Newcastle United, the publicly quoted Premiership football club, announced a fall in profits yesterday which it blamed on failing to qualify for the group stage of last season's Champions' League.
The club were knocked out of the competition in a penalty shoot-out against Partizan Belgrade, costing the club up to £10m in lost television revenue. The loss was partially offset by increases in revenues elsewhere, such as Premier League match revenues, broadcasting turnover and catering. The group's turnover was £90.2m, down 6 per cent on 2003, while earnings per share were up 7 per cent to 3.2p. Total operating profit fell by £3.3m to £8.3m.
The club's chairman, Freddy Shepherd, said: "I am pleased to announce a successful year for Newcastle United, delivering a strong performance both on and off the pitch." He commented on the team's successful run in the UEFA Cup, saying that it helped to "drive a sound financial performance".
"We managed to keep a tight rein on costs with wages and salaries reducing by 1 per cent to £44.9m," Mr Shepherd said.
Despite falling profits, the board has proposed sustaining the final dividend at the 2003 level of 2.04p per share, which means that Shepherd Offshore, Mr Shepherd's private company, will receive more than £600,000 thanks to its 21.6 per cent shareholding in the club
The club have signed a new contract with Adidas, which is expected to generate £20m to £25m over its five-year course. But details have not yet been released of a new contract with Northern Rock, which is said to have been signed on improved financial terms.
When releasing its figures, Newcastle also outlined plans for future ventures which include a 14,000 sq ft Adidas store that will open in January and the Newcastle Utd Superpub, with a capacity of 1,500, which will open shortly afterwards. In a joint venture with MGM Mirage, there are also plans to develop a casino and hotel complex on a site adjacent to the ground, depending on changes in gaming laws.
Recently the club have teamed up with Sky One, renting out their football academy for the channel's reality TV show The Match. The show will culminate on Sunday with a celebrity football match played at St James' Park.
The club has been active in the transfer market this summer, signing high-profile names such as Patrick Kluivert from Barcelona on a free transfer, James Milner from Leeds United (£3.5m) and Nicky Butt from Manchester United (£2m). The sale of Jonathan Woodgate to Real Madrid in August for €20m (£13.8m) will be included in next year's accounts.
Newcastle has no plans to follow its rivals Sunderland in de-listing its shares from the stock exchange, according to a spokesman. "That hasn't even been discussed," he said.