Financial Fair Play / Profit & Sustainability

[TRon]

12 hours ago, Unbelievable said:

The five years is projecting their commercial revenue at current growth rate vs ours mate. Never suggested the others are standing still. Just pointing out that as long as we grow faster, we’ll catch up.

 

Getting really tired of the negativity about this suggested lack of ambition on here in genetal like. Considering where we’ve come from, just what did people expect from new owners?

 

I don't doubt the owner's ambition, I just think the rules they have signed up for are designed to stop them realising them at Newcastle. To become No 1 club in the world, the PL is leaving no avenue except to sell up and buy one of the cartel clubs. So in that respect, more ambition might be a bad thing.

[The Prophet]

I still don't understand why we need to match Arsenal's total revenue to be competitive.

[r0cafella]

1 minute ago, The Prophet said:

I still don't understand why we need to match Arsenal's total revenue to be competitive.

As our owners are aware, generally the team with the most money wins, so if we want to win we need the most money. Arsenal is a decent yard stick because they are like the middle of the big 6 finance wise. 

 

And personally I'm talking about being successful consistently not on a on off basis. 

[Unbelievable]

2 hours ago, r0cafella said:

Total revenue is the only relevant metric. 

I am not an idiot - I understand PSR, and also SCR, revolves around spending within the constraints of total revenue, but let’s have a look at what the owners can directly influence here:

 

- TV revenue is a function of PL finishing position, number of PL games televised and number of European/cup games televised. I.e this is entirely dependent on how well we do on the pitch. I think it’s fair to say we have performed at or above our expected level under these owners?

 

- Prize money likewise

 

- Matchday revenue depends on fans spending on tickets, food and beverages. I think there is some potential to increase this considering wr have a full house most games, but how popular would a significant price hike be? I think the owners deserve credit for, so far, not going down this road. SJP refurbishment or a new stadium will be vital here, which the club is working on.

 

- That leaves Commercial revenue. This is where Ashley mismanaged us grossly and why we are so far behind other big clubs in terms of revenue, and as such it is also the area where redemption can come from, as there is massive scope for improvement in this area. The club targets 30% growth year on year here, and so far have overachieved every year since the takeover. Also I’d suggest any dependency on Saudi companies is not necessarily healthy, and we need sponsors from outside too. Between the Adidas deal and the likes of Red Bull, this is coming along nicely and more will follow. 

[TheBrownBottle]

14 minutes ago, The Prophet said:

I still don't understand why we need to match Arsenal's total revenue to be competitive.

Because it is unsustainable to remain at the top without it.  Football is - and has pretty much always been - based around finances.  Who can spend the most on wages and transfers wins - this is why if you look at who was at the top of the table in most European leagues, it’s the same clubs pretty much any decade over the last 60 years or so.  So if we go back 60 years ago, the top seven was as follows that season: Man Utd; Leeds; Chelsea; Everton; Forest; Spurs; Liverpool.

 

Yes, it is possible to be competitive on half the income of an Arsenal - you can win the odd cup with a bit of luck, or qualify for Europe from time to time.  But to do that with regularity - or to become ‘no 1’, the stated ambition of the Chairman?  You need the revenue to do that.  And we’re miles away from that.  Without it, you don’t hold onto big players - you will lose them to clubs who can pay more.  If Isak demands to be paid what a Haaland or Mbappe gets, we couldn’t offer anything like that - so he’d be off.  We can never attract the best players, and if we develop them, then they’ll inevitably be off for megabucks elsewhere. 

[TheBrownBottle]

12 minutes ago, Unbelievable said:

I am not an idiot - I understand PSR, and also SCR, revolves around spending within the constraints of total revenue, but let’s have a look at what the owners can directly influence here:

 

- TV revenue is a function of PL finishing position, number of PL games televised and number of European/cup games televised. I.e this is entirely dependent on how well we do on the pitch. I think it’s fair to say we have performed at or above our expected level under these owners?

 

- Prize money likewise

 

- Matchday revenue depends on fans spending on tickets, food and beverages. I think there is some potential to increase this considering wr have a full house most games, but how popular would a significant price hike be? I think the owners deserve credit for, so far, not going down this road. SJP refurbishment or a new stadium will be vital here, which the club is working on.

 

- That leaves Commercial revenue. This is where Ashley mismanaged us grossly and why we are so far behind other big clubs in terms of revenue, and as such it is also the area where redemption can come from, as there is massive scope for improvement in this area. The club targets 30% growth year on year here, and so far have overachieved every year since the takeover. Also I’d suggest any dependency on Saudi companies is not necessarily healthy, and we need sponsors from outside too. Between the Adidas deal and the likes of Red Bull, this is coming along nicely and more will follow. 

