Newcastle announce improved finances

 

Mike Ashley's Newcastle is fast approaching the break-even point after reporting an operating loss of £3.9million.

The Magpies, who lost £33.5million in 2009-10 and £37.7million 12 months earlier, reduced those figures to below £4million after amortisation in 2010-11, their strongest financial showing for several years.

Significantly, wages accounted for 60.6% of a turnover which rose by 69% from £52.4million to £88.4million, where in 2008-09, the season they were relegated from the Barclays Premier League, the ratio was 82.7%.

Managing director Derek Llambias said: "The club's financial results for the year end June 2011 are extremely strong.

"We can now count ourselves amongst very few clubs across the UK and Europe who are operating at close to break-even.

"What is particularly pleasing is that we have achieved this whilst also ensuring we have a strong squad sitting firmly in the top third of the table and currently pushing for a European place.

"Some of the key financial principles we set in place when Mike bought to the club back in 2007 are now beginning to reap rewards, most notably our adherence to a strict transfer policy which avoids, or limits wherever possible, the acceptance of dated payments for players bought or sold.

"We believe it is a far healthier financial model to settle full transfer fees for players up front, not dated over a period of years.

"We have dealt wisely in the transfer market and reinvested the income received from player sales into improving the squad."

The net cash spend on player transfers, including Andy Carroll's £35million departure of Liverpool in January last year, was a receipt of £5.4million, although the Magpies have since invested a further £25million in transfers and wages.

In addition, when Ashley took over the club in 2007, it owed £36million in deferred payments for players; the club is now owed £5million.

Newcastle have also cleared all of their third-party debts, which amounted to £76million in 2006-07, and its borrowing from Ashley in terms of interest-free loans remains at £140million.

Llambias said: "Our net cash spend on player transfers to June 2011, which includes the sale of Andy Carroll, was a receipt of £5.4 million, with a further £25 million in cash spent on transfers and players' wages since June 2011.

"We have also worked hard to address an inherited wages-to-turnover ratio which was unsustainable. Wages now account for just over 60 per cent of turnover and we feel this is a healthy and affordable level.

"A further significant achievement has been to clear all of the club's interest-bearing debt, which in 2006/7 was costing £6.5million a year just to finance the debt.

"Mike Ashley continues to provide loans totalling £140million interest-free, for which we are extraordinarily fortunate. Once again, Mike has not taken any money out of the club."

PA

Suggested Topics
Have you tried new the Independent Digital Edition apps?
Caption competition
Caption competition
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

Bleacher Report

Daily Quiz
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn