NEWCASTLE United are still waiting for their proposed takeover to go ahead, a transaction that will surely herald a new direction for one of the English game’s great underachievers. The sale to the Saudi Arabian Private Investment Fund looks set to go ahead – regardless of misgivings about the Middle Eastern state’s human rights record.

As everyone waits for the deal to be rubber-stamped – and supporters must wonder if the club will ever actually change hands – Newcastle United have released their financials for 2018-19 season.

There are a number of positives about the way Newcastle run their finances, but very few will ever give owner Mike Ashley credit for that on Tyneside. Turnover, at £ 176.4 million, was just over 2% down on the previous season, but the club made a pre-tax profit of £ 41.2 million, the third highest in the Premier League in 2018-19. As an investment vehicle, this looks like a fairly sound business, but Newcastle United lack competitiveness and appear to lack ambition – criticisms that fall at Ashley’s door on a regular basis. This has very much been the story of his era.

Scratch the surface and there are some concerns. Firstly, Newcastle’s reliance on broadcasting revenues is way too high. This stream contributes 70% of the club’s overall income, a marked difference from the top clubs in the Premier League – the average among the “big six” is 46% and there’s a big gap between them and the rest of the division. Basically, the clubs outside the top six have a higher level of dependence because their matchday and commercial revenues cannot compete with the bigger clubs.

Five years ago, Newcastle earned £ 77 million from broadcasting, but since then, media revenues have grown by 60%. While this instantly makes Premier League members of Europe’s wealthiest, it also means that relegation is an absolute disaster for clubs like Newcastle United. Furthermore, it also explains why Championship clubs will risk everything on securing promotion, resulting in the financial “basket case” that is the second tier of English football.

For example, In 2016-17, a campaign that saw Newcastle win promotion back to the Premier after being relegated 12 months’ earlier, the club’s income fell by a third even though they received some £ 40 million in parachute payments. At the same time, they were paying out very high wages for the Championship.

In 2018-19, Newcastle’s matchday income increased by 3.7% to £ 24.8 million, but looking back across the decade, they have scarcely grown – in 2010 matchday amounted to £ 20.9 million. Are Newcastle getting the most out of their healthy and intensely loyal crowds? St. James’ Park has had a 50,000-plus average in 14 of the last 20 seasons yet their matchday revenues of £ 24.8 million are a fraction of Chelsea’s (40,000) and Paris Saint-Germain’s (47,000). Season ticket prices have been unchanged for some time which may have prevented Newcastle from truly monetising their huge support.

Similarly, the club is yet to capitalise on its commercial appeal and this income stream declined by around 2% in 2018-19. This lack-lustre performance is not unusual – in 2014, commercial cash totalled £ 25.6 million, just 8% lower than the £ 27.7 million generated in 2019. Commercial income contributed 16% to the pot in 2018-19 while the top six English clubs derive an average of 37% of their earnings from this area of activity as a result of substantial growth over the decade. This not only emphasises that Newcastle are some distance from the very top clubs, but also, once again, waves a red flag on the subject of overreliance on broadcasting income.

Newcastle fans bemoan the fact Ashley hasn’t spent enough in trying to bring success to the North-East, yet the club owes him £ 111 million which is booked as interest free loans. Newcastle have made a loss just once in 10 years and their wage-to-income ratio was 54.9% in 2018-19 – it has rarely been lower. Their wage bill of £ 96.8 million is modest for a club that attracts 50,000-plus crowds and consequently, they have struggled to keep pace when it comes to player compensation. Wages have risen by more than 60% since Mike Ashley took over, but this pales into insignificance compared to the growth rate at the bigger clubs.

One might conclude Newcastle United has been run as a tight ship, one that looks appealing to potential investors, but the football industry invariably translates prudence or caution as a weakness.

