Newcastle United’s 2019-20 finances – worth the wait?

ON THE face of it, Newcastle’s financials for 2019-20 could have been far worse, but they did highlight the lack of commercial progress made by the club over the past decade or so. With a decent level of cash in the bank, reduced net debt and a pre-tax loss of £ 26 million, there’s little high drama in the figures, but over the long-term, the club’s inability to push on and compete must be frustrating for all followers of “the Toon”.

Mike Ashley, the owner, is still keen to sell the club, but the lack of a credible buyer means the unpopular billionaire is still in control. Although £ 26 million could have been higher – compared to the huge losses of Manchester City, Everton and Aston Villa – it has to be remembered that in 2018-19, Newcastle United made a profit of £ 41 million, so there’s been a £ 67 million negative swing. Over the past 10 years, the club’s aggregate pre-tax profit was £ 94 million, a figure bettered by only three clubs. They have made a profit in eight of the past 10 years, hence the club’s comment: “The [2019-20] results do not represent a normal year for the company.”

The club’s revenues were down by 13% from £ 176 million to £ 152.6 million, no surprise given the cost of the pandemic. Newcastle estimated covid-19 cost them over £ 14 million.

Matchday income was down 30% to £ 17.4 million, while broadcasting, which accounts for 70% of overall earnings, was 14% lower at £ 106.1 million. Commercial income, which has failed to keep pace with the club’s rivals, was 1% down to £ 25.9 million. An example of their lack-lustre performance in building a formidable commercial presence is the club’s shirt sponsorship in 2019-20, which was only 10% of Manchester United’s deal and one sixth of Manchester City’s. There could be more energy around commercial business in the form of the club’s new partnership with Castore, who will operate the club’s retail operations.

Against this background, Newcastle’s wage bill totalled £ 121.1 million, representing an increase of 25% on 2018-19. This put the wage-to-income ratio up by 25 percentage points to 79.4%, which was considerably higher than the average for the Premier League (69.3%). 

Newcastle’s wages have doubled over a 13-year period, but this pales into insignificance compared to Liverpool (+320%), Tottenham (+314%) and Manchester City (+866%). Furthermore, Newcastle’s net spend in the transfer market was among the lowest in the Premier (£150 million). Their squad for 2019-20 cost around £ 216 million, again at the bottom end of the division.

More positively, Newcastle’s net debt for 2019-20 totalled £ 45 million, which was a big drop on 2018-19’s £ 98 million and 2018’s £ 111 million. In addition, the club’s total cash was up to £ 62.7 million, a substantial increase on 2018-19 (£ 14 million). 

Mike Ashley is still hoping to sell the club to the Saudi Arabian sovereign wealth fund, a deal that caused a lot of controversy when announced. He is waiting for an arbitration hearing with the Premier League, but this won’t take place until early-2022. Given the potential of the club and its strong regional identity, there should be no shortage of takers for Newcastle United.

Despite the obvious lack of verve in Newcastle’s financials, they are still among the top 30 clubs in Europe, indeed, they are just outside the top 20 by revenues. But they are over-reliant on broadcasting income and their commercial revenues are really disappointing for a club that can call on 50,000-plus supporters in normal times. While Newcastle is not in a precarious position, it has been left behind by the top Premier clubs and in their current state, it is difficult to see the long wait for genuine success – it is now over a half a century since their last trophy. New ownership may provide the fresh impetus that is sorely required, but in the meantime, better communication and accessibility could change the dynamic between the owner and the Newcastle public.

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