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Financial fair play should not constrain Newcastle

Under Mike Ashley, the release of Newcastle United’s accounts was an opportunity for supporters to decry the lack of ambition and the pathetic stagnation on the commercial front.  Now, it is all about financial fair play (FFP) and how much Newcastle can spend going forward.

The accounts for 2021/22 show a £70.7million loss, turnover of £180m and a wages-to-turnover ratio of 94.6 per cent.

Revenue is continuing to grow from a low base, relative to the self-proclaimed ‘Big Six’ sides — Tottenham Hotspur, for example, had a turnover of £444million in 2021-22, which is more than double Newcastle’s — and it will take time to rapidly expand those levels.

Commercial income is the area Newcastle recognise they can rapidly increase.  Fresh sponsorship deals should be announced soon.  The first year of the Castore kit deal did help commercial income rise more than 50 per cent (from £17.6m to £26.5m), but in 2019-20, Newcastle’s commercial revenue was only the 11th-highest in the Premier League. The six biggest clubs earned an average of £207m from sponsorship contracts, which was seven times what Newcastle received. 

Staff costs, which include the club’s wage bill, also ballooned from £106.8m to £170.2m year on year, a 59 per cent increase. Newcastle’s wage-to-turnover ratio has reached 94.6 per cent, up from 76.2 per cent, which is higher than the 70-80 per cent range that is considered healthy.  According to Kieran Maguire’s calculations, Newcastle have an average weekly first-team squad wage of roughly £79,000 a week.

Newcastle’s wage bill ranks ninth in the Premier League, behind the ‘Big Six’, Everton (£183m) and Leicester (£182m), but they are still significantly behind Arsenal (£212m).

Although FFP is based on a club’s pre-tax losses, it contains several exemptions — including costs related to infrastructure, the academy, the women’s team and community projects. That, allied with the continued COVID-19 allowances, is why the full £70.7m loss will not be considered part of Newcastle’s three-year rolling FFP calculation.

Newcastle committed £2.7m towards the expansion and refurbishment of their Benton training ground, which was done at the behest of Howe. Although the club are actively searching for a site to build a state-of-the-art facility, they are substantially improving the existing site in the meantime. The total cost of the project will exceed £2.7m, with that figure merely what had been certified up until June 30, 2022.

Amanda Staveley’s company, Cantervale Limited, charged Newcastle £937,500 in fees for “strategic advisory services”.

 

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