Newcastle’s 'financial model' leads to boast of £1.4m profit
Spending structure allows Llambias to show off a club in the black rather than deep in debt
Derek Llambias leaned back in his chair in an executive box overlooking the St James’ Park turf and talked of coal.
“We do not have some sort of oil well under our pitch,” he said. “We have a bit of coal, which we can’t dig up, but we haven’t got an oil well and we don’t have the revenues of, let’s say Man United. They’ve got 350 million global supporters. We have 3.5m. It is one per cent. It is a massive, massive difference so you can’t have that expectation that this club will be challenging year on year. But we are trying to model ourselves as a top-eight club, we try to get full houses, that is where our affordable ticketing comes in, because you have to. The North-east is struggling, football is expensive but we are staying within the format of our model and we are sustaining our position financially.
“How do we challenge the big clubs? By buying the right players. If you look on that pitch on a match day, you would see Moussa Sissoko, who is 23 and is here on a six-year contract – it was a fantastic deal and he is a fantastic player. Then there is Yohan Cabaye. We have some fantastically talented players at this club. They come here because it’s Newcastle United and because they want to play here, it is a big factor.”
Yesterday was a good day for Llambias, Newcastle’s managing director, and Mike Ashley, the owner. The club recorded a profit (for a second successive year) of £1.4m. Football is an industry submerged in red. A team in the black remains the exception. Newcastle, under the guidance of their chief scout, Graham Carr, buy young – and, most recently, from France. Llambias revealed that the five players they signed in January cost £31m but it was all within tight guidelines.
“We’ve maintained a very good standard on the pitch working within our financial model and our transfer policy,” he said. “The new signings all stayed within our model. January for us was fantastic business but we had already done two of those deals [Yoan Gouffran and Sissoko] as pre-contract deals for the summer. The injuries and the position we were in the league [near to the relegation zone] meant we brought those deals forward. Was that good business for me? No. But for the club it was still fantastic business. It cost us an extra £10m in fees and wages but it’s worth it. Our net spend in January was £31m so it’s a huge chunk.
“I think Graham Carr has more company when he is out there now,” he joked. “He’s not wearing a disguise just yet. If he started wearing glasses, he would start looking like his son [the comedian Alan Carr]!”
Newcastle’s turnover for the year ending June 2012 was £93.3m, putting them in the top 20 revenue-generating clubs in the world. Their wages-to- turnover figure had risen to 68.7 per cent. It will be higher after their enforced January investment but the new TV deal, which will be worth around £30m per club, will readdress their desire to reduce the amount to nearer 60 per cent.
“There is still money available,” said Llambias. “There are several positions we are looking at. Next year, we will have the TV money. There is a budget to spend but our transfer policy remains the same. No trophy buys. Basically, we will continue our model as it is. It works so we won’t break it.
“Obviously Mike is pleased with the accounts side of things. He is a little bit disappointed with what is happening on the pitch, which we all are. It has been a freaky year, with the injuries we have had. How do you plan for those sorts of injuries, unless you have so much depth in your squad?
“The club is stable now. We are the guardians. We have to do our best. Generally we are not losing as a business. The club is in safe hands, financially it is in safe hands, it has a very strong backer and we have got a very strong support team.”
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