A well-run self-financing club: no longer just a pipedream
So we got the Swiss Ramble treatment this week. What are the key points to be gleaned from his characteristically insightful and thorough analysis of our finances?
* Much as we might like to moan about Jabba for his occasional crass/gross errors of judgement, we need to acknowledge his importance in effectively rescuing the club from a serious debt crisis. Not only has he propped us up with his own cash, he's also worked hard to get the club onto a financial footing firmer than the vast majority of our Premier League rivals. We're now close to breaking even - just in time to meet UEFA's new Financial Fair Play regulations.
* Incredibly, we topped the Premier League profit table for 2011, ahead even of Man Utd. Of course, that was partly due to the £35m sale of Rocky to Liverpool, but that remains a huge improvement on the losses we had been posting.
* This profit has been achieved partly by virtue of being the club with the lowest net spend of anyone except Arsenal. Big-name players have been sold for big money, but their replacements have been sourced cheaply and - in many cases - have proven to be as good if not better. As we've said before, though, the continued success of this policy hinges on the work of Graham Carr and our scouting network - but if we can keep turning up rough diamonds on the cheap, then our financial position will only improve.
* We've also made great strides in reducing our wages to turnover ratio, down to a very healthy 61% from the dangerously unsustainable 91% we had in the Championship. That latter figure was partly due to the inevitable drop in revenue, but partly also because we retained several of our high earners - Jabba took a gamble on instant promotion and it paid off, but if it hadn't the consequences are unimaginable. Based on the 2011 accounts we're now 13th in the wages table, so our current Premier League position of sixth represents considerable overachievement.
* We're reaping the rewards of once again being popular, "facility fees" from our televised matches helping to boost revenue. Currently we're in the middle of a six-game streak of gogglebox games. (That said, though the fees were of course lower, we still featured on TV a disproportionate number of times during our season in the second tier - much to the irritation of some other clubs who felt, rightly, that the extra cash we earned was unfair.)
* The one real area for improvement is in growing revenue - we stand some distance behind the top six (or, as we should call them, the top five plus Liverpool...) and real progress is now dependent upon swelling the coffers further. Hence Jabba's determination to press ahead with the unpopular decision to offer the stadium naming rights for sale - though, as is pointed out, this is yet to make any money for anyone except Jabba (through increased exposure for the Sports Direct name) and neither is it likely to, with potential sponsors all too aware of the ill-feeling towards the move on Tyneside.
So the final prognosis is very positive indeed: "For so long the poster boy of inept mismanagement, Newcastle United are now a great example of how you don’t have to break the bank to be successful." Never thought you'd read that from an independent analyst, did you?
* Much as we might like to moan about Jabba for his occasional crass/gross errors of judgement, we need to acknowledge his importance in effectively rescuing the club from a serious debt crisis. Not only has he propped us up with his own cash, he's also worked hard to get the club onto a financial footing firmer than the vast majority of our Premier League rivals. We're now close to breaking even - just in time to meet UEFA's new Financial Fair Play regulations.
* Incredibly, we topped the Premier League profit table for 2011, ahead even of Man Utd. Of course, that was partly due to the £35m sale of Rocky to Liverpool, but that remains a huge improvement on the losses we had been posting.
* This profit has been achieved partly by virtue of being the club with the lowest net spend of anyone except Arsenal. Big-name players have been sold for big money, but their replacements have been sourced cheaply and - in many cases - have proven to be as good if not better. As we've said before, though, the continued success of this policy hinges on the work of Graham Carr and our scouting network - but if we can keep turning up rough diamonds on the cheap, then our financial position will only improve.
* We've also made great strides in reducing our wages to turnover ratio, down to a very healthy 61% from the dangerously unsustainable 91% we had in the Championship. That latter figure was partly due to the inevitable drop in revenue, but partly also because we retained several of our high earners - Jabba took a gamble on instant promotion and it paid off, but if it hadn't the consequences are unimaginable. Based on the 2011 accounts we're now 13th in the wages table, so our current Premier League position of sixth represents considerable overachievement.
* We're reaping the rewards of once again being popular, "facility fees" from our televised matches helping to boost revenue. Currently we're in the middle of a six-game streak of gogglebox games. (That said, though the fees were of course lower, we still featured on TV a disproportionate number of times during our season in the second tier - much to the irritation of some other clubs who felt, rightly, that the extra cash we earned was unfair.)
* The one real area for improvement is in growing revenue - we stand some distance behind the top six (or, as we should call them, the top five plus Liverpool...) and real progress is now dependent upon swelling the coffers further. Hence Jabba's determination to press ahead with the unpopular decision to offer the stadium naming rights for sale - though, as is pointed out, this is yet to make any money for anyone except Jabba (through increased exposure for the Sports Direct name) and neither is it likely to, with potential sponsors all too aware of the ill-feeling towards the move on Tyneside.
So the final prognosis is very positive indeed: "For so long the poster boy of inept mismanagement, Newcastle United are now a great example of how you don’t have to break the bank to be successful." Never thought you'd read that from an independent analyst, did you?
Labels: finances, mike ashley
posted by Ben at 1:42 pm
3 Comments:
In regards to "growing revenue", the first thing that I thought of was something from "I wish I was a Geordie" from the Columbus match:
"that’s why this tour was a better idea than United seemed to know. It’s a goldmine sitting here. The club should keep mining it.
Case in point, this past December I went to a local English Style pub to watch the Newcastle match at Liverpool match, there were only two Newcastle jerseys and at least ten Liverpool jerseys. I'm sure that most of that is just based upon club exposure. ESPN in the states pretty much only shows: Man U, Chelsea, Arsenal & Liverpool matches. I understand showing the "big matches", but I wish there was more league exposure.
Hopefully the rumor of another summer US and a trip to Philly pan out... not that I really want to go to Philly but maybe that will mean a trip the beach as well.
Well, it's definitely the case that pre-season tours are no longer looked upon as simply an opportunity to build fitness - they're also valuable promotional tools. The US generally seems a bit neglected - most of the big clubs seem to have identified Asia as the goldmine, and certainly there's a huge appetite for football and the English game in particular there that (as far as I'm aware) doesn't exist so much in the US (and a huge potential market too in terms of the sheer number of people). Still, perhaps more clubs should be looking to promote themselves across the Atlantic - ourselves included.
I believe there's a larger interest in the English game than you think. I remembered this article from last fall. I know there at least one other EPL match replayed in US Prime Time TV (one of the Manchesters were involved).
I think the last World Cup and the success of the Women's team have changed alot of opinions of the game recently.
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