Newcastle chief Lee Charnley warns club will not spend big despite reporting profit
Last Updated: 18/04/19 6:52pm
Newcastle managing director Lee Charnley has warned that the club will continue to live within its means after reporting an £18.6m profit after tax.
Figures for the year ending June 30, 2018 show that the Magpies - who are currently attempting to persuade manager Rafael Benitez to sign a new contract as he waits to see what their ambitions are - bounced back from the financial disaster of relegation from the Premier League at the end of the 2015-16 season.
However, Charnley, while reassured by the club's position, insists that it will not spend money it has not got in a bid to improve things on the pitch as talks with Benitez's representatives continue. The Spaniard's current deal ends on June 30.
He said: "A 10th-place finish in our first season back in the Premier League was a fantastic achievement and I would like to thank everyone connected to the club - staff, players and fans - for their collective efforts.
"The significant increase in revenue, together with prudent financial management, resulted in the club showing a profit and that is reassuring, given the substantial loss in the previous year.
"There is much more work to be done, but these positive financial results give the club a strong platform on which to build. We all want to see the club improve and be competitive at every level, and in every competition.
"We are convinced that the best route to achieving this is to do so sustainably, spending on young development players and adding high quality to the first team squad each season - players that can really make a difference and improve the team - without risking the financial health and stability of the club.
"We strongly believe that consistently doing the above, and robustly following this policy, will give us the best possible chance of achieving our shared ambitions."
Newcastle's immediate return to the Premier League after a single season in the Sky Bet Championship resulted in a significant improvement in the club's financial health.
A 108 per cent increase in turnover from £85.7m to £178.5m saw a loss after tax of £41.3m transformed into a profit after tax of £18.6m.
That was due in large part to a rise in media income from £47.4m to £126.4m, and a decrease in the club's wages-to-turnover ratio from 130.9 per cent in the Championship to 52.4 per cent.
The figures record loans of £144m, all interest-free and owed to owner Mike Ashley - who is still searching for a buyer - and companies under his control, although the report indicates that £33m of those loans has since been paid back.
Newcastle's transfer spending for the season resulted in a net outlay of £15.7m, up from £11.4m during the previous 12 months, while the club's cash balance amounted to £33.8m, an increase of £42.1m.
Charnley said: "Our budget to strengthen the team and establish our place back in the Premier League has been circa £122m over the last two seasons, which was an initial agreed budget of £70m plus an additional £52m generated as a result of sales and outgoing loans.
"We have spent just over 90 per cent of that - £111m - and the balance of £11m will be carried forward to supplement what we have for forthcoming transfer windows as we look to strengthen again."