Exclusive: Newcastle face financial turmoil if relegated after failing to plan for drop in new player deals

Club run risk of financial turmoil if they go down as there are clauses missing in contracts regarding demotion

Martin Hardy
Thursday 02 May 2013 12:23 BST
Newcastle are in their worst league position under Alan Pardew
Newcastle are in their worst league position under Alan Pardew

Newcastle United have not made provisions for relegation in all of the contracts they gave to the players who arrived at St James' Park in January.

The club did not insert relegation clauses into all of the five deals that were given to the French players who arrived during a spending spree which cost the club £31m in transfer and agents' fees. Newcastle signed Mathieu Debuchy, Yoan Gouffran, Mapou Yanga-Mbiwa, Massadio Haïdara and Moussa Sissoko during the transfer window earlier this year in a bold attempt to move the club away from the relegation zone.

However, despite an initial surge in the team's form, results have tailed off and Newcastle are now in the middle of a relegation fight for the second time in five seasons.

They fell to 17th in the Premier League table when Aston Villa beat Sunderland 6-1 on Monday night, their lowest position since Alan Pardew took over as manager, and now sit just five points above third-bottom Wigan Athletic, who have a game in hand. Newcastle similarly sit fourth-bottom in the current form table.

Their most recent accounts showed that the club's wage bill was £64.1m – but that was before the influx of new players – against a turnover of £93.3m. That turnover, however, would fall dramatically should they be relegated from the Premier League, as they were in 2009 when they were demoted on the final day of the season.

The new television rights deal for showing Premier League matches kicks in next season and the clubs are set to receive £60m – a £14m increase in income. This will only expand the financial gap between the Premier League and the Championship. The one silver lining for Newcastle is that relegated clubs will receive £48m in parachute payments over the following four campaigns.

The situation may be enough to force Newcastle to sell some of their prize assets. The likes of Sissoko, who was signed for just £1.8m from Toulouse, would attract great interest from clubs around Europe. The midfielder was valued at £16m two seasons ago, which arguably negates the need for a clause to decrease salaries to match demotion.

However, other clubs such as Sunderland and Norwich City are believed to have undertaken the safety-first policy.

Sunderland, who are also back in the midst of a relegation scrap following their heavy loss at Villa Park on Monday night, have clauses inserted into the players' contracts as a matter of course. If they were to fall into the Championship, players could see their salaries fall by as much as 40 per cent. That is now policy in light of the financial hardship the club has suffered following previous relegations. After demotion from the Premier League in 2003, 70 members of staff lost their jobs.

Similarly, Norwich have put relegation clauses into player contracts that would reduce wages by more than a third should they finish in the bottom three this season.

Queen's Park Rangers, however, who have already been relegated from the Premier League, struggled to persuade some of their more illustrious signings to gamble on such deals that protect the club if things go wrong on the pitch.

The Wigan manager, Roberto Martinez, has admitted that he would also take a pay cut if the club are relegated from the Premier League. "There are relegation clauses in all of the contracts," he said. "I have one, too. It's about having a sound financial plan and if you drop your league status, you are dropping your budget. Everyone should be affected by it. As a football club, it is something we have to have."

It is something that Newcastle don't.

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