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One Of Eight Clubs To Make A Profit

Tooj

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Tooj

Tooj 17

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http://www.journallive.co.uk/north-east-ne...-name_page.html

 

NEWCASTLE United is still near the top of the money league in English football despite failing to deliver success on the field.

 

Research by top football finance analysts Deloitte has revealed the club was one of only eight Premier League clubs to make a profit in the 2006/07 season – down from 16 the previous year.

 

And the club increased spending on wages by £10m in the period. That was one of the largest increases in English football, behind only big-spending Chelsea, West Ham and Portsmouth.

 

But the extraordinary amounts laid out by Newcastle fitted into a wider Premier League picture where revenues hit £1.5bn – up 11% from the previous season, and 65% higher than the next richest league, in Germany.

 

The average balance between wages and revenue was also very high, at 61%, when most observers say 50% is the most any club should take on.

 

The Deloitte figures for Newcastle United precede new owner Mike Ashley’s restructuring of the club’s finances since taking over at the end of last season.

 

He is believed to be looking closely at the wage bill to ensure the business is stable.

 

Meanwhile, Newcastle’s deadly rivals at the Stadium of Light were not in the Premier League in the season in question, but the Deloitte study reveals they were one of the biggest spenders in the Championship as Niall Quinn’s Drumaville consortium invested to win promotion.

 

Transfer spending in the Football League soared 79% to £86m in the 2006/07 season, with the biggest spenders being Sunderland and their fellow promoted clubs Birmingham and Derby County.

 

The amount of debt carried by Premier League clubs has worried many experienced observers of football finance, with total debt for the 20 clubs standing at £2.5bn at the end of 2006/07 – far beyond anything that would be tolerated in a normal business. Professor Tom Cannon, an expert in football finance at Buckingham Business School, said the experience of several Football League clubs going out of business recently could yet spread to the higher reaches of the English game.

 

He said: “So far, Premier League clubs have managed to maintain their credit worthiness. There is a feeling that ‘it’s never happened, so it won’t happen’. But I’m not sure I believe in that.

 

“A lot of people are asking about the next television deal – if there is another 70% increase in revenue, debt levels will be sustainable, but if not …” He added: “Most big clubs are carrying big debts. Interest rates are going up, so things are getting tighter, and it’s getting hard to sustain the position – so most of the increases in revenue are consumed.

 

“The economic situation also helps to explain ticket prices going up quite rapidly. Sunderland have already been criticised for that.”

 

John Williams is director of the Sir Norman Chester Centre for Football Research at the University of Leicester. He said: “Clubs are running very fast to stand still, competing against the expenditure of the clubs around them.

 

“Every year we say it’s not sustainable, and yet every year it all continues to rise, and we know that income has gone up enormously in 2007/08 from the year in question here.

 

“There is no doubting the size of franchise Newcastle have got – they are a chunky business. The only question is whether the turnover and the surpluses are matched by success on the field. It is the size of the supporter base which justifies the size of the investment in the current environment.”

 

Pundits say some clubs in lower leagues will go bust

 

ENGLAND can continue to support 92 professional clubs, but only if they remain realistic about their ambition.

 

While cash in the TV-dominated Premier League continues to grow, those outside the top flight must adopt a rather more prudent stance.

 

The number in financial difficulty appears to be growing and Halifax Town, members of the Football League for more than 70 years, are now on the brink of going out of business altogether after hitting catastrophic problems.

 

In their newly-published annual review of football finance, the Sports Business Group at Deloitte paint a sobering picture, saying there will be a "continuing flow" of insolvency cases outside the top two divisions if "legacy debt" and risks taken by some boards of directors continue unchecked. Dan Jones, a partner at Deloitte and co-author of the report, is not as pessimistic as some might believe.

 

But he does think clubs must budget for what they are realistically likely to achieve.

 

"People say we cannot keep 92 clubs, but that is simply not true," he said.

 

"There are no mega-stars but revenue in excess of £2.5m-a-club should allow you to run a squad and maintain a stadium that can be of use to the entire community.

 

"What you have to do is live within your limits. If Wigan, with their owner, and Hull, with their stadium, decide to go for it, that is great news. But you have to be realistic within your own club.

 

"There are individual problems at individual clubs, but that will always happen when you invest at an unsustainable level."

 

Players' wages rocket

 

:: Premier League clubs’ revenues increased by £151m to £1,530m in 2006/07.

 

:: Clubs’ wages were more than 75% higher than in Spain’s La Liga (€0.8bn) and double the total wage costs paid by any of the other big five leagues.

 

:: Revenue growth was focused among the big four clubs (Arsenal, Chelsea, Liverpool and Manchester United). On average, the big four clubs’ revenues increased by £34m to £178m, while the rest of the Premier League clubs had average revenues of £50m in 2006/07.

 

:: In 2005/06, 16 Premier League clubs recorded operating profits. In 2006/07 half that number recorded an operating profit. They were Manchester United, Arsenal, Tottenham Hotspur, Liverpool and Newcastle United and the three promoted clubs Reading, Sheffield United and Watford.

 

:: The largest increases in wages in 2006/07 were reported by Chelsea (£19m), West Ham United (£13m), Portsmouth (£12m), Newcastle United (£10m) and Liverpool (£9m), with West Ham United and Portsmouth investing significantly in their playing squads following the arrival of new owners.

 

:: Premier League clubs’ wage costs increased by 13% to £969m in 2006/07, a second consecutive year of growth. The clubs’ total wages will have exceeded £1bn for the first time in 2007/08.

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Tom

Tom 13804

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Well I'd rather be run properly, bearing in mind Newcastle United - financially and professionally are a new run regime.

 

So we've only just begun really & I hope Ashley & Mort/New Guy can bring us success without jeopardising our future.

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Jimbo

Jimbo 133

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PREMIER LEAGUE CLUBS WITH LOWEST STADIUM UTILISATION

 

Bolton Wanderers - 75%

Middlesbrough - 76.3%

Blackburn Rovers - 76.8%

Wigan Athletic - 76.9%

Sunderland - 89%

 

Figure relates to average % of stadium filled for home games

Source: Deloitte

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Jimbo

Jimbo 133

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PREMIER LEAGUE TEAMS WITH MOST DEBT 2006/7

 

Chelsea - (£620m)

Manchester Utd (£605m)

Arsenal - (£268m)

Fulham - (£182m)

West Ham Utd (£142m)

 

Figures are total debt at end of 2006/7 season

Source: Deloitte

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