The £115m squad, the £956,000 board, and injury prevention
WHAT WE LEARNED FROM ACCOUNTS
NEWCASTLE United have filed their accounts for the 2015/16 campaign – and the club recorded a profit for the sixth consecutive year, even if it did reduce significantly.
However, last week managing director Lee Charnley sent out a stark warning about the club’s future, given that the accounts for the year ending June 30, 2016, do not yet highlight the significant financial impact brought about by relegation last season.
But, taking an in-depth look at the accounts themselves, we can also find out how much Steve McClaren was paid by the club, the wage bill, how a new approach to injuries was adopted, and much more.
Here, NUFC writer Chris Waugh runs through the most eye-catching highlights from the accounts... ■■A £115m squad return nothing but relegation NEWCASTLE’S playing squad is included within the ‘intangible assets’ section of the accounts – the value of which rose by a staggering 250% between 2015 and 2016.
Incredibly, a squad whose determined value (according to the club) increased from £46.8m to an eye-watering £115.4m inside 12 months was demoted from the Premier League.
That included the transfer fees spent on players during the summer 2015 and January 2016 windows – so features the £24m paid cumulatively for Jonjo Shelvey and Andros Townsend, plus the likes of the £13m forked out on Aleksandar Mitrovic – as well as the subsequent appreciation in individual squad members’ values.
The £30m earned from selling Sissoko is not included in the accounts themselves given that he was not sold until August but, given that his value increased exponentially over the course of the campaign, that appreciation – and any appreciation to the value of any other squad members too – is also included in the intangible assets section.
“This value will take into account any offers receive for that player, as well as the directors’ knowledge and experience of recent trading and market conditions,” the accounts explain. ■■A £956,000 board deliver demotion WHEN Steve McClaren was appointed as the club’s ‘head coach’ in June 2016, a new-look board was also announced which included managing director Charnley, chief scout Graham Carr and ambassador Bob Moncur.
The accounts show that the “highest-paid director” – understood to be McClaren – was remunerated £674,000 in wages for his failed nine-month spell at the helm.
And, though a figure of £1m is listed alongside “compensation for loss of office”, the 55-year-old was only remunerated part of that amount due to the fact he was subsequently re-employed by Derby County seven months later.
It is also confirmed that McClaren needed to resign as a director on March 11, 2016, once he was dismissed as head coach.
What’s more, Charnley’s salary is confirmed as remaining at £150,000 – while Carr and Moncur were paid a cumulative £132,000 between them, though their precise individual salaries are not stated. ■■Promotion is the be-all and end-all WE already knew it, and Charnley offered a stark warning of what to expect in next year’s accounts last week, but the full document only stresses further how important it is Newcastle secure promotion in the coming week.
“The outcome of the 2015/16 season was hugely disappointing for all connected with the club; an 18th-place finish in the Premier League, and as a result relegation to the EFL,” they read.
“Results for the year ending June 30, 2017, will reflect the significant financial impact of relegation.
“Regaining (and retaining) Premier League status will significantly improve future financial prospects.”
That last line does offer a positive for the future – but only if Newcastle see the job through this season, and then cement their place in the top flight for years to come too.
Should they fail, however, and things don’t look great.
“A continued absence from the Premier League would have a material impact on the company’s operations,” the accounts continue. ■■Newcastle made £40m profit last summer – but they won’t see it all immediately MOUSSA Sissoko was sold for £30m, while Georginio Wijnaldum fetched £25m, and overall the Magpies made £40m profit in terms of player sales last summer.
But, as is revealed in the accounts, the “transfer fees are payable over various agreed timescales” – meaning Newcastle will not see the full benefit of that cash for between three to four years.
As a result, there will be “a net cash outlay with respect to transfers” in the accounts for 2016/17, which will be released in 12 months’ time.
What’s more, Newcastle’s own spend on incomings may also increase if certain players trigger certain clauses in their contract, for example by playing a specific number of games.
However, it is noted that the club do not expect the majority of players to meet any of those criteria, presumably due to relegation. ONE particularly interesting part of the accounts is the ‘principal risks and uncertainties’ section, which always feature in these documents.
Of the six risks identified, one of them understandably refers to transfers.
It reads: “Identification and acquisition of players, in what is a highly-competitive market, is one of the most-significant and highprofile risks facing the company.
“Our policies and procedures for acquiring and developing successful players are very carefully implemented and regularly reassessed to mitigate this risk.”
The club admit that they continually reevaluate their transfer strategy and, given that they failed to sign any players in January, its begs the question as to whether or not a change in policy was enacted.
We know there has been a long-term policy of primarily signing players under the age of 26, so was that reinforced during the
mid-season window? ■■Rafa has revolutionised the approach to injuries LAST season Newcastle were forced to play with 12 different players at left-back at various times, so chronic was the injury crisis. Yet Benitez has attempted to reduce the number of bodies in the treatment room, and the club have backed him by investing in medical equipment and sports-science technology. “Injuries to key players can weaken the playing squad and reduce the chances of on-field success,” another bullet point on the ‘principal risks and uncertainties’ section reads.
“The club has invested substantial sums in sports medicine and science facilities to minimise the unavailability of players through injury.” THE Sports Direct magnate himself may have rarely visited St James’ Park over the past two years, but his family spent £225,000 in matchday hospitality over 24 months.
During the 2014/15 and 2015/16 seasons, Ashley paid £124,000 and then £101,000 to the club in order to accommodate his family in the hospitality section.
Ashley himself did not receive any dividends last year, perhaps unsurprisingly given the club’s relegation, and the club still owes him an interest-free loan of £129m.
Interestingly, however, Ashley’s company, St James Holdings Limited, provided an additional loan of £33m on December 21, 2016 – £18m of which was used to repay Ashley his personal loan to the company, while £15m was given to the club for “operating activities”. ■■Turnover declined by 3% NEWCASTLE’S turnover declined from £129.7m for the year in 2014/15 to £125.8m in 2015/16.
Of the four sections turnover was calculated from, it was the reduction in media income (from £77.2m to £72.7m) – as a result of finishing three places lower and being shown only 16 times live on TV compared to 20 the previous campaign – that had the most-significant impact.
Match-day income also declined (from £26.4m to £24.7m), while commercial income rose (from £24.8m to £25.1m) and ‘other income’ also increased (from £1.3m to £3.3m). ■■A £66m wage bill THE club employed 258 people in total during the 2015/16 campaign – down from 264 the previous year – and paid out a combined £66.3m in wages, which was a substantial increase on the previous year’s £56.9m.
Of those 258 employees, 126 of them were formed from the playing squad, Academy, team management and support staff.
The significant rise in the total wage bill was largely accounted for by the increased salaries paid to new signings like Mitrovic, Wijnaldum and Shelvey.