The first graph below shows the reported profit of Newcastle United. Since 2000 things had improved steadily until the 2005 results were announced. The 2006 results show that the losses have only once been worse. Ideally the club should not be making profits, or losses, it shoudl be investing as much money as it can afford in the running of the club. To make a loss and having to borrow money is not sensible, to make a profit and pay taxes on that is not sensible either.
It's only when you look at the profit after the shareholders have taken their cut that things don't look quite so good.
Since 1998 the shareholders have taken out just under £31m from our club in dividends. On top of that the club paid out £4.5m to buy shares back from the Hall family. So a total of over £35m went to shareholders.
The bottom line out of all of this is that the total loss the club has made since 1998 which is £27m turns into a loss of £62m when the shareholders have taken their cut.
In the 9 years the club has been a PLC, a profit after dividends has been made only twice. In tyhose two years the profit was £200,000, in the 7 other years the losses have totalled £62m.
How good are the people running the club ? Well the steady reduction in losses from 2000 to 2004 seemed to show they were improving, that the club was doing better every year. The results for 2005 and 2006 show otherwise.
The best way of seeing how well they are doing is to compare the increase in profits with the increase in TV money. The two match up very neatly. Of course the club doesn't do the individual negotiations for TV deals, that is done by the Premiership as a whole, every Premiership club will show similar links.
The 2006 results contained the statement "The FA Premier League recently announced new broadcasting agreements, commencing in 2007/2008 season, in which overall income levels will be significantly higher than the current contract. To fully benefit from these additional revenues the Club must seek to compete in the upper regions of the FA Premier League".
