We’re very fortunate at TF to have a number of writers on the staff (cough) who are as handy reading a spreadsheet as a team-sheet. The publication of the latest United accounts for 2018/19 have now been pored over by our man Andy Trobe and he has provided us with his view on what they tell us about Newcastle United, the current financial health of the club and how it has been run over the last thirteen years. 

Before we start however, for all the tax-payers reading this … just think about the profits Newcastle United has made set against staff being furloughed. For those on Direct Debit schemes who have paid for games you may never see  think about your ticket money staying inside the club and no communications to even tell us when they might be paying us back or whatever. Its so bad, its almost laughable. 

Newcastle United is an ethical x-ray. 

Over to Andy. 

The NUFC accounts for last season (18/19) are finally in the public domain. What do they tell us about state of the club? The future? And Ashley’s financial stewardship over the last 13 years? Let’s take a look.

What are the key highlights?

The club made a profit (after tax) of £34.7m, the 3rd highest in the Premier League behind Liverpool and Spurs. This compared to a £18.6m profit the previous season (17/18). Ker-ching.

That sounds quite impressive. Is it?

It depends on your viewpoint. Ashley supporters would argue that the club is stable, self-sustaining and profitable. The club’s business strategy (particularly on transfers) has delivered a mid to lower table club which is one of the most profitable in the Premier League.

The rest of us would argue that the club’s profitability has been achieved not by growing the club through investment, commercial expansion and on-field success but by cutting costs to the bone and consistently selling our best players. This has contributed to on-field performance collapsing over the last 13 years.

So how did the club manage to almost double their profits?

The table below gives the details.

Can you translate that into English please?

Simple really. The increase in profit was solely down to player trading. The sales of the likes of Mitrovic, Merino, Sels and Mbemba swelled profits by over £20m.

And everything else remained broadly the same?

Yes. Other than some marginal drops in turnover and minor increases in wages.

What caused the small drop in income?

Lower merit payments for finishing 13th (compared to 10th the previous season) and the failure to stage any concerts as lucrative as the Ed Sheeran ones at St. James’ in 2018. This was slightly offset by an increase in match day income as some ticket prices rose by up to 20%.

And wages rose?

They did but only as a result of a movement on the “onerous contracts provisions”.


You may find yourself lapsing in and out of consciousness at this explanation.

An onerous contract is a contract in which the aggregate cost required to fulfil the agreement is higher than the economic benefit to be obtained from it.

Sorry, still none the wiser. In English please?

Essentially, this was the club recognising in the accounts players who were crap but would still cost us a fortune to see out their contracts (see Jack Colback as Exhibit A). The club raised this provision in 16/17 which inflated our financial losses that year by £22m.

The club has since revised down the amount of this provision which has reduced the wage bill for the last two years (but not quite as much in 18/19).

Phew. Still with me?

Er, I think so. So removing this provision movement, wages actually reduced?

Yes, the underlying wage bill reduced from £103m to £101m. This gives a pretty healthy ‘Wages to Turnover’ ratio of 57% (the club target to have a ratio of lower than 60%). This was the 14th highest wage bill in the PL broadly in line with our final league placing. When Ashley bought the club in 2007, we had the 5th highest wage bill in the PL.

It should be no surprise that out 9 out of the top 10 final league placings were occupied with clubs with the top 10 highest wage bills.

So not quite Benitez “receiving every penny that the club generates”?

No and this has been a major bone of contention for Newcastle fans.

Following our relegations in 2009 and 2016, Ashley’s supporters point out that he loaned the club cash to cover our losses effectively bailing us out. He then recouped those loans when the club got promoted.

But it could be argued that it was his decision making that resulted in the club getting relegated in the first place. He should therefore take personal responsibility for the losses rather than recouping them from the club’s much needed funds following promotion.

Many (most) club owners “capitalise” their loans to their clubs (essentially writing them off). Ashley has steadfastly refused to do so.

What about money owed on transfer fees?

Newcastle owe £12m in transfer fees although this isn’t included in the headline debt figures commonly used. On the flip side, they are owed £48m by other clubs for players sold. So a net surplus of £36m owed on transfer fees.

So are the finances in a better state than when Ashley bought the club?

This is an article of faith for Ashley’s supporters. When Ashley bought the club, there were undoubtedly financial problems. The club had just made a loss of £34.2m and had external debts of £77m. His supporters have often stated that we were on the brink of administration and Ashley rescued us.

Is that correct?

It’s true that in the first year of ownership, Ashley loaned the club £100m to repay the bulk of the external debt (£70m) and provide some much needed working capital (£30m) for the club to operate.  But to hail Ashley as the club’s saviour from bankruptcy is a gross exaggeration.

Ashley didn’t buy the club to save Newcastle. He bought it as an investment to make money and as an advertising vehicle for his Sports Direct brand. He is poised to succeed  on both counts.

He knew (or should have known) the financial issues facing the club yet he bought it regardless. That was his decision. No-one forced him to purchase it and indeed, he seemed desperate to do so.

So Newcastle were a financial basket case when Ashley purchased the club?

Far from it.

Firstly the net debt of £67m in 2007 was about £32m less than it is now. And that debt had essentially paid for the ground expansion. It was akin to a mortgage and has helped generate much higher match day revenue which the club have enjoyed ever since.

Secondly, NUFC had generated a profit only two years earlier in 2005 (and indeed in the two years prior to that). It was only Shepherd’s financial backing of Souness which dragged the club down into the financial mire.

Thirdly, the club were not as reliant on broadcasting income as they are now. In 2007, less than 30% of NUFC’s income came from broadcasting. It’s now 70%. Ashley has miserably failed to grow match day and commercial revenue over 13 years. Match day income was £8.8m higher in 2007 than it is now. Commercial revenue was £1.4m higher.

As a result, NUFC now have the 23rd highest income in European football (10th highest in England). When Ashley took over the club, they had the 13th highest (5th highest in England). They’ve gone backwards compared to other clubs.

For example, Spurs generated income of £75m in 2007 whilst Newcastle generated £87m. By 2018/19, Spurs had massively increased their income to £459m. Newcastle’s income, in contrast, increased only to £176.4m which was all down to the centrally negotiated TV deal.

And what about the future?

That all depends. NUFC are undoubtedly on a sound financial footing. But they were in 2015. Then they appointed Steve McClaren and were relegated within a year. This time we appointed Steve Bruce.

We may be fortunate and avoid relegation this season but the same problems will be there. No growth in income. Our best players sold. Perennial relegation battles.

Or there may be another direction. At the time of writing, the Staveley led consortium takeover is still waiting approval from the Premier League. If this goes ahead, it will undoubtedly mark a sea change in the club’s strategy.

The press are reporting that the consortium plan a huge investment in the summer not just on players but on the club’s infrastructure. The good news for the prospective purchasers is that NUFC’s prudent approach under Ashley and the resulting profits would leave them with plenty of room to manoeuvre and still meet Financial Fair Play.

Exciting times. Hopefully.