Newcastle United and the questionable value of their profit

This morning, Newcastle United have announced that during the financial year between June 2013 and June 2014 the club made a record profit of £18.7m.

“I am pleased to report a positive set of results which confirms the healthy financial position the Club now finds itself in and is a reflection of the prudent and measured manner in which we operate.

The Club benefits from a supportive owner and is financially stable. This gives us a strong platform from which to grow, both on and off the pitch, a result of which means, as we move forward, we are able to net spend on the playing squad and invest in other areas of the business.”

(The Mirror).

That’s Lee Charnley, Managing Director at St James’ Park, with a slightly euphemistic spin on this morning’s announcement.

Fans take a more active interest in their club’s accounts in 2015 and it’s no longer deemed an irrelevance.  Some supporters’ concerns still don’t stretch beyond the pitch, but there are many who see financial performance as a future indicator and who, subsequently, are aware of what appears on these balance sheets.

Superficially, then, the news out of Newcastle this morning should please the natives.  A profit is a good thing, clearly, a record profit is even better.

But this is Newcastle United and nothing in that world is really ever as it seems.

This is the fourth successive year in which the club have made a profit and there has to be a point eventually at which that means something to the supporters.  We are all aware of the recklessness that has punctuated football over the last decade and so, as a consequence, we are urged to admire anything resembling prudence.

“But what about Leeds, what about Portsmouth…?”

Yes, yes, yes.

It’s irritating how often this discussion is separated into two opposing extremes, the insinuation being that clubs only ever have a choice between being ambitionless cash-hoarders or reckless, bankruptcy-seeking catastrophes.

I am not a Newcastle United fan, therefore the club’s future is ultimately of little concern to be me beyond the precedent it’s currently setting, but it seems reasonable to ask what the end-game is in the North-East.

The club is well-run as a business, but that has come at the cost of its identity.  Heaven knows what the supporters think, but the outside association with this organisation is no longer sporting.  When Newcastle United are mentioned now, first you think of Mike Ashley, then SportsDirect, then the uber-branding inside the stadium.  Then, maybe, you remember that they also play football.

That can’t be right.

The ‘sound business structure’ line from Newcastle has grown very tired.  Fans can be unrealistic sometimes and they can demand too much spending or fail to recognise the perils attached to aggressive transfer policy, but this isn’t an example of that.  After four successive years of profit - and now a decadent new broadcasting contract on the horizon - where is the suggestion that a new day is about to begin?

Or, in more basic terms, what has this all been in aid of?  What is Mike Ashley actually working towards?

We all experience periods of enforced frugality in our lives and we all recognise that there are times when it’s right to bank pay-cheques rather than to spend them, but those moments usually occur within the context of a greater aim.

A holiday, maybe, or a down-payment on a new house - perhaps something more simple like a new television?

When is Newcastle United’s new television day going to be?

Back in October 2014, plans for a new training complex received council approval - and that does represent infrastructural improvement - but progress with that, or at least the type that would vindicate budgetary caution, seems very scarce.

Newcastle have cast themselves as a particular type of club.  The realities of the Premier League mean that a team of their size will likely never challenge for the title again, but you still expect a degree of mobility - and that’s not in any way apparent.

They buy to sell, they exist to collect.

The pertinent question, therefore, is after how many successive years of profit will that change?  How large does the television contract have to get before Newcastle start behaving like a football club again?

Where is the pay-off for all this self-celebrated prudence?

Follow @SebSB

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1 Comment on "Newcastle United and the questionable value of their profit"

  1. sickandtired | Mar 30, 2015 at 3:02 pm |

    Seb - the simple fact is the numbers don’t add up.
    13/14 NUFC signed no one other than Kemen (a kid). Remy & L De Jong were on loan with atotal outlay for all three of probably around 3 million. Outgoings (including Cabaye) resulted in around 19 million profit on player trading that year.
    12/13 accounts showed pre tax profit of 9.9 million on a turnover of 95.9 million. So, he then further reduced costs, he reduced the wage bill, he signed no one, and he neither built or improved infrastructure.
    All revenues were up except Matchday (down 7% or 2 mil or so) due to less games from not being in the Europa Cup like 12/13.
    How can profit increase to only 18.7 million under those circumstances when turnover rose to 129.7 million?
    Unless he paid himself back some of his ‘loan’ then there’s a big black hole to be answered for.

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