NEWCASTLE United will celebrate the 50th anniversary of their 1969 Inter-Cities’ Fairs Cup triumph this season – it has been a long time since the Geordies have enjoyed any form of tangible silverware. Yet everyone, from the media to the man who used to stand on the Gallowgate, believes Newcastle are a huge club that deserves some success. Any success.
A sleeping giant?
However, the club’s fans point to current owner Mike Ashley as the [latest] reason why Newcastle continue to be one of British football’s great under-achievers, a club with a glorious past that earns them the tag, ‘sleeping giant”.
Ashley wants to sell Newcastle and he wants between £200 and £300 million for his club. According to KPMG Football Benchmark’s latest report, the club still lags behind many of its peers in terms of Enterprise Value, although a successful 2018-19 would possibly put them among the top 32 clubs in Europe.
At present, the signs are not good, with Newcastle second from bottom in the Premier League with just one point from four games.
Newcastle went into 2018-19 with the ongoing debate over the future of the popular Rafa Benitez. Furthermore, fans were frustrated over the seeming lack of aggression in the transfer market. As KPMG pointed out in its report, Newcastle showed a profit in their summer activity, spending £ 31m and receiving £42 million. Their biggest signing was Yushinori Muto, a £9.6 million capture from Germany’s Mainz. They sold Aleksandar Mitrović to Fulham for £ 22 million, which is rapidly looking like a big mistake rather than good business.
Still a big club?
|Last Football League Championship||1926-27|
|Last domestic trophy||1954-55|
|Last major prize||1968-69|
Last season, Newcastle finished 10th in the Premier League, which is significantly better than their post-WW2 average of 15th, but the Magpies fans continually compare the current regime to the Keegan-Robson/Sir John Hall era when Newcastle became everyone’s second favourite club, mostly due to the soundbites and charisma of Keegan and a team that played exciting, if sometimes naïve, football.
KPMG notes, however, that Newcastle spent £ 114 million more than they earned in this period. “Arguably their successes had come at a price that was unsustainable.”
Interestingly, KPMG highlights a number of clubs with strong track records of success that have been lost to the Premier League: Leeds United, Nottingham Forest, Sheffield Wednesday and Aston Villa. All of these clubs have “tried and failed to generate the funds required for a successful and sustainable return to the top division”.
Newcastle fans probably hanker for an owner of the type that has transformed other big, somewhat dormant clubs, such as Manchester City, Chelsea and Wolves, but KPMG considers Mike Ashley has enabled Newcastle to avoid some of the pitfalls. “Ashley is often criticised on social media and radio phone-ins for his lack of ‘ambition’. But this, in truth, is synonymous with debt.”
Stopping a downward spiral
KPMG adds that Ashley’s business decisions have enabled Newcastle to enjoy the eighth highest commercial revenues in the Premier League. When Ashley arrived, the club was in a downward spiral, on and off the pitch. Under his control they have been relegated twice, but each time they have returned at the first attempt. This was largely due to “the owner’s willingness to pump in tens of millions of pounds to prevent the hiccups and blips turning into disaster and disgrace.”
Newcastle have occupied a place in Deloitte’s Football Money League more often than not in the past decade under Ashley. Relegation in 2015-16 negatively affected revenues and their standing, but pundits forecast the club should report revenues of around £ 179 million for 2017-18. A large slice of that is derived from TV/Broadcasting.
Ashley rarely speaks in public and appears to refuse to counter incessant criticism. That doesn’t do much for his popularity, but he recently sent a letter to Jeremy Wright, the UK secretary of state for digital, culture, media and sport, that outlined his contribution to the club – £ 144 million of interest-free loans that cleared £ 76 million of debt, numerous engagement programmes, better training facilities and more.
KPMG concludes: “The Toon may never warm to Mr. Ashley, but perhaps it might be worth looking at him in a different light. Because, when it comes to Newcastle, not everything is black and white.”
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