In the transfer market, Newcastle have had spells when they have spent heavily, such as in 2015-16 when they outlaid £ 88 million on a group of players that included Giorgino Wijnaldum, Aleksandar Mitrović and Andros Townsend, but they have really become a selling club. In fact, over the past decade, they have made £ 174 million in profits on player sales, including £ 25 million in 2018-19. In 2019-20, they paid Hoffenheim a record £ 40 million for Brazilian Joelinton and £ 20 million to Nice for Allan Saint-Maximin, but they recouped £ 30 million when selling Ayoze Pérez to Leicester City.

Newcastle United, when they are eventually sold, will probably become the next monied contender in English football. They do need a European presence to take the next step and they’ve not managed to qualify for Europe since 2012-13 when they reached the quarter-finals of the Europa League, the only European campaign under Ashley. They also need some stability when it comes to hiring and firing managers. As it stands, Newcastle are not only under-performing on the field, but also off the pitch. However much money gets pumped in from the Middle East, and whoever arrives at St. James’ Park as part of the new broom sweeping clean, the “Magpies” should be faring much better. It has been 51 years since they last caught a glimpse of serious silverware on the banks of the Tyne, 65 years since the FA Cup was won and they were last champions in 1927. The 2018-19 season may represent the beginning of the end of an uninteresting era, although it will be two years until the accounts start to see radical change. One thing is certain, the club’s new owners won’t be happy with sepia-tinted memories and claims of being a “sleeping giant”. They will expect far bigger things from “the Toon”.

@GameofthePeople

Photo: PA

Categories: Finance & Business

Tagged: finance, Lead, Mike Ashley, Newcastle United, Premier League, Saudi Arabia, top slot

Crystal Palace aim to be liquid in a crisis

GOTP Editorial Team

Posted on June 1, 2020

CRYSTAL PALACE, at long last, made public their financial performance for 2018-19 and underlined a relatively conservative approach to keeping their house in order. Palace, who are in their record-breaking seventh consecutive season in the top flight, made a pre-tax profit of £ 5.4 million on the back of best-ever revenues totalling £ 155.4 million.

This places Palace in a mid-table position from a financial perspective, although it should be noted the club has a very high reliance on Premier League broadcasting income, which accounts for some 80% of the club’s overall revenue generation. A look back over the past half dozen years emphasises how important TV money is to Palace – in 2013-14, the club’s first after promotion, revenues went up from £ 14.5 million to £ 90.4 million in one swoop, attributable to a rise of more than £ 70 million in broadcasting fees.

Retaining Premier League status is therefore vital to Palace, particularly as the club wants to redevelop Selhurst Park and increase its capacity from 25,500 to 33,000. Palace have only ever averaged more than 30,000 once for home games, in their debut top flight campaign in 1969-70 (average 30,167). At present, they have a stadium utilisation rate of almost 100%, their average in 2018-19 was 25,455. Matchdays contribute around 9% of revenues, with commercial activity accounting for 11%.

Palace’s profit for the season is a turnaround from 2017-18 when they made a loss of £ 34.6 million. Aware of tip-toeing into Financial Fair Play trouble, the club has used the proceeds from the sale of full back Aaron Wan-Bissaka to Manchester United for £ 50 million to stave off another loss and also service existing bank debt. This allowed the club to book a £ 46 million profit on player trading, one of the highest in the Premier and bettered only by Chelsea and Leicester City.

Given Palace’s need to sell their top talent, despite Chairman Steve Parish’s hope that they can hold onto their best players, the next likely departure is Wilfried Zaha, who is valued at around £ 70 million. He’s under contract until June 2023, but interested clubs are already circling the 27 year-old and his agent, Pinhas Zahavi.

Player wages continue to rise at Palace and climbed to £ 119.3 million in 2018-19, representing 77% of income, the lowest since 2014-15, but only marginally less than the past few years. This remains one of the worst ratios in the Premier, making Palace vulnerable to a liquidity crisis. The club’s wage bill is the 10^th highest in the division but only 35% of Manchester United’s £ 336 million.

