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Opinion

Newcastle United accounts 2022/23 and beyond

1 month ago
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The Newcastle United 2022/23 accounts have been released.

The second time the new / current owners have published the club’s accounts, however, these are the first set of accounts that  cover a full season under this NUFC ownership.

Should we react positively or negatively?

Many supporters will pick up on the headlines and be worried about FFP. Without additional comment, concerns may seem legitimate, but let’s get that monkey out of the way before fuller analysis.

The relevant Premier League regulations are itemised in their handbook, from E47-E54. In short, a maximum allowable loss over three years can not exceed £105 million. The headline loss for the year to June 2023 came out at £73.4 million, added to the 2022 loss of £70.7 million and 2021 of £12.2 million would seem to push us over that threshold .at £156.3 million.

However, some costs, although not specified in the Premier League Handbook, can be offset. There were of course losses through Covid. Investments in women’s football and the academy can be considered. The club is allowed to invest in infrastructure without penalty, so the renowned change from wheely bins to hydro-therapy pools, as well as freshening up the stadium, can be treated as investment.

We appear to be within our limits, the Staveley consortium board worthy of praise for working to the extremes of what is allowed. Indeed, the accounts have been released months earlier than we have come to expect. Whether Ashley and his sidekick, Charnley, were apathetic, secretive or whatever, it is welcome that early communication is provided by the new regime.

lee charnley and mike ashley

The other welcome addition to communication flows from the Staveley consortium is that Chief Executive, Darren Eales, has been on hand to provide further explanations. He has pretty much confirmed, almost verbatim, speculation from The Mag in our look at the current transfer window, back on new year’s day.

One of the big headlines is that revenue has increased dramatically, from £180 million to £250 million. Broken down, matchday is up by £10 million with a team worth watching. Media, through extra TV coverage and league prize money was up by £41 million. Commercial revenues have increased from a level that was stagnant under Ashley by a further £17.5 million.

When Ashley took over, we were on a par with the likes of Spurs for commercial revenues. There is now a gap from Spurs’ commercial growth but it is closing. The new regime have highlighted that there will be further growth, through our partnerships with Sela, Adidas and others, with undoubtedly more to come.

There have been further expenses. Crucial to UEFA rules, player wages have increased, Amortisation of players contracts, their value being reduced over the life of their contracts has gone up by £37 million but the worth of players is recognised on the Profit and Loss Account but on another main statement, the balance sheet, player contracts have gone up by £63 million to £262 million, against an overall purchase cost of the squad at £472 million.

As a side note, Eddie Howe’s ability to add value to players is not recognised in the accounts, even though it may become apparent to club managerial hierarchy over time.

As for UEFA requirements, the proportion of revenue spent on wages, despite an overall increase of £45 million has come down from 96.4% of revenue to a little over the 75% that UEFA will require.

Behind the facts are the implications, most immediately from a supporter’s point of view for this transfer window and beyond in the summer?

It will come as no surprise to regular readers of The Mag to understand that the lowest loss, Covid affected season will drop out of the FFP three year rolling period, most recently identified in an article on 1st January. Signings other than loans may have to be financed by judicious sales, perhaps initially as unpopular as the sale of Andy Cole in bygone years.

The Eales interview has confirmed that “squad churning” is a harsh reality of FFP. However, the influx of what seems to be an initial estimate of £37 million revenues from the Champions League goes some way in mitigation. Although we have seen input from Sela, commercial confidentially hides the level of cash input. Extension of player contracts also spreads amortisation costs over a longer period. The board are doing the right thing in being cautious.

Then we have summer.

Next season sees us having to replace a bigger loss making season in the three year cycle of FFP, if indeed it remains in its current form, following UEFA’s changes. Added to the allowable losses is extra revenue, not least from the first year of Sela front-of-shirt sponsorship, combined with the new Adidas deal.

Kevin Keegan Ant Dec

Yes, there are players signed in the Ashley era who are still on the books. Apart from the first transfer window under the Staveley consortium, the club have invested in young talent, not only likely to retain their value but see it increased, particularly under Howe. The potential is there to have our highest ever transfer window spend, perhaps as much as double.

Whisper it if you dare but whatever the appeal of Manchester United, Ashworth will have a canvas on which to display his talent. It will be 120 years since Newcastle became the second United, after Sheffield, to win the English top flight, 118 years since we were the first United to win it twice. The work that he has been doing behind the scenes. What greater incentive could there be for him to stay in the North East?

The latest accounts suggest that we are on a fantastic path to growth, despite the constraints. The Champions League has helped financially. If we accept a January sale or two, we may be able to make even more progress in the short term.

In the meantime, we can be grateful for the input that we have had so far under the new consortium. The accounts hint at their aims.

We have early successes. The club communicates. Accounts are a legal requirement. The club have gone beyond. It isn’t just the accounts but the way in which they have been released and followed up that provides evidence that we have a wonderful future to come.

We have growth but even the growth in costs is coming in all the right areas.

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