Newcastle’s pre-tax loss in 2022/23 was much the same as the previous year at £73m, as the “continued investment” in the squad was offset by strong revenue growth.
Revenue shot up £70m (39%) from £180m to a new club record
£250m, but this was nearly matched by £62m (24%) growth in operating expenses
to £320m. In addition, profit from player sales halved from £6m to £3m, while
net interest payable rose £6m from £1m to £7m.
All three revenue streams saw significant growth, so much so
that new club records were established in each of them. Commercial was up by
nearly two-thirds (£19m) from £28m to £47m, while match day rose £10m (38%)
from £28m to £38m. The smallest
percentage growth was in broadcasting, but even that was 33% higher, increasing
£41m from £124m to £165m.
Newcastle’s revenue growth has been very impressive, higher
in percentage terms than the Big Six clubs. In absolute terms, their £74m
increase since 2019 has only been outpaced by Manchester City, though many
clubs still have to publish their accounts for 2022/23.
Despite the impressive revenue growth, the fact remains that
Newcastle still lost £73m, which is the worst financial result in the Premier
League in 2022/23 so far. In fairness, only four clubs have so far published
accounts for last season, but only two clubs reported higher losses in 2021/22.
Player trading
One area where Newcastle have plenty of room for improvement
is player trading, considering that they have only made around £11m profit from
player sales in the last three years. It
will be a bit better this season following the sales of Allan Saint-Maximin to
Al-Ahli for £23m and Chris Wood to Nottingham Forest for £15m, but it’s still a
lot less than their rivals. The need to
sell players has been acknowledged by Newcastle’s hierarchy, especially to help
meet the club’s Financial Fair Play (FFP) challenges.
Champions League participation will further raise the club’s
revenue in 2023/24, as it is estimated that this has earned them around €34m in
TV money. This is better than English
clubs received in the Europa League and the Europe Conference, which averaged
€21m and €14m respectively, but it is much lower than the other English
representatives in the Champions League: Manchester City €96m, Arsenal €80m and
Manchester United €60m.
Newcastle have commenced a feasibility study on increasing
St James’ Park’s capacity to 65,000, which would make it the second largest
stadium in the Premier League behind Old Trafford, though this project is
complicated by the city centre location.
Newcastle’s £187m wage bill is now the 7th highest in
England, only surpassed by the Big Six, with clear water between them and the
rest of the league. However, for some
more perspective, Newcastle’s wages are still a lot less than the
highest-spending clubs, e.g. they are only around half of Manchester City £423m
and Liverpool £366m. That said, they have significantly narrowed the gap to
Arsenal £212m and Tottenham £209m (though their figures are from 2021/22).
Newcastle’s average gross spend since PIF’s arrival is
around three times as much as the preceding 8-year period, rising from £51m to
£151m.
The new owners have already spent more than Ashley on
infrastructure, i.e. the stadium and training ground. PIF’s £27m outlay in the
last two years is nearly four times as much as the feeble £7m in the preceding
12 years.
Newcastle’s new owners have injected £266m of capital to
date, including £127m last season and £60m in August 2023. As they paid £305m
to purchase the club, that means that PIF have now spent £571m in total.
Financial fair play
PIF inherited a pretty solid FFP position from Ashley, as
the former owner’s tightfisted approach to spending meant that they had a fair
amount of wriggle room. However, the
FFP monitoring period is a moving target, so the 2022/23 calculation dropped
the £41m 2018/19 profit, replacing it with last season’s £73m loss, i.e. a
negative swing of £114m. After making
deductions for “healthy” expenditure (infrastructure, academy, community and
women’s football) and COVID losses, Newcastle were still just about within
target, but it must have been mighty close.
The fact is that despite being backed by the endless wealth of Saudi
Arabia’s Public Investment Fund, Newcastle now have very little room to
manouevre.
The club will have to box clever clever to stay within FFP
rules. This means that if there are to be any arrivals, that almost certainly
means also having to sell players.
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