Failed relegation fight took toll on Newcastle United profits

Newcastle United

By David Owen

April 17 – Newcastle United, the Tyneside club close to sealing an immediate return to the Premier League under big-name Spanish manager Rafa Benítez, have reported a sharp downturn in profits for their relegation season. Pre-tax profit plunged to £4.2 million for the year to 30 June 2016, against £36.2 million, the second-highest in the league, in 2014-15.

While turnover did fall to £125.8 million (2015: £129.7 million), the outcome was explained largely by increased costs, attributable partly to a transfer splurge on the likes of Andros Townsend and Jonjo Shelvey, as the club battled unsuccessfully to salvage its Premier League status.

Player amortisation rose from £20.5 million to £28.3 million, wages from £56.9 million to £66.3 million and profit on disposal of players’ registrations dropped from £17.1 million to £3.2 million.

With Townsend and Georginio Wijnaldum departing on lucrative transfers to Crystal Palace and Liverpool respectively subsequent to the year-end, the accounts said that a net surplus of some £40 million in respect of changes to the playing squad had been generated. However, a “substantial proportion” of the player sales were on deferred terms “with the result that in the year ending 30 June 2017 there will be a net cash outlay with respect to these transfers”.

Net debt added more than £45 million to £131.1 million, with interest-free term loans from ultimate controlling party Mike Ashley remaining at £129 million. In December 2016, an Ashley company called St James Holdings provided a further secured loan of £33 million, with £18 million of it used to repay a personal loan from Ashley.

Directors’ remuneration at the entity, Newcastle United Football Company Limited, soared from £296,000 to £1.96 million. Much of this appeared to be linked to former manager Steve McClaren, who was made a director of the company before resigning in March 2016. Remuneration of the highest-paid director was said to be £674,000, excluding a provision for “the maximum amount of compensation payable for loss of office”, written into the accounts at £1 million.

Accounts for 2016-17 can be expected to reflect the club’s second-tier status, with turnover much reduced, as a consequence of far lower media rights payments.

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