09 October 2014

Newcastle United Financial Accounts – Where Has The Money Gone Under Mike Ashley?

Reprinted here from The Mag, a Newcastle United fans' site, is Mark Jensen with a breakdown of their finances under Mike Ashley, and a clear indicator as to why Rangers could never sustain him.

Football is a game of opinions, it is what keeps us all going in between those ninety minutes’ that are played on the green stuff.

Sadly, much of the chat between fans these days isn’t just about what happens on the field of play, instead much of our time (including on this website) is spent discussing how the club is run off the pitch under Mike Ashley.

The finances coming into the sharpest focus when for example Newcastle United don’t buy a single player in the summer window just gone by.

Alan Pardew has regularly told us that Newcastle can’t compete when it comes to the financial side of things, justifying the lack of transfer activity and Newcastle United’s place in the scheme of things.

To back this message up, we have been treated to some quite bizarre columns appearing under Joe Kinnear’s name in recent matchday programmes, for example lecturing fans about the ins and outs of FFP (Financial Fair Play) and United’s commercial income compared to other clubs. All very bizarre, not just the ridiculous nature of what they are saying, in my opinion, but that they also expect us to actually believe that Joe Kinnear has written it.

Repeatedly it is hammered home, Newcastle fans who think their club should be able to compete these days with the ‘big boys’, or indeed the not so big boys, are clearly deluded.

So is that the end of it? Should we just accept that Newcastle will always now be also-rans, with no chance of ever competing with what people generally see now as the ‘top six’, or even those below that?

Alan Pardew has often said that off the pitch there is no way Newcastle can compete with Manchester United financially but to many of us that isn’t the point. What I, and many others, believe is that a well run Newcastle United can year after year build its way into a club that can compete with those in that top six. Newcastle will never have a turnover that matches Manchester United but what NUFC are capable of, is making massive strides in closing the gap on those other clubs in that top six and eventually getting in amongst them.

How can this be done? Well the answers to many puzzles are often to be found by looking backwards to help take us forwards.

Newcastle United’s financial position is currently;

1. Mike Ashley has made clear Newcastle United has to live within its means, he isn’t going to put his own money in to subsidise the running of his club (asset).

2. The second part of the equation is that the income Newcastle bring in from commercial activities and match day revenue streams, is far lower than that of those top six and much of a muchness now with clubs such as Everton, Villa and others.

So that’s it then, isn’t it? If you believe so then it is a depressing reality because then the only possible advantage Newcastle could have over any of our ‘competitors’ is Graham Carr unearthing player after player who will massively increase in value, with Newcastle selling high and reinvesting in other hidden gems.

Obviously it is a huge benefit to have somebody of Graham Carr’s experience and expertise but it isn’t a whole plan or strategy in itself. For starters every club is looking to get quality players at the best price, plus for every success you will have players who don’t increase in value.

So the bottom line is that for Newcastle United to realistically compete year after year and have a chance of winning trophies you need money, the conundrum is where can it come from?

The financial information below, comes from the annual Deloitte reports, or the ‘Rich List’ as it is often referred to. Deloitte put out a report examining the twenty football clubs with the highest turnovers in the world, they look at each club and see where they get their money from.

The income is divided into Matchday, which includes all money generated such as corporates and boxes, not just the ‘ordinary’ fan buying tickets.

Then you have Broadcasting which is almost exclusively from the various TV deals both in the UK and increasingly, income generated from overseas rights.

Finally, Commercial income, which is pretty much everything not included in the other two categories; shirt sponsor, merchandise, kit deal, perimeter advertising inside St.James’ Park and increasingly (for most clubs) all kinds of tie-ins with companies both in the UK and again increasingly around the world, with the reach of the English Premier League allowing its clubs to bring in massive amounts of extra cash due to the exposure. This was given a massive shot in the arm with the latest North American deal seeing matches shown live on terrestial TV over the pond, making the audience infinitely greater.

So what about Newcastle United?

Well look at these figures we have taken from various Deloitte reports, as a decent illustration we have compared Newcastle United’s figures with Tottenham’s, for the three seasons before Mike Ashley took over and then the latest available Deloitte report for the 2011/12 season when Newcastle finished fifth in the Premier League.

Have a good look.

The world placing refers to highest turnovers in the world, so basically in 2004/05, Newcastle’s was the 12th biggest and Spurs’ was 13th.

Then we have the overall turnover figure, before the breakdown of that figure into the three different categories that make up the total.

