Toon reveal cost of relegation

However, the drastic action the Magpies took to address their

financial situation in the face of a reduction in turnover of 39% –

from £86.1million during the year covering the 2008-09 season

to £52.4million – means their losses increased only slightly

from £15.2million. But the annual accounts for the year ending

June 30, 2010, which were submitted to Companies House on

Wednesday, also show that owner Mike Ashley had to inject a further

£42million into the club despite an increase in gate receipts

as more than a million fans attended games at St James’ Park. The

latest figures do not reflect Newcastle’s return to the top flight

at the end of last season, with promotion worth anything up to

£60million to successful clubs, nor Andy Carroll’s

£35million departure to Liverpool in January. Managing

director Derek Llambias said: “Our overriding aim in 2009-10 was to

secure promotion back to the Premier League at the first attempt.

“Relegation presented a considerable challenge for us financially.

“With such a marked reduction in turnover, largely due to reduced

TV and media revenue, we needed to cut our operating costs

accordingly without jeopardising our ability to return to top

flight football straight away. “We succeeded in reducing our wage

bill considerably whilst maintaining the basis of a Premier League

squad. “It has been a significant achievement to keep our overall

loss at a level similar to the year before despite the impact of

relegation, and our ability to do this has been helped immeasurably

by the continued financial support of Mike Ashley, who injected a

further £42million into the club last year interest-free.” The

club made an operating loss of £33.5million compared to

£37.7million the previous year, but that was reduced to

£17.1million by player trading. Obafemi Martins, Sebastien

Bassong, Damien Duff, Habib Beye and Geremi were among those to

depart as the Magpies attempted to slash expenditure. However,

revenue from television and other media fell 57% from

£37.6million to £16million, although new sponsorship

deals were struck with Puma and Northern Rock. That prompted the

club’s hierarchy to trim operating costs from £98million to

£74.4million, a reduction of 24%. But their determination to

retain the services of enough Premier League-class players to

launch a credible bid for promotion meant the wage bill still

amounted £47.5million despite a 33% drop from

£71.1million. As a result, the wages-to-turnover ratio

increased to a staggering 90.6% from 82.6% earlier. The recommended

level is 50%. The club’s overall debt burden remained stable at

£150million, although bank borrowings fell by £25million

and were replaced by a loan of the same amount from Ashley, taking

the total he has loaned the club to £139.8million, all of it

interest-free. Ashley, who also advanced £13million to cover

the acquisition of January signings Danny Simpson, Mike Williams,

Wayne Routledge and Leon Best, has enjoyed an uneasy relationship

with large sections of the fans for much of his time at the helm.

But that did not prevent Newcastle from recording an average home

crowd during the reporting period of 43,388, the fourth highest in

the country.