1. Newcastle United is rumoured to have signed a new £5m kit deal with Castore from next season although neither club nor manufacturer has yet confirmed. 

Never heard of them? Ask Rangers fans who bought their tat this season. Castore were forced to make an apology as a result of “quality control issues” with replica kits. But that’s not what we’re looking at here. We’re going to look at the financial implications.

What conclusions can we draw from the deal? What does it say about Newcastle United under the stewardship of Mike Ashley? And does it have any bearing on a potential takeover? 

Firstly, how does it compare with previous kit deals? The current deal with Puma is worth about£5.5m per season so at first glance, the new deal with Castore would seem to be a backwards step. The devil, as always, will be in the detail.

There will no doubt be two elements to the deal. There’s the upfront price and there’s the commission. So, for example, Manchester United earn £75m per year from their deal with Adidas, but purportedly get a 7% commission on each sale. Liverpool have a lower fee but they’re on 20% commission with Nike. 

Whilst the deal looks poor in comparison to Southampton (£9m per year with Under Armour) or Everton (£9m with Hummel), it may pay a higher commission.

But in terms of the upfront price, the table below shows how the deal compares against other clubs in the Premier League.

2020/21 season
Manufacturer £m pa
Man Utd Adidas 75.0
Liverpool Nike 70.0
Man City Puma 65.0
Arsenal Adidas 60.0
Chelsea Nike 60.0
Tottenham Nike 30.0
Everton Hummel 9.0
Southampton Under Armour 9.0
Newcastle Puma 5.5
West Ham Umbro 5.0
Crystal Palace Puma 4.0
Aston Villa Kappa 3.0
Leicester Adidas 3.0
Wolves Adidas 3.0
Brighton Nike 1.5
Burnley Umbro 1.5
Sheff Utd Adidas 0.8

Prior to Newcastle’s deal with Puma, the kit manufacturers were Adidas. Newcastle received an estimated £4-5m per season. That was in 2005. 15 years later and we are generating broadly the same income from our kit suppliers.

Whilst it would be deluded to expect our new deal to threaten the silly money received by the ‘Big Six’, it seems extraordinary that Newcastle can’t even negotiate a deal comparable to Southampton’s despite a much bigger fanbase both in the UK and abroad.

But this new kit deal is just the latest in a long running catalogue of catastrophic business failures to grow the club commercially under Ashley. For those of you who think that Mike Ashley is a business genius, the table below may no doubt come as a surprise. But it’s certainly no surprise to us at True Faith. We’ve been banging on about it for years. It shows total Commercial income which includes KIT deals, sponsorship, advertising etc. 

2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Growth
07 to 19
Chelsea 53 61 53 56 57 67 84 109 108 117 133 165 180 240%
Man Utd 53 64 70 81 103 118 152 108 197 268 276 276 275 419%
Liverpool 43 51 60 62 77 80 98 104 116 116 136 154 188 337%
Arsenal 42 44 48 44 46 53 62 77 103 107 117 107 111 164%
Tottenham 39 34 29 32 37 42 45 43 60 59 73 109 135 246%
Newcastle 28 26 19 15 16 14 17 26 25 28 15 28 28 0%
Man City 19 21 18 47 58 112 143 166 173 178 198 232 227 1095%
West Ham 16 22 14 17 15 13 20 20 22 28 35 32 36 125%
Aston Villa 8 11 12 14 17 24 23 26 28 28 13 13 18 120%
Everton 7 9 9 10 12 11 13 19 26 21 27 30 41 486%

To be absolutely clear, this failure to grow Commercial Income lies solely with the Newcastle owner. It’s the one revenue stream which Ashley can directly influence and negotiate. And his own personal battles with the major kit manufacturers, Adidas and Nike has hardly helped the club.

I can’t help but think that it must be a source of acute embarrassment to Ashley that the club’s commercial income has stagnated so miserably. And this isn’t over a single year or two. It’s over the entire duration of Ashley’s tenure. Football Finance expert, Kieran Maguire, has called Ashley’s tenure at NUFC as the “lost decade” and the statistics bear this out.

Every other club has managed to at least double their commercial income over the 12 year period shown in the table.

At a time when the Premier League has enjoyed spectacular worldwide coverage with global corporations falling over themselves to promote their brands through sponsorship and advertising, it seems extraordinary that Newcastle have been unable to increase their commercial income even marginally. If we had Gerald Ratner as Commercial Director, it’s difficult to envisage that he could have done a worse job.

Aside from the collapse in on-field performance since 2007, Ashley’s failure to grow Newcastle’s revenue base is, in my opinion, the biggest reason why the club is crying out to be taken over. It’s why we don’t compete. 

When Ashley took over, Newcastle were generating the 13th highest total revenues in the world. For context, Tottenham were 15th highest (with 15% lower overall income than Newcastle). And it wasn’t too longbefore (1998) that when we actually had the 5th highest income ahead of the likes of Barcelona, AC Milan and Liverpool! 

And this income was not distorted by the massive centrally negotiated TV deals that came later with the Premier League(which has been Newcastle’s only income growth under Ashley). It was money generated by the club the hard way through their Commercial and Match Day activities. 

Now Newcastle don’t even make the top 30 highest income list. They’ve been overtaken by the likes of Everton, Wolves, West Ham, Leicester and Crystal Palace. Spurs are now on a different planet to Newcastle in terms of generating income. 

It’s often stated that Ashley ‘saved’ Newcastle when he bought them in 2007. The truth was he bought a club which had so many inherent business advantages at that time. 

In 2007, the club had already undertaken a massive ground redevelopment, at a relatively low cost, which gave themthe 3rd highest capacity in England. Newcastle should have enjoyed a comparative advantage against other clubs who were still to undertake their expansions. Since then, like our Commercial Revenue under Ashley, other clubs have caught up and overtaken us. Newcastle now have the 8th biggest stadium in England. 

Commercially, we were generating incomes that were not too far behind the “big 6”. We were an established PL club regularly competing in Europe. Sponsors and advertisers still wanted to be associated with our “brand”. Our commercial revenue made up 32% of our total income. 

Under Ashley our “brand” has become toxic. That’s why we generate so little commercial revenue. Commercial revenue now makes up less than 16% of our total revenue. Sponsors know that there will be little or no excitement at St. James’. Zero ambition. A club used purely as a vehicle to advertise the owner’s high street store. A higher likelihood of relegation than Europe. A zombie club. Who wants to be associated with that? 

If a new owner was to buy the club, the cloud being lifted from the club would automatically generate higher revenue. But this kit deal has led to speculation that it could jeopardise any future buy-outs.P rospective buyers could be put off if they’re tied into such an awful deal preventing them from increasing future income. 

We can but hope that there could be a break or renegotiation clause that can be called upon in the event of a takeover. Otherwise, we will still suffer from Ashley’s incompetence even after he’s left. What a legacy!