Naturally, there are all kinds of talking points but there are a number I’d particularly like to draw your attention to.

1. Spurs have more than doubled their income in seven years, Newcastle’s has pretty much stayed the same, rising by around 7%.

2. In those three seasons before Mike Ashley arrived, Newcastle were more than competing with Spurs and in fact Matchday income saw United well in front, while it was only in that 2006/07 season where Spurs came alive on the Commercial front and leapt ahead of Newcastle.

3. Newcastle’s income was very steady and it isn’t using a one-off season to back up any argument. These were solid income streams and these aren’t from Champions League seasons either, sadly they (Champions League seasons) were history by this point.

4. The TV money has gone up by tens of millions.

Leaving comparisons with Spurs aside, because really we are only bothered about Newcastle, the NUFC figures are astonishing.

We are repeatedly told that Newcastle are now a financially well run club under Mike Ashley. Not spending more than you get in is only part of the equation, the amount of money you get in is ‘quite’ important as well!

The figures are mind blowing, Mike Ashley has managed to halve Newcastle United’s Commercial income from £27.9m in 2005/06 to £13.8m in 2011/12, this is without even taking into account higher prices/inflation and so on which should have automatically INCREASED the total, never mind it going backwards. Standing still would have been seen as disastrous, never mind what the actual reality we are faced with..

When it comes to Matchday money, income has come down from £35.3m (2004/05) to £23.9m (2011/12).

What has happened to the money? With Mike Ashley owning Newcastle United in its entirety, he presents his accounts as he sees fit, with only the basics available for us to see via the published club accounts and then set out by such things as the Deloitte reports.

What the figures tell me is that Newcastle United has been turned into a massive financial failure, it is an absolute disgrace. Money that should be there, and we are talking tens of millions every season, is just no longer there in the totals. Where it has gone is obviously a very interesting question.

The combined income from Matchday and Commercial was £57.2m in 2004/05 and Ashley has turned that into £37.7m in 2011/12.

Comparing Newcastle to Spurs is a very small part of the story, if you looked at every single club in the Premier League and probably all of those below the top division, I bet you wouldn’t find one that has less (non-TV) income in 2011/12 than they had seven years previous.

Mike Ashley is turning us (has turned us?) into almost another Blackburn or Bolton. Clubs where the TV income is everything.

What Ashley has done to Newcastle is strip away belief and self-respect amongst many fans that our club is something special.

Read the following extracts from the Deloitte reports in the three seasons before Ashley arrived at St.James’ Park.

“Newcastle is the highest placed club not to benefit from Champions League revenue. This is a remarkable testament to the strength of the brand, and the club’s fanatical support. Average Premiership attendances stood at 51,800.”

“Newcastle’s Money League placing is largely due to the club’s strong home support, and average Premier League attendances have been above 50,000 for all six seasons since St James’ Park expanded.”

“Newcastle have featured in all eleven Money Leagues, and the club is once again in the list despite not benefiting from UEFA Champions League football, a tribute to the strength of the club’s brand and its loyal following.

“The club will hope the change in ownership and management will provide the catalyst for improvement both on and off the pitch.”

Read those quotes and weep.

Mike Ashley took over a club that was a brilliant ‘brand’ and was successful (in making money) BECAUSE of the massive support, Newcastle United just needed a little care & attention and management expertise to turn that into success on the pitch. Freddie Fletcher’s commercial expertise had helped make Newcastle a money making machine and it had only been brought to its knees thanks to all the money the Halls and Shepherds took out of the club and the disastrous decisions made in appointing people like Dalglish and Souness, combined with a disastrous transfer policy much of the time.

Freddie Fletcher turned Newcastle United’s fanatical support into pounds, via the Matchday and Commercial income.

There has never been a better time to sell the appeal of Premier League clubs both in the UK and around the World.

Whatever his motivation, Mike Ashley has screwed Newcastle United into the ground and into a club that cannot compete, thanks solely to the way he has the club organised. The rest of Ashley’s empire is booming but Newcastle United is now starved of money as well as trophies.

For Newcastle United to compete and potentially win trophies, the club doesn’t need Mike Ashley to ‘put’ money in, all that it needs is to be run professionally and with ambition.

We know our club is something special and one day it may have the chance to prove that once again to the outside world, sadly it won’t happen without massive changes and clearly the biggest of those is Mike Ashley.


Special thanks to Mark and The Mag for letting us republish this here. Find more from them at TheMag.co.uk.