2007 Half Year Analysis

On 30th March 2007 the club published their financial results for the 6 months up to 31 December 2006.

Please, please, PLEASE contact us if you spot a mistake in all this, or if you have something that you feel should be added. There are some guestimates at the future half way down and it would be great if someone could comment on whether there are any mistakes in the conclusions. Please !

Included in the results were some financial highlights, below is shown some that have not been listed by the club.

Gate money

5 more games played as in the same period, but only £1.5m more in gate receipts
Average home league crowd 2006 = 52,115. Average league crowd 2007 = 49,725
Average amount paid per person in 2006 = £27, in 2007 = £25.
There are 8 league games left for the 2007 season. With extra cup games, and some bigger games the total for the season should be about £31.9m. This is up from the £30.9m last season. So that long UEfa run only brought us £1m extra in gate receipts !!

TV/Media Money

The club has made the same amount from TV as it had at this time last season. This has mainly been from the Uefa games being televised, and this compensating for fewer games being on Sky.
The second half of the season includes the merit payments from Sky, Last year the club finished 7th. Any finish lower than this would reduce the payments by roughly £500,000 per place. At the current position of 11th this would mean £2m less coming in.

Running Cost

The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs. The underlying costs costs were up from £40.3m to £45.1m, but instead the one-off insurance payment made it £41.8m.
The increase in running costs came from having to put on more games.
The club say that wages have gone up from £26.8m to £27.0m. But the £27.0m is the figure when the compensation has been taken out. The club have not said how much of the compensation is for Owen's wages, the comments in the press seem to imply it has been £50k per week. In 6 months that would mean roughly £1.3m. Again the underlying wages would have risen from £26.8m to £28.5m, an increase of roughly 6%.
This wage increase comes while losing Faye, Boumsong, Chopra, Elliot, Bowyer and Shearer and bringing in Martins, Duff, Sibierski and Bernard.
The wages to revenue ratio without the compensation would be 63%, against the accepted target of 50%.

Others

The sale of Faye raised £2m and of Boumsong £3.3m. In the case of Boumsong this was 18 months after paying £8m for him
Quote - "13th place in the FA Premier League at the end of December 2006, having lost over 250 senior player appearances". We played 21 games in that period so an average of 12 players that could have come in for each game ?
The loss "from operations " came to £6.9m. This ignores costs associated with interest payments. If these are included then the loss came to £9.8m. If there had been no compensation for Owen's injury it would be £3.3m worse.
Quote - "The return of Kieron Dyer to the first team has been akin to a new signing"
Quote - "The Board intends to take a number of projects forward and this may result in the possibility of a restructuring of existing debt facilities"
There is no dividend

Net Assets

If all of the assets of the club, so the players, the ground, the Academy were all sold off, and the money was used to pay off debts then the club would be left with under £7m.
In 1998 the same exercise would have left the club with over £56m

Cash

The club used to have lots of cash. Particularly in June/July time when the season ticket money had come in and none of the costs for the year had yet gone out. Last year for the first time they announced they had an overdraft. This was just under £18m, but had reduced to £5.5m last July, when the season ticket money came in. This has now risen to £20.8m.

Future ? (Guess work, with some explanations of the guesses)

The revenue for the full 2006-07 season would look to be ~£82.9m
- Match day, based on half season plus comparison with last season, £31.9m
- TV/Media, half season plus expected Sky money if finish at 11th, £25.0m
- Commercial, based on half year, £26.0m
The costs for the year would look to be ~£83.7m
- Half year, £45m
- Owen compensation reduces this by £3.3m
- Same number of league game in second half of last season meant costs of £36m
- Three extra Cup games to host ~1m
- An extra month of wages £5m
Wages ratio over 68%, against the target of 50%.
Player trading and amortisation, based on half year figures ~£17.9m
Finance costs, based on last years second half ~£6.4m
Total ins £82.9m, total outs ~£108m, total loss ££25m
Through 2005-2006 the business lost just over £1m per month. It looks as though the loss in 2006-07 will be just over £2m per month
In July the net assets of the business could well be net liabilities of close to £10m

Some graphs (** the 2007 figures being for 6 months)

1. How profitably the board has run the club

2. How well the board has managed te wages at the club

3. How well the board has run the club for the benefit of shareholders

4. How well the board has overseen the assets of the club

Press Coverage

The Evening Chronicle has consistently refused to put a link to this site.

When this site was launched in the summer of 2005 the Chronicle's reply to our request for them to add a link was :

"We haven't delved into Newcastle United's financial dealings in any depth - not yet at least - as it's a very sensitive subject and we have to tread carefully both from a legal point of view and also in terms of maintaining work relationship with the club. It is a lot easier for the fanzines, and indeed the national papers, to tackle United on such matters than it is for the local media. But we are keeping tabs on things. I don't think it would be possible for us to provide a link to your website as this would suggest we are sanctioning it in some away when we want to remain impartial."

Last November we made a further request for them to put a link to this site and were told

"Thanks for your email. I don't think our position on this has changed on terms of a website link.
However, our newsdesk is continuing to monitor developments on the business side at St James' Park"

Its own on-line site has the following impartial analysis of the financial results:

Toon announce profit

Mar 30 2007

By Nick Whitten, The Evening Chronicle

Newcastle United’s return to European football have boosted the clubs finances.

United’s Intertoto Cup success and reaching the last 16 of the UEFA Cup saw revenue for the first six months of the year rise by £2.3m to £45.3m compared to last season.

And the club’s interim results for the six months ended December 31, 2006 also show a profit of £3.5m compared to £2.7m last year.

Chairman Freddy Shepherd said: “Revenues are up £2.3m on last year, principally due to an increase in the number of matches played in the six month period.”