While Palace declare in their financial review the club has no external debt, that claim is now incorrect as the coronavirus lockdown has prompted them to take on some debt to ensure they can remain liquid during the crisis. This is logical given the plans for the stadium, which have already been delayed, are expected to cost up to £ 100 million with completion currently aimed for the summer of 2023. The club needs to buy some of the properties in the surrounding area and the project has to meet with Section 106 requirements which means Palace have to make improvements to the local community.

The club envisages the new-look Selhurst will create a big upturn in non-media revenues and elevate the status of Crystal Palace. The establishment of a new academy will also attempt to tap-into a rich vein of football talent that circulates the London area.

And what of the immediate future for the club? At the tail-end of 2019, Palace were allegedly being “hawked for sale” with an asking price of more than £ 200 million. Furthermore, the prospectus calculated the club could be worth up to £ 700 million within five years. That’s all gone very quiet, unsurprisingly, but when football resumes, the rumours will surely return. In the meantime, Palace – who look secure for another Premier season in 2020-21 – continue to make progress.

@GameofthePeople

Photo: PA

Categories: Finance & Business

Tagged: Crystal Palace, English Football, Finances, Lead, Premier League, South London, top slot

Mexico line up on May 31, 1970 for the opening game against USSR.

50 years ago, Mexico 1970 was a game changer

GOTP Editorial Team

Posted on May 31, 2020

AT THE age of 11 and a half, my football career probably peaked. In fact, you could say that 1970 was my Annus mirabilis in terms of the beautiful game. In 1969-70, I was leading scorer for my primary school, Benyon of South Ockendon in Essex. I scored 10 goals in 15 and a half games (actually 16 starts). I was chaired off the pitch after scoring a hat-trick in one game, completing a dramatic comeback from two-down. By the halfway point of the season, I had scored seven goals in 10 games, but then disaster struck – twice.

Firstly, I started having problems reading the chalk board, which prompted a trip to the school nurse and the horror of all horrors, I had to wear glasses. In 1970, this was the equivalent of having a contagious disease and I was heartbroken. “Never mind, son, Nobby Stiles wears specs,” said one teacher. “But he’s useless, I would say.” I remember it well, it was the day that Sutton United hosted Leeds United in the FA Cup. Days later, I had another setback. Playing football in the playground, I was kicked in the groin. Later that evening, I was rushed to the doctor with a burst bloodvessel. I was confined to bed for two weeks, missing my 11-plus and also in danger of losing my place in the school team. I prayed for snow and it came, by the time I returned, I lined-up to reclaim my number nine shirt (actually, we didn’t have numbers).

Just like Greaves

I wasn’t the same player, though. I had lost confidence and the cricketer’s box taped into my shorts made me look like a court jester around the time of Henry VIII. I scored three more goals, but there was another blow waiting to scupper my fragile self-esteem. In the area five-a-sides, an end of season ritual, I was not selected to play for the team. “Sorry, Neil, you’ve not been as effective since your eye problems, you’re the spare man,” said my teacher. I walked away, holding back the tears and muttered, “I know how Jimmy Greaves must have felt in ’66.”

But it was not all was gloomy, far from it. Chelsea won the FA Cup and I rejoiced, sitting in my kit, writing down the main events from the game and jumping for joy when David Webb nudged the ball into the net for the winner. The next day, before school, I ran to the village green, circled the war memorial and ran back, dressed in my Chelsea kit.

The summer was going to be exciting, for it was World Cup 1970. I had read a lot about overseas football thanks to the International Football Book, which my parents had bought me for Christmas 1969. I was an avid reader of Goal, too, so I was interested in European football at a very young age. I knew about Pelé, Gianni Rivera, Gerd Müller and all the top players of the time. I was excited about 1970, it was my first World Cup. The only problem was, the games were on the other side of the world, how would I get to see a lot of them?

