Newspaper article The Journal (Newcastle, England)

Big Spender Still Stays in the Black; Newcastle One of Eight Clubs to Make Profit

Newspaper article The Journal (Newcastle, England)

Big Spender Still Stays in the Black; Newcastle One of Eight Clubs to Make Profit

Article excerpt

Byline: Graeme King & Paul Loraine

NEWCASTLE United is still near the top of the money league in English football despite failing to deliver success on the field.

Research by top football finance analysts Deloitte has revealed the club was one of only eight Premier League clubs to make a profit in the 2006/07 season - down from 16 the previous year.

And the club increased spending on wages by pounds 10m in the period. That was one of the largest increases in English football, behind only big-spending Chelsea, West Ham and Portsmouth.

But the extraordinary amounts laid out by Newcastle fitted into a wider Premier League picture where revenues hit pounds 1.5bn - up 11% from the previous season, and 65% higher than the next richest league, in Germany.

The average balance between wages and revenue was also very high, at 61%, when most observers say 50% is the most any club should take on.

The Deloitte figures for Newcastle United precede new owner Mike Ashley's restructuring of the club's finances since taking over at the end of last season.

He is believed to be looking closely at the wage bill to ensure the business is stable.

Meanwhile, Newcastle's deadly rivals at the Stadium of Light were not in the Premier League in the season in question, but the Deloitte study reveals they were one of the biggest spenders in the Championship as Niall Quinn's Drumaville consortium invested to win promotion.

Transfer spending in the Football League soared 79% to pounds 86m in the 2006/07 season, with the biggest spenders being Sunderland and their fellow promoted clubs Birmingham and Derby County.

The amount of debt carried by Premier League clubs has worried many experienced observers of football finance, with total debt for the 20 clubs standing at pounds 2.5bn at the end of 2006/07 - far beyond anything that would be tolerated in a normal business. Professor Tom Cannon, an expert in football finance at Buckingham Business School, said the experience of several Football League clubs going out of business recently could yet spread to the higher reaches of the English game. …

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