They are raising ticket prices - but they also couldn’t do it in the way that they likely happily would; we aren’t successful so cannot command tourist money like the big six.  We also are in the poorest area of Britain, with a limited catchment area.  They couldn’t charge what Spurs or Man Utd can.

 

The commercials were decimated under Ashley, like you said.  But the biggest commercial deals have already been signed; commercial deals in reality come from success, so unless PIF uses the leverage then we can’t get near the big boys.  Arsenal are a much bigger club, have a huge worldwide fanbase, and have won things with regularity for the best part of a century - commercial sponsors want that association.  We’ve never won a trophy which you can watch back in colour, and our worldwide support is tiny in comparison.  NUFC is a big club in the region, not internationally - that’s what drives serious commercial increases.  To get those increases, therefore, needs Man City or Chelsea-esque money pumps - and we can’t do that.  So unless the rules and regs change significantly, we’re approaching our ‘natural’ ceiling.   NUFC without being put on steroids will not break the £400m turnover barrier.  Commercial growth is not built on the cleverness of the staff involved - it is built on footballing success. 

[TRon]

48 minutes ago, TheBrownBottle said:

Because it is unsustainable to remain at the top without it.  Football is - and has pretty much always been - based around finances.  Who can spend the most on wages and transfers wins - this is why if you look at who was at the top of the table in most European leagues, it’s the same clubs pretty much any decade over the last 60 years or so.  So if we go back 60 years ago, the top seven was as follows that season: Man Utd; Leeds; Chelsea; Everton; Forest; Spurs; Liverpool.

 

Yes, it is possible to be competitive on half the income of an Arsenal - you can win the odd cup with a bit of luck, or qualify for Europe from time to time.  But to do that with regularity - or to become ‘no 1’, the stated ambition of the Chairman?  You need the revenue to do that.  And we’re miles away from that.  Without it, you don’t hold onto big players - you will lose them to clubs who can pay more.  If Isak demands to be paid what a Haaland or Mbappe gets, we couldn’t offer anything like that - so he’d be off.  We can never attract the best players, and if we develop them, then they’ll inevitably be off for megabucks elsewhere. 

 

 

The cartel clubs understand this very well. That is why the rules have been drawn up in such a way that it's fine for an owner to spend untold billions on new training grounds, stadiums or Mrs Maisy's house down the road which needs new double glazing.

 

But try spending some money on making a title winning squad and the hammer is coming down. The Premier league authorities by their nature have to look after the interests of their biggest paymasters, and that would be the clubs who are already at the top and don't want competitors.

[The College Dropout]

3 hours ago, Sibierski said:

PSR for me isn't about getting close to the levels of Arsenal/Manchester/Liverpool, it's about getting to levels of Spurs at a minimum.

 

Operating on sums that Spurs have, you should be regularly challenging top 4 and having the odd title challenge if you've got the right manager and set up. At those funds, you can sign players at the good end, maintain your superstars and have depth that's experienced. Beyond those levels, you are just simply overpaying to keep players, having your depth on bloated deals and can spend bigger sums on players that are no more a success strike. 

We've performed at a Spurs level the last 2 seasons and likely this season - on the pitch I mean.

 

Spurs level isn't the end goal for me. They've never regularly challenged for titles and won nowt for almost 20 years.

 

Spurs have unreplicable advantages revenues wise. Apart from being the smallest of the big 6 clubs in terms of success, I don't see why we would target them.

 

Chelsea generate the least from gates due to the small capacity and difficulty moving. A big enough stadium with corps might be able to get revenues similar or greater. In time we could have a great academy too. Their worldwide fanbase might be big but it's more fragile than Arsenal, Liverpool, Man U.

[The College Dropout]

1 hour ago, TheBrownBottle said:

They are raising ticket prices - but they also couldn’t do it in the way that they likely happily would; we aren’t successful so cannot command tourist money like the big six.  We also are in the poorest area of Britain, with a limited catchment area.  They couldn’t charge what Spurs or Man Utd can.

 

The commercials were decimated under Ashley, like you said.  But the biggest commercial deals have already been signed; commercial deals in reality come from success, so unless PIF uses the leverage then we can’t get near the big boys.  Arsenal are a much bigger club, have a huge worldwide fanbase, and have won things with regularity for the best part of a century - commercial sponsors want that association.  We’ve never won a trophy which you can watch back in colour, and our worldwide support is tiny in comparison.  NUFC is a big club in the region, not internationally - that’s what drives serious commercial increases.  To get those increases, therefore, needs Man City or Chelsea-esque money pumps - and we can’t do that.  So unless the rules and regs change significantly, we’re approaching our ‘natural’ ceiling.   NUFC without being put on steroids will not break the £400m turnover barrier.  Commercial growth is not built on the cleverness of the staff involved - it is built on footballing success. 

Great post.

