Newcastle reach commercial new level: Financial freedom to pay debt back to Ashley and fund big transfers this summer
18 April 2019
Benitez told he will have significant funds in transfer market as contract talks go on. Club confirm youth strategy.
Owner Ashley repaid £33 million of debt by club. CEO underline that Ashley will continue as owner “because we have to”.
Off The Pitch can reveal that Newcastle turnover dramatically jumps to £178.5 million. Wages to turnover ratio amongst the lowest in the Premier League.
Rafa Benitez has been told he will have a potential budget of around £100 million to spend in the transfer market over the next two years plus whatever funds he generates as the clock ticks down on his contract at Newcastle.
Benitez’s current deal at St James’ Park runs out at the end of June, with frustration and concern in both camps that an extension has still to be agreed.
Lee Charnley, the club’s managing director, has admitted that there have been attempts at negotiations for the past 18 months but a resolution has still to be reached. A number of options have been assessed, including a one-year extension to his current contract and the club insist that accounts released today show that Benitez was given all but £11 million of what he was promised in a meeting with owner Mike Ashley at Shirebrook in May 2017, following Newcastle’s return back to the Premier League.
Given everything they can
Those accounts show that the current squad has cost £166 million to assemble and that turnover has rocketed back to £178.5 million following United’s return to the Premier League in the 2017/18 season.
Benitez has been consistent since that summer that promises have not been kept and in discussion has asked for a budget to compete higher up the Premier League table, control over recruitment and improved training ground facilities.
We will also look to ring-fence a specific additional budget to spend on young development players that have the potential to be part of the first team in the future.
Newcastle insist that they are giving the Spaniard everything they can but have confirmed Off The Pitch’s story that they want to sign young, emerging talent this summer, a policy not favoured by Benitez.
Newcastle’s wage bill of £93.6 million for the financial year ending 30 June 2018 was 14th in the division. With turnover jumping from £85.7 million to £178.5 million the club recorded an operating profit of £17.6 million and brought their wages to turnover ratio down to 52.4 per cent.
Strengthen the squad
Those figures, based on an operating cost of around £25 million per year, should see a figure of around £50 million per season available to invest into new players.
‘We’re in a position now where we can look to invest and strengthen the squad again,” said Charnley.
“Our accounts are pretty simple in terms of the main numbers. We've got turnover less our wage bill and other operating costs, broadly speaking gives us what we have to spend in a year. It's not difficult to do the maths, that's what we have to spend.
“In addition to that you then have the funds generated from player sales. We will also look to ring-fence a specific additional budget to spend on young development players that have the potential to be part of the first team in the future.”
The club believe the age of the squad needs to come down and want to introduce younger players.
Charnley also confirmed there was now a desire to sign quality rather than quantity, with 23 players having signed permanent contracts since Benitez was appointed manager.
Players who could make a difference
“Our view is, yes we accept there needs to be a balance and there are examples of this with some of the players we have brought in but we are clear that we think for us to grow and move forward that our focus should be on young players that can come into the team and really improve us,” he added.
“The best ones that we can afford. That’s not to say that we wouldn’t do anything else, but we feel that’s an area we as a football club should strengthen and must focus on.
In my experience, has a player turned round and said I’m not signing for Newcastle United because of your training facilities? No.
“We wouldn’t see this volume repeated. We would look to spend our budget on a smaller number of high quality players, rather than dilute the money over so many. We’d then look to supplement this with loans etc. We want players that can make a difference and improve the team.”
Charnley confirmed new plans for the club’s Benton training ground have been put in place at a cost of between £15 and £20 million but they are not yet scheduled to be implemented.
Money best spent on the team
He added: “We are looking at a training ground building project that is potentially going to be between £15 m and £20million. If you were to ask me now, do I think we are best served spending that on a new training facility or spending it on improving the team, now, today in the short-term, I think that money is best spent on the team.
“We have revisited the plans that came out and we now have a different design. We have also got a different build structure.
“In my experience, has a player turned round and said I’m not signing for Newcastle United because of your training facilities? No. Did it stop us getting promoted out of the Championship, did it stop us finishing tenth, did it stop us having a good season this season? No.
“Is it something at some point in the future, if we could and it was the right time to spend the money, we would look at improving? Yes.”
The accounts also showed that owner Mike Ashley had been repaid £33 million of his £144 million loan to the club. There are no plans to repay the remaining £111 million which was acquired after he purchased the club in 2007 and cleared existing debt.
“It was very important to pay the money back,” added Charnley.
“The intention was to pay him back before. I think, as a football club, living within its means, standing on its own two feet, being able to spend what it has and what it generates is incredibly important.
The £111 million he’s put in has been there for just over a decade now and the intention around that is he would only take that back in the event of the sale of the club.
“We’ve given him that money back now so we’ve got, effectively, a clean slate and I think that’s a good place for the football club to be. The £111 million he’s put in has been there for just over a decade now and the intention around that is he would only take that back in the event of the sale of the club.
“Are we planning, assuming Mike will still be the owner of this football club? The answer is ‘yes’ – because we have to. To do anything else wouldn’t be the right thing.”