THE need for Newcastle United to make an instant return to the top flight has been underlined by the revelation the club is losing around £500,000 a week in the Championship.
United made drastic cutbacks in the summer following relegation, but have still needed to be bankrolled by owner Mike Ashley after he failed to find a buyer. The size of United’s losses makes it imperative that promotion is achieved this season or even bigger cuts will be made in order to ensure the club’s survival in May.
The Journal revealed before Christmas that Ashley had loaned the club £20m to cover everyday running costs. It is understood the retail entrepreneur may put even more of his own money in before the end of the campaign because of the extent of the losses, although the books have been boosted by crowds of more than 40,000 in recent weeks.
A senior United source said: “Newcastle United couldn’t survive at the moment without Mike’s money, it’s as simple as that. If Mike and the banks weren’t willing to cover the cost of relegation Newcastle may well be in a Portsmouth situation. It is costing Mike £500,000-a-week this season to keep Newcastle running without making further cutbacks, yet some people are saying the club should be able to wipe its own mouth, that it should be able to run by itself with the income coming in.
“You can not lose £50m in revenue and expect not to have to take a hit, particularly when you have the overheads Newcastle have.
“The wage bill was reduced, but it’s still way too big for the Championship.” Although Ashley’s mistakes at St James’
Park certainly contributed to the club’s demise, he has tried to rectify them by allowing Chris Hughton to retain a wage bill in excess of £40m in the second tier.
That has enabled United’s former caretaker manager to maintain a squad which, in his opinion, has the best possible chance of returning to the top flight at the first attempt.
Ashley, though, is unlikely to allow the business to haemorrhage money in this way long term and it remains to be seen whether he looks to find a buyer again in the summer, regardless of what division the club are in.
Ashley had already cleared debts of £110m when he took control of the club back in June 2008, although it was claimed he did not want to be repaid that money as long as someone came up with the £100m asking price last year.
It is not yet clear whether he will take his £20m back this season, particularly as the squad will need significant investment if it is realistically going to compete back in the top flight.
The scale of United’s losses came on the day a report by Uefa, European football’s governing body, estimated that the 18 Premier League clubs in 2007-8 owed more money than all of the clubs in the rest of Europe’s top divisions put together.
The combined debts of these clubs stood at just under €4bn euros (£3.5bn), around four times the figure for the next most indebted top division, Spain’s La Liga.
Given Portsmouth’s demise – the club may still go out of business even if it goes into administration tomorrow – English football is heading for a prolonged period of belt tightening after the boom of the Noughties, and Newcastle are no exception.
Meanwhile, Newcastle United’s Academy side will play Crystal Palace in the FA Youth Cup at St James’ Park tonight (7pm) with manager Joe Joyce hoping the venue will be an inspiration to them.
He said: “Fortunately quite a number of the lads have been in this environment before and have played at St James’ but one or two of the younger members of the squad haven’t.
“It is good for them to see what they are trying to achieve.
“There will be a few nerves around the place, but we are coming off the back of a good victory away at Derby and they are very focused on what we are trying to do.
“We’ve lost one game in 16 and we have great belief. Having said that, we need to make sure we aren’t complacent. We’re the home team and onus is on us to take the game to Crystal Palace.”