Newcastle United close to breaking even

MIKE ASHLEY ... close to clearing Newcastle United's debts.
MIKE ASHLEY ... close to clearing Newcastle United's debts.

NEWCASTLE United today revealed that the club is close to breaking even for the first time in its recent history.

The huge turnaround was revealed as the club filed its annual accounts for the year ending June 30, 2011.

2010/11 was a landmark year for the club financially, achieving close to break-even for the first time in its recent history.

At the same time, it retained and built a strong squad which is currently sitting sixth in the Premier League.

The overall operational loss for the year after amortisation was just £3.9m, compared to a loss of £33.5m in 2009/10 and £37.7mn in 2008/9.

Promotion to the Premier League resulted in a 69 per cent increase in turnover, from £52.4m in 2009/10 to £88.4m in 2010/11, principally the result of a three-fold increase in TV revenue.

Ticket sales revenue rose 16 per cent, from £20.9m in 2009/10 to £24.3m in 2010/11, largely the result of an increase in corporate hospitality income associated with the return to the Premier League.

Just under a million fans visited the stadium in 2010/11, the third highest attendance in the country.

The club has worked to bring its wages-to-turnover ratio down to a long-term sustainable level.

In 2008/9, wages accounted for 82.7 per cent of turnover, rising to 90.5 per cent in the Championship season 2009/10.

For the year 2010/11, wages accounted for 60.6 per cent of turnover.

The net cash spend on player transfers to June 2011 was a receipt of £5.4m, which includes the fee for the sale of Andy Carroll to Liverpool for £35m in January 2011.

The club has since spent a further £25m in cash on players and wages.

Owner Mike Ashley has a strict policy in respect of player transfers, with the emphasis on paying and receiving full transfer fees up front rather than accepting dated payments over a number of years.

When he acquired the club in the summer of 2007, he inherited outstanding deferred transfer payments totalling £36m for players past and present.

Under the new policy, the club is now owed £5m.

Thanks to Ashley’s financial support, the club has now cleared all of its third party debts, which stood at £76m in 2006/7 and incurred finance costs of £6.5m.

The debt to Mike Ashley remains £140m, which continues to be provided interest-free by the owner.

The club secured a new two-year shirt sponsorship deal with Virgin Money in January, and announced plans to sell full naming rights to the stadium in order to maximise potential revenue streams.

The full annual accounts, including the financial statements of the group and the Independent Auditors’ Report for the year, have been submitted to Companies House today.