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Tuesday, January 18, 2022

Football finance expert – Newcastle United should be allowed 90% of Manchester City commercial income

Premier League clubs have brought in new rules this month regarding ‘related party transactions’, Manchester City and Newcastle United the only two reported to have opposed the move.

On Wednesday (22 December 2021) morning, The Times ran an article on the issue, giving some more details on how exactly the new rules with work.

Any Premier League club with a new sponsorship deal worth over £1m a year, has to put it forward for approval to the Premier League, who if they think it could potentially fall under ‘related party transactions’, will then pass the deal to an outside ‘independent’ company, to then check as to whether it is ‘fair value’, or inflated due to a supposed existing relationship between club and sponsor.

Newcastle United had already made clear a number of times that legally they don’t believe these new Premier League rules will be able to be stood up. Whilst this new article in The Times also said that senior figures in football felt the same, that they felt if the Newcastle United owners challenge the new rules, it would be very likely they’d prevail over the Premier League.

Reacting to the piece in The Times this morning, Kieran Maguire has given his take on the situation.

Football finance expert Kieran Maguire lectures in the subject at the University of Liverpool. He has regularly written in the past about Newcastle United and Mike Ashley, as well as of course, the situations at many other clubs.

Kieran is also a Brighton fan and back in 2018, he famously said ‘I’d be soiling myself’ if Mike Ashley was taking over his club.

Kieran Maguire via his Price of Football online presence – 22 December 2021:

“All club sponsorship and payments to players, management over £1m to get PL scrutiny to determine if they are at ‘fair value’.

“This is of course not at all, not at all, not at all aimed at Newcastle and just an amazing coincidence that introduced after the takeover.

“Newcastle have a stadium that is 90% of capacity of [Manchester] City and Liverpool.

“So presumably Newcastle can have deals up to 90% of the value of those clubs?

“[Manchester] City had commercial income of £246m in 2020 compared to NUFC £26m so a lot of scope for Newcastle to grow surely…to be fair?”

This absolutely sums up the can of worms that the Premier League have opened with these rule changes, that are simply a case of other clubs trying to prevent Newcastle United being able to compete in the years ahead.

Back in the 2006/07 season, Newcastle United were 14th in the World football club rich list, Deloitte reporting a 129.4m euros (approx £110m) turnover. Manchester City not even in the top 20 and the 20th in the list was Werder Bremen on a turnover of 97.3m euros (approx £82.5m).

In the 2006/07 season, the last before Mike Ashley took over, Newcastle United had commercial revenue of £27.6m.

The latest available accounts before Ashley departed, show that in 2019/20 NUFC had commercial revenue of £25.9m, £1.7m less than 13 years earlier when he took over.

In the first season, 2008/09, after their takeover by Sheikh Mansour, Statista report Manchester City’s commercial revenue was still only 21.1m euros (approx £17.9m by today’s exchange rate). They report it then leapt to 57.0m euros (£48.3m) the next season and by only their fourth season it had rocketed to 138.5m euros (approx £117.5m).

Before then in 2019/20 it is at that £246m quoted by Kieran Maguire, as opposed to £25.9m for Newcastle United.

How does anybody judge what exactly ‘fair’ is?

Quite clearly, the natural level of  NUFC’s commercial revenue has been significantly suppressed this past decade and a half under Mike Ashley, as every other major club has seen very significant increases. Including Man City who have increased theirs more than ten times over, as NUFC have gone backwards!

Is Kieran Maguire correct in putting on the table the idea of Newcastle United being allowed to have commercial deals now, to the extent of 90% of Manchester City’s?

Whatever you think of that, you certainly can’t base anything on the state that Mike Ashley has now left Newcastle United in.

If you would like to feature on The Mag, submit your article to [email protected]

James Mackreides
'Mac' is a short tempered former helicopter pilot , now a writer based in Sofia, Bulgaria. Loves dogs, the outdoors and staying far away from the ocean.

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