WG

Big Losses At Newcastle United

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The depth of Newcastle United’s financial problems has been revealed with the first set of accounts from Mike Ashley’s spell as owner. The club made a pre-tax loss of £34.1m in the year to 30 June 2008. Of the annual turnover of £100.9m, £73m was accounted for by wages, or 72 per cent by the club’s income. About 60 per cent is generally accepted as the safe limit. The accounts confirm that after buying Newcastle for £134m, Ashley had spent another £100m to keep them afloat, including £20m on cutting debts.

Everton Hit By Stadium Setback

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Things may be going well on the pitch for Everton, but there are more problems off the pitch. The club’s plans to finance its planned new stadium in Kirby were dealt a blow after an application for their former training ground to be re-developed for housing was refused. The setback will cost the club an estimated £10m, according to reports, money which had been planned to part-finance their £78m contribution towards the proposed new ground by selling former Bellefield training ground in West Derby for housing.

Man United Seek Shirt Sponsorship Deal

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As expected, the troubled US insurance group AIG which has been bailed out by the US Government will not be renewing its shirt sponsorship deal with Manchester United that expires in May 2010. AIG agreed to pay £14 million a year for four years for the shirt sponsorship deal and also has a longer £5m a year deal to run MU Finance. AIG signed a six-and-a-half year deal at the beginning of 2008 to offer insurance, credit cards and mortgages using the MU Finance brand. It is not clear whether the MU Finance deal will continue.

Chelsea Deny Sale Reports

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Chelsea have denied reports in a Sunday paper that the club is for sale. It was claimed that an emissary of Roman Abramovich had gone to the Middle East seeking potential purchasers. Chelsea are confident that the publication of their annual financial report for the year ending June 2008 next month will bring to an end rumours of this kind. They are expected to include a clause demonstrating the owner’s commitment. Abramovich e-mailed board members yesterday to reassure them that he had not authorised anyone to conduct negotiations on his behalf with regard to a potential sale.

Jamaican Football Clubs Under Pressure

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Despite the increased sponsorship money negotiated by the Premier League Clubs Association (PLCA), the majority of the 12 participating clubs in Jamaica’s Digicel Premier League, are bracing for the worst in the current economic climate. Each club now receives an average of $Jamaican 4m a season (about £35,000) or more than five times the $J 750,000 they would have received three years ago.

Tangerines Make Big Profit

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Dundee United made a £834,000 profit in the twelve months to June 2008, compared with a loss of £989,000 in the preceding period. As recently as 2003, the club was losing £2.87m a year. This is the first profit the club has made since 1997. It does include the sale of Barry Robson to Celtic, but this was not the full million pounds some believed as a selling on fee had to be paid to Inverness.

York City FC Make 413K Loss

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York City have announced a loss of £413,590 for the year ending 30 June 2008. Loan interest, amounting to almost £200,000, represents a significant proportion of the sum lost by the Conference side. Approximately £150,000 of that interest relates to the Football Foundation loan, acquired by the club to regain ownership of their KitKat Crescent home from three former directors. The remainder is made up of the accrued interest on the 75 per cent majority shareholders’ JM Packaging’s loan to the club, but that money is not due to be paid until the club has moved stadium.

Gloomy View of Spanish Football

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A study by a professor of finance and economics at the University of Barcelona, Professor Jose Maria Gay, takes a gloomy view (perhaps excessively so) of the future of Spanish football in the context of the global economic crisis. ‘Spanish football is bankrupt,’ he declared.

Scottish Football Clubs Under Pressure

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As we have argued, football north of the border has taken a big hit from the credit crunch with proportionately more clubs under threat. The credit crunch came at a time when football clubs had finally started to make inroads into their debt. Most SPL clubs reduced their liabilities to some degree in the last financial year. Clubs had finally begun to budget properly and many of them had got back to break-even point. Now clubs face a new challenge from the credit crunch. Supporters perceive that they have less disposable income, or at least need to set more aside for a rainy day.