Newcastle United tumbles to £54m operating loss as Covid-19 lockdown hammers sales and profits

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Newcastle United has revealed how the Covid-19 pandemic plunged the club into the red, triggering operating losses of £54m.

Turnover dropped from £176.4m in 2019 to £152.6m for the year ended July 31, 2020, as restrictions, training and matchday protocols saw a chunk of the 2020-21 season play out to an empty St James’ Park.

The previous year’s operating profit of £14.9m switched to an operating loss of £54m, while pre-tax profit of £41.15m converted to a loss of £25.9m.

Read more:Mike Ashley to step down from Frasers Group

Accounts for the club, owned by Mike Ashley, detail how it faced a number of challenges, with the firm’s broadcast and matchday sales taking a significant hit as the Covid-19 pandemic brought regular matches to a halt during the first national lockdown.

The Premier League had been suspended in March 2020, when only 29 of the club’s 38 games had been played and when play resumed just the final home game was played before a crowd.

As a result of the restrictions, matchday revenue dropped from £24.8m to £17.4m, while broadcast revenue also tumbled from £123.9m to £106.1m, as a result of rebates given to broadcasters as a result of the delayed end to the season. The club’s number of TV appearances also dropped from four to five live games.

Commercial income fell by £300,000 from £26.2m to £25.9m.

The wages bill at the club climbed from £84.9m to £106.8m with the average wage at the club around £52,000 a week, which reflects the club having to play an additional month’s salary to players.

During the year NUFC spent £76m on player purchases, bringing in the likes of Joelinton, Allan Saint-Maximin and Emil Krafth for substantial fees.

The club recouped £30m in player sales, led by Ayoze Perez’s departure to Leicester.

Following the year end the group said it has committed to a further maximum spend of £48m on changes to the playing squad and team management.

In a report accompanying the accounts, managing director Lee Charnley said: “The financial results do not reflect a ‘normal’ year for the company.

“Covid-19 aside the company’s income would not have been hugely impacted by the extension of the accounting period by the further month, whereas operating costs would be expected to increase pro-rata.

“The vast majority of the company’s income arises during the playing season (10 months out of 12) whereas the cost in particular of two of the most significant wages and player amortisation accrue on a more even basis across the entirety of any given accounting period.”

Newcastle was also one of the first Premier League clubs to tap into the Government’s job retention scheme and the accounts show it claimed £1.152m in 2020.