I had a plan. I would come home from school, have my dinner and then go to bed, setting an alarm clock to get-up around midnight, I think, to see the games. It seemed to work and I would prepare myself for the evening with some research on the teams and who might be worth watching. I was also doing some scouting for new players for Chelsea, so it was important to know my stuff.

I compiled a book of the players I was watching, identified by my sticker book, Charles Buchan’s Football Monthly and Goal. I had read that Brazil’s Tostão had problems with one of his eyes and that he was lucky to be in the squad. I felt some affinity with him, my eyesight had effectively cost me a place in that five-a-side line-up. We were both forwards. I wanted him to succeed. His name went down in my book. I wrote: “Good player for Chelsea. Unusual for a Brazilian, he is very white.” It was 1970.

Brazil’s Pele celebrates opening the scoring as Tostao and Jairzinho rush to congratulate him in the final.

Dear Mr Sexton

The competition got underway. “Gustavo Peña (Mexico)…takes a good penalty…Byshovets (USSR)…fast, but communist…Ladislao Mazurkiewicz (Uruguay)…good goalkeeper, but difficult name to pronounce, probably not good idea to sign him.” It went on and on, the pattern of going to bed with the sun shining, getting up when everyone was in bed (my Dad hated football) and then waiting for the TV to get warm before seeing a broadcast that looked like it was on the moon or on a similarly far-off planet. This prompted me to start my “Dear Mr Sexton” letters which I sent to the Chelsea manager to recommend players for his squad. I anticipated Fantasy Football and foreign imports by at least two decades. If Mr Sexton had listened, Pelé might have worn the blue shirt of Chelsea and Franz Beckenbauer might have gone on to become as popular as John Terry at Stamford Bridge. But did they listen?

There was another aspect to 1970 that makes it special and that was the decision by me and my brothers to play our own World Cup, game-by-game. We had a special pitch at the back of our railway cottage house, on some disused allotments. With old bed frames as goals, we played two-a-side and went through the entire fixture list. If political correctness had been around, we would have been in trouble, for when Peru were in town, we blacked our faces with shoe polish. We had a problem when the polish disappeared before Pelé was due to run-out against Czechoslavakia. I wanted to be Pelé, but the others said I should be Tostão because I had a suspect eye. When England met West Germany in the quarter-final (coinciding with the real thing), I was Peter Bonetti and saved a Gerd Müller penalty. But over in Mexico, there was disaster looming for the “Cat of Stamford Bridge”.

I blame the local greengrocers. To this day, I will not forgive Mrs Stone for running-out of Jersey tomatoes.

It was like this. I had read in the Victor comic that footballers had lucky charms or rituals. One had a little black cat sewn into his shorts, another would only put his shorts on at the last minute before running onto the pitch, others had lucky underpants, and so on and so forth. Mine was tomato sandwiches. If I had them for tea, Chelsea (or England) would win. It worked in the 1970 FA Cup from round three all the way to Wembley. It also worked in the World Cup against Rumania and Czechoslavakia. When England played Brazil and lost, I blamed it on the fact that the tomatoes were a little green.

When England met West Germany in León on June 14, 1970, I was far from confident. I had enjoyed watching the Germans and when we had played their games out on our own stadium, I had worn a swimming cap on my head in honour of Uwe Seeler. Actually, I looked more like “The Hood” from Thunderbirds, but nevertheless, it was a passable representation of Hamburg’s number nine. At half-time, it was 1-0 and four minutes into the restart, 2-0. But then it all went wrong. “For pete’s sake, Mum, are you sure we don’t have any tomatoes?” I said when West Germany levelled. She went in search, scouring the allotment next to our pitch, but nothing. “Then we are doomed,” I replied.

Ambitious

And we were. Meanwhile, England were in “our semi-final” but lost 8-7 to Italy. “That Luigi Riva’s some player,” I told my disinterested Dad. “He scored six against England earlier this evening.” The game had to be finished with a neighbour shining his torchlight onto the pitch and we had to replace the ball as a hefty clearance from “Jack Charlton” had sent our best red Frido into the pig sty. But we got there and it meant Italy and Brazil would meet in the final, just like the real thing.

