Why newly released Newcastle United 2018/19 accounts are very good news for imminent new owners
The Newcastle United 2018/19 accounts were finally released on Friday.
Mike Ashley delaying the publishing of the accounts, by using a loophole the government had made available to companies due to the virus situation.
Newcastle United the very last Premier League club to publish their accounts.
Amongst the many negative things the accounts showed up to Newcastle fans, there was one big positive for the club’s (hopefully) imminent new owners.
Back in April when the Newcastle United takeover had been passed to the Premier League for their checks, football finance expert Kieran Maguire made the point that ironically, due to the way Mike Ashley has ran Newcastle United, the Saudi PIF / Reuben brothers bidders would be able to spend MORE money in their first season / transfer window than otherwise would have been the case.
Kieran believed a basic budget of £150m would be possible in this next transfer window as well as paying ‘decent wages’, yet still ‘adhere to FFP (Financial Fair Play’ rules.
This is due to Mike Ashley having made profits at Newcastle United in recent years, which will then allow bigger losses to be made for the 2020/21 season, if that is what the prospective new owners want to do. So overall, Newcastle United losses would need to be no higher than £105m for the combined 2018/19, 2019/20 and 2020/21 seasons, as Premier League rules allow owners to cover average losses of £35m per season over a three year period.
So whilst the Newcastle United 2018/19 accounts show that Mike Ashley refused to back Rafa Benitez as he had promised with ‘every penny’, it is good news for the imminent Saudi PIF owners. Those NUFC accounts for last season showing: ‘Operating profit before player trading and amortisation of £53.5m’….and then ‘Profit after tax £34.7m.’
That basic £150m 2020/21 transfer budget that Kieran Maguire pointed to, could of course be increased further, if/when the revenues increase under new owners. For example, the shirt sponsor deal is up for renewal at the end of this current season and if the Saudi PIF led bid does take NUFC over, then you will imagine the revenues will be far higher than before, especially when it comes to that shirt sponsor. Plus of course we would have a situation of fans more than happy to put their money into the club, including buying official merchandise, compared to currently a massive proportion of the fanbase refusing to buy it because of Mike Ashley owning the club and potentially benefiting from the cash.
Revenues could also be significantly increased with player sales, a lot more of which would seemingly be guaranteed if Newcastle United were going on an ambitious spending spree.
Important to also point out, when it comes to clubs making losses that could break Financial Fair Play rules, there are items that aren’t included.
Spending on youth development and infrastructure (St James Park and training ground etc) are exempt.
Mike Ashley hasn’t allowed a penny to be spent on any of these that he didn’t have to but with these potential new owners, I think it would be nailed on that we would see substantial investment, none of which would count towards the losses that impact FFP.
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