Traditionally, Newcastle United were one of the most successful clubs in England.
Under Mike Ashley, however, things have changed.
Newcastle have shifted from a financial giant to a cost-cutter, aiming for
financial stability, through the revenue made from player sales.
For the 2014-15 season,
Newcastle reported a total revenue of a hundred and twenty eight million, eight
hundred thousand pounds. This was split into 26.8 million in matchday income,
77.2 million in broadcasting and 24.9 million in commercial.
Overall this means Newcastle United have the seventh highest revenue in English
Football, behind only Tottenham, Liverpool and the regular Top Four. With Manchester
United 266 million pound ahead,
Newcastle are logically unlikely to compete with the elite teams. Yet seventh
place, puts the club ahead of Everton, West Ham, Southampton and Leicester.
All the more perplexing then that the club were relegated last season. Yet more troubling
is that Newcastle recorded a profit of 36 million pounds before tax in 2015.
With the club struggling on the field, supporters might not take too kindly to
the club's earnings, not being reflected in their results.
Financially speaking, however, the club are in a reasonable position.
Ashley's policy has always been sustainability, attempting to spend only
what the club earns, and this was after initially loaning the club a total of a
hundred and twenty nine million pound, interest-free. Newcastle have recorded
profits in their last five annual reports and whilst most clubs are making
profits now, due to the huge broadcasting revenue available,
Newcastle's 36 million pound profit in 2015 was second only to Liverpool's,
whose total came mostly from the sale of Luis Suarez.
Although the club are healthy, this doesn't mean that Ashley's tenure has been a
success. Newcastle's financial sustainability has been largely, as a
result of their huge fan base, and until recently their continued presence in the
Premier League. The worrying factor from a financial perspective, is in the club's
lack of growth. Matchday and commercial revenue are both down since Ashley took
over the club in 2007. Newcastle are the only Club in the Top Ten earners in the
country not to experience growth in these areas. Their smaller matchday income
is partially understandable as the club have frozen some ticket prices in an
effort to maintain affordability, but amidst the huge financial growth of the Premier
League, there is almost no excuse for their lower commercial income. One reason
for this could be potential investors unease about associating with the Sports
Direct brand, given the very public criticism of Ashley's company.
Newcastle have made most of their money through player sales in recent years,
with Andy Carroll's 35 million pound transfer to Liverpool at the top of that
list, but the club have also spent on players. Inbetween 2014-15, Newcastle's
net transfer spend was second only to the two Manchester clubs. The problem then
was poor purchases and converting those fees into results. This period of
unusually high spending ended in relegation, the worst possible
eventuality. in the Championship their revenue will take a huge hit,
despite the parachute payments. A 70 to 80 million pound drop is estimated, with
the gap above widening, as Newcastle will miss out on the new Premier League TV
deals average of fourty million pound more per season. To manage this drop the
club have had to sell their best players, raising around 75 million pounds from
player sales in the Summer.
Given their size , their relative financial stability,
despite the lack of growth and the position as the seventh-highest earning
club in England, Newcastle's relegation was the result of huge underachieving.
Ashley can't be held solely responsible, for his tenure does
illuminate an inability on the owners part, to effectively run the club. It's
not the money isn't there or they're not reinvesting it. To show this, despite
their big profits, Ashley hasn't taken any repayment for his initial loans.
To put it bluntly, it's just that the owner is bad at running his football club.
Newcastle have the potential to be a huge force but this seems unlikely under
Ashley and in the Championship, with a shrinking revenue, they're unlikely to
attract investors.