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Swiss Ramble
Newcastle United’s 2017/18 financial results reflect their promotion after a single season in the Championship. Managing director Lee Charnley said, “A 10th placed finish in our first season back in the Premier League was a fantastic achievement.” Some thoughts follow
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
promotion brought the club back to “a healthy financial position”, moving from £47m loss before tax to £23m profit, as revenue more than doubled from £86m to a record £178m and no repeat of prior year £32m exceptional costs: £10m promotion bonus & £22m onerous contracts.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
£93m revenue growth very largely driven by broadcasting’s £79m increase to £126m, reflecting vastly higher TV money in the Premier League, while commercial also increased £13m (90%) to £28m, but match day flat at £24m. However, profit on player sales dropped £39m to £4m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
underlying wage bill (excluding the one-off promotion bonus & onerous contracts provision) increased £14m (17%) from £80m to £94m, while player amortisation also rose £6m (16%) to £41m, though other expenses were £1m lower at £24m, due to “prudent financial management”.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
were one of 13 Premier League clubs to report a profit in 2017/18. Although their £23m profit before tax (£19m after tax) was pretty good, it was actually only the 9th highest in the top flight, a long way below £139m, £125m, £70m & £67m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
profit was restricted, as they only made £4m from player sales (mainly Hanley, de Jong & Murphy), compared to £42m prior year (Sissoko & Wijnaldum). This was one of the lowest gains in the Premier League, in stark contrast to clubs like £124m, £120m & £113m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
have been profitable in 7 of the last 8 years, the only exception being the Championship season in 2016/17, amounting to £79m. Since Mike Ashley bought the club in July 2007, Newcastle have had total profits of £27m, as there were £53m losses in his first 3 years.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Looking at the last 8 years, have posted 6th highest profits in England of £79m, despite the chunky £47m loss in 2016/17. As might be expected, highest profits came at £324m, £199m and £185m. The Toon Army would like to see more of that money on the pitch.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Part of profit improvement was due to the elimination of exceptional charges. There was £29m for “mismanagement” 2007-11, then nothing for 5 years until £22m onerous contracts provision in 2017, which obviously inflated the reported loss that year (though no cash impact)
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Over the years player sales have had a decent impact on profits, contributing £184m during the Ashley era. That said, only 3 years were above £20m. If such profits were excluded in 2017, the loss would have been as high as £89m. This year will include Mitrovic and Merino.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Excluding exceptional items, EBITDA (Earnings Before Interest, Depreciation and Amortisation), which strips out player sales and non-cash items to give underlying profitability, improved from minus £20m to a record £61m, almost double the £32m from the last time in the PL.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
As a consequence, EBITDA of £61m is actually the 7th highest in the Premier League, only below the “Big Six”. They are within striking distance of £78m, but only a third of incredible £177m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
£178m revenue is £53m higher than the last season in the Premier League (2016/17), entirely due to the new TV deal that started in 2017. It’s the same story since Ashley’s arrival in 2007, as revenue has grown £91m, but £101m is from centrally negotiated TV contracts.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
On the one hand, £178m revenue is the 8th highest in the Premier League, only behind the Big Six and £189m, but on the other hand they are a long way below the leading clubs, e.g. around half of 6th placed £381m and less than a third of £590m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
returned to the Deloitte Money League Top 20 for the first time since 2014/15, as they had the 19th highest revenue in the world of £178m, just behind Milan £184m, but ahead of Napoli £162m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Before Ashley’s 2007 takeover, had the 14th highest revenue in the world, just £19m lower than the 10th placed club. In 2018 this gap has soared to £201m, around 10 times as much, as the club has been left behind by others’ growth.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
£126m broadcasting revenue was the 8th highest in the top flight. Here, European qualification makes a big difference, e.g. Newcastle’s domestic revenue was only £20m below , and , but they earned £72m, £58m and £53m respectively from the Champions League.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
received £123m from the Premier League in 2017/18, three times the prior year’s £41m parachute payment. This was the 8th highest distribution, even though they finished 10th in league, due to the club’s popularity, as facility fees were boosted by being shown live 18 times.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
have only qualified once for Europe under Ashley, earning just €5m in 11 years. In contrast, they qualified in 10 of the 13 years before he became owner, including 3 times for the Champions League. As an example of what they could have won, got €128m in last 3 years
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
(limited) objective is “being a member of the Premier League”, which is to an extent understandable, given that 71% of their revenue comes from TV (£126m of £178m). That said, the only club outside the Big Six with a lower reliance on TV is and 7 clubs are above 80%.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
match day revenue rose slightly by £0.5m (2%) to £23.9m, despite hosting fewer home games in the Premier League than Championship, as attendance increased from 51,108 to 51,992 (just below capacity). This is the 8th highest in the top tier, only behind Big Six and .
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Not only is £24m match day revenue lower than the last time in the Premier League in 2016, but it is also nearly a third less than the £34m in the last season before Ashley’s arrival. Others have surged ahead in this period via stadium developments or success on the pitch.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
As testament to fans’ loyalty, the 2018 average attendance of 51,992 is the highest since 2006. The previous season, they averaged a very impressive 51,108 in the Championship. Ticket prices were cut by 10% following relegation, then frozen in the following campaign.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
attendance of 51,992 was the 8th highest in the Premier League, but fans are unhappy with prices rises of up to 20% this season, though there was no increase for around 20,000 with long-term season tickets that have no price increases for 10 years.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
commercial income nearly doubled from £15m to £28m, as performance-based clauses were triggered by promotion. Comprises commercial £26.7m (including central PL sponsors) & other income £1.4m. This was the 9th highest in top flight, but way behind the elite clubs.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Ashley has only managed to grow commercial income by £0.5m in 11 years, so the club has fallen way behind rivals, e.g. Big Six have grown by £65-220m in that period. Accounts say that Sports Direct will now pay for stadium advertising, but similar promise was made in 2015.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
had a new shirt sponsor, Fun88, in 2017/18 with a deal worth £6m (up to £6.5m in 2018/19) plus first sleeve sponsor with MRF Tyres. Puma have been the club’s kit supplier since 2010. Last season benefited from Magic Weekend and Ed Sheeran events.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
reported wage bill fell £18m (17%) from £112m to £94m, but this is a bit misleading, as prior year included £10m promotion bonuses and £22m onerous contracts provision. Excluding these once-offs, underlying wage bill increased £14m (17%) from £80m to £94m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
enjoyed the 5th highest wage bill in England before Ashley bought club in 2007, but since then this has risen by just £34m (57%) from £60m to £94m, while others have increased wages by significantly more, e.g. up £104m (237%) from £44m to £148m.
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
As a result, £94m only had the 14th highest wage bill in England in 2017/18, around the same level as the 3 relegated clubs (Stoke City £94m, WBA £92m and Swansea City £91m). Much lower than , , , , and even .
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Swiss Ramble 23 Apr 19
Replying to @SwissRamble
Normally, the largest year-on-year % growth in PL wages is from clubs promoted from the Championship, and 2017/18 was no different in the case of 188% & 148%, but were the exception to the rule – only 17% (though prior year was highest ever Championship wage).
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