We played our game on the morning of June 21, 1970. We had an improvised Jules Rimet trophy, a misshapen carrot with some cardboard wings (we had the carrot for Sunday lunch later) and we even cut the grass on the allotment. “The old stadium’s looking good, I said. “I wonder if we could build a grandstand here, this competition’s been such a success.” We never got planning permission, but it was an ambitious idea.

The game was exciting, but my brother twisted his ankle and had to limp off. We stuck him in goal but he could only watch as Italy capitulated and lost 5-3. “If the game this evening’s as good, we will be in for a treat,” I said in my best commentator’s voice. It was, as we all know, possibly the most memorable World Cup of all and I drank-up every second of it. A few hours before the final, our TV packed-up, but my Dad managed to borrow a set from a neighbour. We were very close to a disaster.

By 1974, I was an avid fan of Ajax, the Netherlands, Cruyff and Total Football. In my office I have huge posters of Cruyff and Netzer and pennants of Bayern Munich, Juventus and other European clubs. This obsessive interest in football outside the UK has stayed with me and I’m delighted that one of my sons has a deep interest in the game. I don’t write to the Chelsea manager anymore to recommend players, but I’m often tempted. There’s no doubt that it was triggered off by my Mexico ’70.

@GameofthePeople

Photos: PA

Categories: History

Tagged: Brazil, England, featured, Gerd Muller, Lead, Mexico, Pele, top slot, West Germany, World Cup 1970

Soccer City: Why Munich is Germany’s football capital

GOTP Editorial Team

Posted on May 30, 2020

WHAT chance has any club got when you have Bayern Munich on your doorstep? TSV 1860 Munich, the Bavarian capital’s oldest club, has an unenviable task in trying to get air time when the behemoth that is FC Bayern pervades every side street, kiosk and newspaper.

As a city, Munich has much to offer as well as three professional clubs – SpVgg Unterhaching, formed in 1925, is the other team – it is a stylish and comfortable metropolis. We know it for a number of clichés, beer halls, foaming lager, lederhosen, oompah bands and hearty food that relies heavily on meat, potatoes and bread. It’s the home of BMW and insurance giant Allianz and it has played its part in European history in many ways. Munich’s GDP per person is around € 101,000 which is 40% higher than the national average in Germany. In short, it’s a very prosperous place.

FC Bayern are at the top of the tree – no other German club has won the Bundesliga since 2012 and every aspect of this huge footballing institution is dissected by the public – in Germany as well as in Bavaria. Bayern are loved and hated, admired, resented and envied.

Bayern are one of the world’s top football club brands and form part of the European elite. They are watched by 75,000 people at every home game at their impressive Allianz Arena, making them one of the top clubs by average attendance. TSV 1860 Munich, who are now in 3.Liga, draw an average of less than 15,000 to the Grünwalder Stadium. As for Unterhaching, also in 3.Liga, they attract barely 5,000 loyal fans.

TSV and Unterhaching are like all clubs that reside in a city dominated by a European giant. They are in the shadows. Aside from a TSV club shop in the centre of the city, there’s little trace of Munich’s “other” clubs, which is a pity. TSV were members of the Bundesliga before Bayern and were champions in 1966, three years before their soon-to-be far noisier neighbours. TSV also reached a European final before Franz Beckenbauer and his pals, losing to West Ham United in the European Cup-Winners’ Cup at Wembley.

TSV’s recent history has been disastrous, though, and that’s why they fell as low as the Regionalliga Bayern in 2017 after failing to secure a license to play in 3.Liga following relegation from 2.Bundesliga. The club had been co-owners of the Allianz but they soon realised that the stadium was too big and too expensive for their own purposes. They sold their stake to Bayern Munich for € 11 million and eventually moved back to their beloved Grünwalder. In staving off bankruptcy, the club effectively gamed the 50+1 system that characterises Germany club ownership, allowing Abu Dhabi-based millionaire Hasan Ismaik to buy 60%, although Ismaik’s stake only carried 49% voting rights.

