This was Newcastle’s second full set of accounts under the ownership of the consortium led by Saudi Arabia’s Public Investment Fund (PIF) after Mike Ashley’s long reign came to an end. In the period since that acquisition in October 2021, there has been much progress both on and off the pitch, as the club has benefited from significant investment from the new owners.
Newcastle’s made an £11m pre-tax loss, which the club described as a “strong financial performance”, noting the “substantial reduction in the loss from the last two years”, including the (restated) £72m in 2022/23.
Although Newcastle posted an £11m loss, this is still one of the better results to date in the Premier League, where nearly half of the clubs lost more than £50m, led by Manchester United’s awful £131m.
Newcastle regularly posted profits under Ashley until the pandemic struck in 2020, but the club has now lost money five years in a row, first due to COVID, then because of the significant investment in the squad under the new owners. The higher expenditure resulted in large losses of around £70m in the previous two years, which means that the £11m loss in 2023/24 represented a substantial improvement.
Player sales
Of course, Newcastle’s much reduced loss owed a lot to excellent profit from player sales of £70m, which was a huge improvement on the previous year, when they only made £3m. In an ideal world, Newcastle would probably not have made these sales, but they were required in order for the club to be compliant with the Premier League’s Profitability and Sustainability Regulations (PSR). Newcastle’s £70m profit from player sales was a new club record, overtaking the previous high of £42m in 2016/17. In fact, this was more than the previous six seasons combined.
The need to sell players has been frequently acknowledged by Newcastle’s hierarchy, especially to help meet the club’s PSR challenges. Sporting director Paul Mitchell said, “there has to be a more balanced model and there definitely has to be a more strategic approach here that we haven’t had the last two and a half years.” In his eyes, this means more mid-range sales, pointing to how Liverpool do their business, as opposed to losing their top talent like Alexander Isak, Bruno Guimaraes or Anthony Gordon.
Revenue
Participation in the Champions League helped drive significant growth in revenue, which shot up £70m (28%) from £250m to a new club record £320m, while profit from player sales greatly increased from just £3m to £70m. However, investment led to hefty £71m (22%) growth in operating expenses to £389m, while net interest payable was also up £5m from £7m to £12m.
All three revenue streams set new club records, led by commercial, which rose £39m (84%) from £47m to £86m. However, there was also very good growth in broadcasting, up £19m (11%) from £165m to £184m, and match day, up £12m (32%) from £38m to £50m.
It is good news that Newcastle’s revenue has dramatically increased in the last two years, rising by £140m (78%) from £180m to £320m, with good growth across the board: broadcasting rose £60m, while commercial and match day were up £58m and £23m respectively.
Chief executive Darren Eales described the growth as “unprecedented” and it is indeed higher in percentage terms than any of the Big Six. In absolute terms, their £140m increase in the last two years has only been outpaced by Arsenal’s £244m, following the North London club’s return to the Champions league.
However, even after this growth, Newcastle’s revenue is dwarfed by the elite, as four clubs generate more than £660m, namely Manchester City £715m, Manchester United £662m, Liverpool £614m and Arsenal £614m. That said, the Geordies have established themselves as the “best of the rest”, as their £320m was comfortably ahead of West Ham £270m, Aston Villa £267m and Brighton £222m.
Following the steep growth, Newcastle now have the 15th highest revenue in the world, according to the Deloitte Money League. This represented an improvement of two places over the previous season, putting them above the likes of Juventus, Marseille, Eintracht Frankfurt and Benfica.
The club said that it is “continuing to explore a range of options in relation to potential enhancement or expansion of St James’ Park or the development of a new stadium”.
Newcastle’s wage bill increased by £34m (18%) from (restated) £185m to £219m, which the club attributed to an increase in first team squad costs, as well as the development of a “fit for purpose” structure across football operations, commercial teams, executive and central support functions. Wages have more than doubled in the three years since PIF arrived, rising £112m from £107m to £219m, though 2020/21 only covered 11 months, due to a change in the accounting date. This growth is higher than any of the Big Six.
It is clear that Newcastle have been held back by the constraints imposed by PSR. They were able to front-load investment into the squad, ironically thanks to the headroom created by Ashley, but they then had to hit the brakes.
Newcastle’s squad cost is currently sixth highest in the Premier League, though it will probably be overtaken by Tottenham when they publish their 2023/24 accounts. However this is still miles below the leading clubs, as Manchester City and Chelsea have both broken through the billion pound barrier, while Manchester United are just behind them at £944m.
In the three years under PIF, the business model has basically been to spend a lot of money on improving the squad by making £305m player purchases (net), funded by capital injections of £303m. PIF have also spent £42m on infrastructure, i.e. the stadium and training ground, in the last three years, compared to Ashley’s paltry £7m in the preceding 12 years.
Newcastle’s £50m debt is one of the smallest in the Premier League, miles below the likes of Tottenham £851m (new stadium funding), Everton £792m (new stadium and player recruitment) and Manchester United £547m (Glazers’ leveraged buy-out).
Owner funding
Newcastle’s new owners injected £303m of capital up to end-June 2024, including £97m last season, plus another £48.5m since these accounts closed, making £351.5m in total. After paying £305m to purchase the club, that means that PIF have now spent a total of £656.5m. This was the second highest owner funding in the Premier League, only surpassed by Everton, even before the additional capital provided in 2024.
There is no doubt that the club’s progress has been compromised by PSR, which has meant that they have had to box clever to stay within the rules. This included the frantic dash to sell a couple of players last June, which just about enabled them to be compliant - and also meant that their loss was significantly reduced in 2023/24.
It’s a balancing act between meeting those short-term requirements, while also building the club up for the future, as Eales explained, “We continue to make significant strides with our commercial deals and match day offerings as we strengthen the foundations of the long-term project here at Newcastle United."
A cynic might say that the Big Six are determined to maintain their cartel, but that is not working out well at the moment in either Haringey or Salford.
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