Newcastle United reports huge losses after consortium’s takeover

Premier League clubs’ financial accounts for the 2021-2022 season

Newcastle United has become the latest Premier League club to reveal its financial accounts for the 2021-2022 season. The filings cover July 1, 2021, to June 30, 2022, taking in the final three months of Mike Ashley’s tenure as well as the first nine months of the new ownership group.

While many Premier League outfits have been hit hard by the COVID-19 pandemic, Newcastle’s massive losses are largely attributed to the consortium’s takeover of the club. The Magpies recorded a loss of £70.7 million during this accounting period alone.

Several other Premier League clubs have also revealed headline figures of their financial results. Arsenal recorded a £45 million loss while Brentford had a record turnover of £140m and a profit of £30m in their first season in the top flight. Brighton & Hove Albion turned a £53.4m loss into a £24.1m profit, with an increase in turnover largely helped by player sales.

Newcastle United’s financial situation after the consortium’s takeover

The $305 million takeover of Newcastle United by Saudi Arabia’s Public Investment Fund (PIF) made headlines across the world, with fans excited about what it could mean for their beloved club. But the latest financial results show that the reality is far from rosy.

Newcastle United lost £12.2m in the previous year largely as a result of COVID-19 restrictions affecting matchday revenue. However, things got even worse after the new consortium took over. Newcastle lost an eye-watering £70.7 million during this accounting period alone.

A majority of this post-tax loss is due to the £90 million spent on five signings during January 2022 window and a further £170m invested in transfers since then. Clearly, the new owners are not afraid to splash the cash.

Commercial revenue increased by 52% to £26.5m, and turnover recovered from the pandemic-affected previous seasons, rising from £140.2m in 2020-21 to £180m. Year-on-year appreciation in media income (from £119.3m to £124.1m) and a slight growth in matchday revenue (£27.3m to £27.5m) were also recorded.

Sponsorship deals need to be rapidly scaled up to allow Newcastle to continue spending in the transfer market and navigate Financial Fair Play restrictions. Premier League clubs are only permitted to lose £105 million over a three-year rolling basis; Newcastle’s wage-to-turnover ratio has reached 94.6%.

Three share issues amounting to £167.9m were made to cover increased expenditure, and another £676,000 was put into the club by PIF to cover the cost of the warm-weather training camp in Jeddah, Saudi Arabia.

Newcastle highlights the pressing need to increase revenue streams to allow them to continue improving their sporting performances and financial performance.

Newcastle United’s owners plan to improve the club’s performance

The new owners have made a good start to life in the boardroom, guiding the club to 11th place last season and now towards the business end of the table.

The long-term objective of Newcastle United’s owners is to improve both the sporting and financial performance of the club. The club invested heavily during January 2022 transfer window, bringing in several new players at great expense.

The net cost of player transfers, excluding any contingent fees, was £170m. While this has contributed significantly towards their massive losses for this accounting period, fans are hopeful that these new signings will help propel their beloved team back up towards the top of the Premier League table.

A review of all aspects of the footballing and business operations is ongoing, with a view to outlining a new long-term vision and strategy for the club. Lee Charnley, the former managing director, officially resigned on the day of the takeover and did not intend to stay on, unlike other prominent figures.

Only time will tell whether Newcastle United’s new owners are able to turn things around for the club both on and off the field. But one thing is for sure – their financial situation is certainly starting from a very difficult place.

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