If TSV were more prominent in the 1960s, the 1970s really belonged to Bayern as Munich became, arguably, the top football city in Europe. Bayern assumed the crown won by Ajax Amsterdam in 1974, winning three consecutive European Cups. Despite the Dutch dominance between 1970 and 1973, Germany was the centre of European sport – Munich hosted the 1972 Olympic Games and 1974 World Cup as well as Bayern and their three European Cups and three Bundesliga titles. Sadly, the shooting of Israeli athletes in the Olympic Village cast a dark shadow over events, but it could not erase the efforts made by West Germany to create a modern Olympics with some remarkable architecture, highlighted by the revolutionary stadium that set out to imitate the Alps.

Another reason why Munich has been so important to sport is the work of Otl Aicher, a graphic designer and typographer. Aicher, not a Bavarian by birth, studied at the Academy of Fine Arts in Munich. His work included the logo for Germany’s airline, Lufthansa and he was commissioned to be the lead designer for the 1972 Olympics. This included the creation of a series of pictograms that illustrated the various sports of the games. His designs lived on and arguably changed public signage – even today, you will walk past a signpost somewhere that bears his influence.

While Adidas was not based in Munich, the sportswear company became the brand that everyone wanted to see on their football shirt and boots in the 1970s. It was “continental” and associated with the most successful and “cool” clubs and players of the period.

SpVgg Unterhaching vs. 1.FC Kaiserslautern 3. Liga

The majority of the faces of 1970s European football, in addition to the Netherlands’ Johan Cruyff, were undoubtedly German – Maier, Breitner, Beckenbauer, Hoeneß and Müller, to name but a few. Uli Hesse, in his book on Bayern (Bayern: Creating a global super club), explained that Bayern’s European success of the period was vital in order to keep these legendary players at the club. Hesse also revealed that their rivalry with Borussia Mönchengladbach in the 1970s was something of a “Beatles or Stones” situation, although Bayern’s ability to carve-out victory, versus Gladbach’s status as heroic losers, made them unpopular with a lot of people.

Bayern are part of Bavarian culture, their crest features the state colours and it’s a routine for the team to visit the Oktoberfest, dressed in traditional costume. A few years ago, the club launched a lederhosen-inspired strip, comprising a white shirt, brown shorts and white socks with a “calf-warmer” design. The team also wore Alpine jackets and hats to complete the look. Brave as well as respectful to tradition.

Beer, of course, is everywhere in Munich and a visit to the Hofbräuhaus, if you can get a table, is a significant box to tick. There are more accessible venues around the city that also capture the spirit and ambience of the beer hall. There’s no doubt that Munich is steinful of great liquid refreshment!

Aside from the cellars and beer gardens of the city, nowhere is the tradition of beer, sausage and brezel better represented than at a football match. The game and beer have long been bedfellows, although not always for the greater good. But at the Allianz Arena, to name but one footballing venue, the marriage of the people’s game and the people’s elixir appears to create the right sort of vibe. Munich may be a city of beer, but it is also one of the world’s great homes of football.

@GameofthePeople

Photos: PA

Categories: Soccer City

Tagged: 1972, Allianz Arena, Bayern Munich, Europe, Germany, Lead, Munich, Olympic Stadium, Soccer City, top slot, TSV 1860 Munich, World Cup 1974

All stood still – Newcastle United’s financial position

GOTP Editorial Team

Posted on June 4, 2020

Crystal Palace aim to be liquid in a crisis

GOTP Editorial Team

Posted on June 1, 2020

50 years ago, Mexico 1970 was a game changer

GOTP Editorial Team

Posted on May 31, 2020

Just like Greaves

Dear Mr Sexton

Ambitious

Soccer City: Why Munich is Germany’s football capital

GOTP Editorial Team

Posted on May 30, 2020