So now we know why Mike Ashley didn’t want to spend any money in January.
Newcastle United’s financial outlook is bleak, but not nearly as bleak as that of most relegated clubs.
What is clear is that the club will be paying the price for Steve McClaren’s disastrous nine-month tenure for many years to come.
United yesterday issued a statement outlining their latest set of financial results.
The full figures, which are not yet available, will give a more detailed picture of the Championship club’s situation.
Essentially, the results cover the relegation season, and next years’s figures, covering this term, will be much worse given the drastic reduction in TV revenue.
Outgoing transfers will ultimately generate a significant net player trading surplus for the summer 2016 transfer window but, due to the cash profile of the deals, this will result in a net cash outlay in 2016-17.Rafa Benitez
Newcastle revealed that the club’s net debt has now risen to £127.3million (up from £80.7million).
A company controlled by owner Mike Ashley has also loaned the club 33million, though £18million of this has gone to repay an outstanding personal loan made by the billionaire. The rest has gone on running costs.
United, essentially, have maintained a Premier League wage bill in the division.
But what about the £30million-plus profit the club made from last summer’s transfers?
Managing director Lee Charnley has the answer.
“Outgoing transfers will ultimately generate a significant net player trading surplus for the summer 2016 transfer window,” he said.
“But, due to the cash profile of the deals, this will result in a net cash outlay in 2016-17.”
In other words, Newcastle are still owed a lot of that money – and the club will report a loss this time next year.
So back to January, when manager Rafa Benitez was left frustrated at the club’s unwillingness to sign Andros Townsend.
Ashley was willing to bankroll the club this season – Benitez alone takes home a reported £5million-a-year salary – but he drew a line in the sand. Promotion won’t transform the club’s financial fortunes overnight, but the financial picture could be a lot, lot worse.