The Cost of Failure

A Line Graph that both makes this blog look intelligent and factual and shows why English clubs currently dominate Europe.

A Line Graph that simultaneously presents this blog as intelligent and factual and explains why English clubs currently dominate Europe.

A new financial report has been released that, on the whole, makes good reading for the world of football. Continuing to fly in the face of the global recession, Premier League clubs still look to be in good financial shape, with over half of them operating at a profit for the ’07/’08 Premier League season. However, when you look at the top five wage bills, it does not look good for newly relegated Newcastle.

The report shows that the highest wage bills were as follows in 2007/2008:

1. Chelsea – £172.1m
2. Manchester United – £121.1m
3. Arsenal – £101.3m
4. Liverpool – £90.4m
5. Newcastle United – £74.6m                     (- Deloitte, BBC)

We’ve been saying for many years now that money ultimately brings success in football these days and here is the statistical proof that we’ve always knew would eventuate from somewhere. However, like most real-world statistics there is a fairly major anomoly, which sees Newcastle paying out the fifth most for wages in England. Considering that they have had precisely no success in recent years and that they have now been relegated, you have to conclude that there has been an extortionate mismanagement of their finances.

Furthermore, when you see that the five clubs with the most debt are the same clubs and that Newcastle thus owe £245m, their plummet into the second, and much less lucrative, tier of English football is even more distressing for their loyal fans. Given that for the same season the wage bill of the Championship was in total just £291m (i.e. equivalent to Chelsea & Manchester United’s combined wage bill), you see that Newcastle’s current expenditure simply cannot be sustained at that level.

But given these statistics it should be a miracle that Newcastle find themselves in such a situation, and yet when they were relegated the general attitude from English football fans was akin to “well, it’s been coming”. And that is the thing, for many years now we’ve seen the steady decline of the club into almost comic incompetency, and yet while we’ve all see it coming, no one inside the club seems to have been able or willing to halt the slide.

My diagnosis for the decline is that as well as poor financial leadership, the club has paid the price for their constant swapping and changing of managers. They’re on their fifth manager inside two years, and such constant change is never going to keep a club running healthily. Whenever a new manager enters a club, he will always look to bring in a few players to get them playing his way, and will no doubt change the way the club works in terms of training, facilities, diet and psychology, all of which will require financial input.

And when you consider also that every time a manager is sacked they must pay up his agreed contract in full, you begin to realise that Newcastle have been spending a lot of money in paying managers who are no longer contributing to the club. If they had simply allowed one of their recent managers the chance to settle in and establish a routine at the club they would doubtless find themselves in a healthier position both on and off the pitch.

As it is they find themselves in the Championship and with an owner who can’t wait to offload the club. However, with such a high payroll, such large debt and such huge expectations, the club cannot exactly be called a great proposition for the potential investor. Arguably those most likely to buy would be those with a vested interest in the fortunes of the club itself, but hang on, that’s just what current owner Mike Ashley is, and look how much he’s done for the club.

So while football looks set to continue to defy the recession, making money and spending it in lavish fashion (just listen to all the transfer talk that is already circulating, it could be a big spending summer), it looks as if they future could be much bleaker for Newcastle United and their fans. We’ve seen in recent seasons how quickly a club can go bust and with such a high wage bill contributing ever more to a hefty debt, the financial stability of a sinking club must be highly questionable.

Many Premier League fans revelled in seeing the Geordies relegated, rightly or wrongly they felt that the club in a sense deserved its fate, but with the release of these financial figures many Newcastle fans could be forgiven for worrying about the future of their club and its continued existence. It’s highly unlikely that it will come to being wrapped up, but that is a fate that no football fan should have to consider and I’m sure I’m not alone in hoping that someone can sort Newcastle out, because there is no way that fans as passionate as theirs should be denied a club to support.

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