The Newcastle United Situation – A Financial Perspective

The current crisis that Newcastle United is suffering is evident to many football fans. Threatened massively by relegation, fans are turning against the players, the list could go on in terms of what one sees with the naked eye. However with signings flopping, and with Ashley still at the helm, the problems could run a lot deeper than it seems.

Given, their problems could be alleviated with the appointment of Rafa Benitez, but the question is the cost of this appointment and other transactions in the recent past.


The first place to look is the amount Newcastle spent on players in the two transfer windows of the 2015/16 season. Football is arguably now more of a business that it is a sport, with billionaires alike investing a lot of money into clubs in the hope that this makes them successful. Perfect examples of this are the likes of Manchester City and Paris Saint Germain, who spend a lot of money of high profile players. Over the past two transfer windows, Newcastle have a net spend of £73,150,000, a staggering amount for any club, never mind a Premier League minnow. If success is yielded from this spend, then this is not too much of a problem, as a lot of money will be made back in terms of fan attendance and potentially the prospect of European football.

However reviewing the calibre of players that the Magpies have signed, the likes of Jonjo Shelvey and Andros Townsend are not the type of players that are going to push a club to the next level. Especially in recent seasons where players such as Christian Eriksen signed for spurs for a lower price than Shelvey. In fact looking at Newcastle’s net spend over the last five seasons produces some shocking and worrying outcomes. There is a general fall in points earned since the 2011/12 season there they earned 65 points, spending just £11,600,000, compared to a protracted tally of 31 with their ridiculous spending this season.

Newcastle Chart

Looking at the above chart, (horizontal axis is amount spent, vertical axis is points earned), this further backs the point that the less that they have spent, the better they have done. In this case, why was so much spent and so little has come out of it? Why pay these high wages for average players? The potential issue here is possibly that the manager does not have complete control over the players signed at the club. As seen with Joe Kinnear, it is evident that the directors have a major sway on the club’s transfer policy.

Taking this into account, that are the potential future repercussions for the club? Per week alone, £852,000 is spent on player wages, in a year that is £44,304,000. That alone is staggering for a club threatened by relegation. Add in transfer fees, the total is £117,454,000 on players this season. That’s a lot of money to make back, especially seeing as their ticket prices are reasonably low, which may be seen as necessary to appease the fans into watching the standard of football played currently. With an average ticket price of £27, and an average attendance of 49,325, the amount they make on tickets comes to £1,331,775 per Premier League game, and a protracted amount of £50,607,450 over the season, which is just under 50% of what they spent on players this season. Given, the sponsorships with Puma and Wonga may help push this figure up, but even then looking at the trend of previous seasons, this may not be enough to make a profit. The average commercial income of the club between the 2008/09 season and now is approximately £17,270,000, adding this on to the current earnings figure still does not enable them to break even.

With this figure being a worrying factor, potential relegation would generate even bigger losses in many ways. Financially, the ‘parachute payment’ paid to the club may not be enough for them to break even on their spending. Going off the 2014/15 season parachute payments, if Newcastle were to be relegated they would be paid £25 million, still meaning that they cannot break even. To facilitate this a fans can expect a mass exodus of players to make up for these losses. Should this be the case, especially as many of their players will have some form of a release clause if they are relegated, automatic promotion back to the premier league may not be on the card, and even if they do stay up, players will still have to be sold in order to make a profit.

So to conclude, the financial stance of Newcastle United does not make for good reading. Fans can more than likely expect a mass sale of players in order to make a profit, which will hold repercussions for the next season. The one hope at the moment is that Benitez does in fact turn this club around, otherwise a very bleak future indeed is on the cards.



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