercial revenues between the Premier League and EFL, we are reporting a drop in annual income of almost one third.

“An immediate return to the Premier League was vital to restore the financial stability and future prospects of the club.

“With the support and backing of the owner we took what was, in essence, a financial gamble on securing immediate promotion.

“Statistics show how difficult this has been to achieve in recent times, with only five of the 18 teams relegated over the previous six seasons having come straight back up (one via automatic promotion and four via the play-offs). We were the only relegated club to achieve an immediate return to the Premier League.

“We were therefore under no illusion as to the scale of the challenge we were facing.

“Retention of the manager and key members of his coaching team, together with a significant spend to reshape the squad for Championship football, gave us what we felt was the best possible chance of success.

“There were some high profile departures including Moussa Sissoko, Gini Wijnaldum, Daryl Janmaat and Florian Thauvin.

“In addition to Dwight Gayle, Matt Ritchie and Matz Sels, who joined us in June 2016, a further nine players followed in the financial year 2016/17 – Christian Atsu, Ciaran Clark, Mohamed Diamé, Jesús Gámez, Isaac Hayden, Grant Hanley, Achraf Lazaar, Daryl Murphy and DeAndre Yedlin.

“Whilst sizeable transfer fees were earned for the players who left, the cash profile of these deals resulted in the fees being receivable over periods of up to four years.

“Our ability to withstand the financial impact of relegation, and adopt the approach that we did, was therefore only made possible by the continued financial support of our owner, who injected a further £15m interest-free loan into the club in 2017.

“Gaining promotion was the first priority and retaining our Premier League status was the second, both of which were achieved through considerable hard work, at all levels of the club, across every department, and thanks in no small measure to the magnificent support of our fans.”


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