 

Gate-lever. We can close a gap here. But we are unlikely to reach revenues of Man U and the top London clubs. Mostly down to geographic economics and history of a fanbase. These are sticky factors that won't change significantly in the next 5 years.

 

We've got some room to go in commercial growth "naturally" but nothing to considerably close the gap on the big 6.

 

Closing the gap on the big 6 means leveraging Saudi in a real way.

 

Unless the rules change, I don't see how we keep our best players and build the squad around them over the next 3-5 years. And maybe we don't, maybe we sell Berbatov and a Bale emerges. Then we sell Bale and a Harry Kane emerges. 

 

 

Edited yesterday at 12:13 by The College Dropout

[The Prophet]

1 hour ago, r0cafella said:

As our owners are aware, generally the team with the most money wins, so if we want to win we need the most money. Arsenal is a decent yard stick because they are like the middle of the big 6 finance wise. 

 

And personally I'm talking about being successful consistently not on a on off basis. 

 

1 hour ago, TheBrownBottle said:

Because it is unsustainable to remain at the top without it.  Football is - and has pretty much always been - based around finances.  Who can spend the most on wages and transfers wins - this is why if you look at who was at the top of the table in most European leagues, it’s the same clubs pretty much any decade over the last 60 years or so.  So if we go back 60 years ago, the top seven was as follows that season: Man Utd; Leeds; Chelsea; Everton; Forest; Spurs; Liverpool.

 

Yes, it is possible to be competitive on half the income of an Arsenal - you can win the odd cup with a bit of luck, or qualify for Europe from time to time.  But to do that with regularity - or to become ‘no 1’, the stated ambition of the Chairman?  You need the revenue to do that.  And we’re miles away from that.  Without it, you don’t hold onto big players - you will lose them to clubs who can pay more.  If Isak demands to be paid what a Haaland or Mbappe gets, we couldn’t offer anything like that - so he’d be off.  We can never attract the best players, and if we develop them, then they’ll inevitably be off for megabucks elsewhere. 

 

Point taken.

 

I'd argue we could assemble a squad that can compete for honours and regularly qualify for the Champions League without having the third joint highest revenue in the league.

 

Sure to move beyond that we'll need to eventually close the gap, but that'll come hand in hand with more on-field success. In my opinion at least, there's no mad rush to grow faster than what we already are.

[The College Dropout]

3 minutes ago, The Prophet said:

 

 

Point taken.

 

I'd argue we could assemble a squad that can compete for honours and regularly qualify for the Champions League without having the third joint highest revenue in the league.

 

Sure to move beyond that we'll need to eventually close the gap, but that'll come hand in hand with more on-field success. In my opinion at least, there's no mad rush to grow faster than what we already are.

To regularly qualify for the CL with the 7th highest budget - is unlikely especially with this new CL format.  Neither us or Villa have come close to sustaining a CL push year after qualifying. We don’t have the money to build the squads. I think Villa’s good run and recent sales may position them to give it a good go in back to back seasons. 
 

And that ain’t the stated ambition. If the stated ambition changes I’ll stfu.  

[Matt1892]

Our short term aim over the next few years should be to constantly finish inside the top six, which isn’t an unreasonable aim. Then once we have done that we are in a position where the profile of the club globally should be raised and the commercial gap should close.

 

Catching Arsenal in terms of commercial revenue is pie in the sky stuff unless we can either manoeuvre related party deals or we can grow the club to match their global appeal, which will be done on the pitch over a number of years.

If Chelsea qualify for the Champions League next season then their figures will jump up a similar amount, there isn’t any point in beating yourself up over it.

 

[The Prophet]

6 minutes ago, The College Dropout said:

To regularly qualify for the CL with the 7th highest budget - is unlikely especially with this new CL format.  Neither us or Villa have come close to sustaining a CL push year after qualifying. We don’t have the money to build the squads. I think Villa’s good run and recent sales may position them to give it a good go in back to back seasons. 
 

And that ain’t the stated ambition. If the stated ambition changes I’ll stfu.  

 

I agree, but that's not what my posts are getting at. Our revenue needs to continue to grow, but we can be competitive without reaching Arsenal. The same as Arsenal have been competitive before their latest leap.

 

It's baby steps at this point, granted the abolishing of the APT rules might speed things up a bit.

[The College Dropout]

14 minutes ago, The Prophet said:

 

I agree, but that's not what my posts are getting at. Our revenue needs to continue to grow, but we can be competitive without reaching Arsenal. The same as Arsenal have been competitive before their latest leap.

 

It's baby steps at this point, granted the abolishing of the APT rules might speed things up a bit.

But the rules and infrastructure are rigged for Arsenal to become long lasting competitive.  
 

For one, you take arsenals league finished since the Man City takeover. It’s surely an average of 4-5th. That’s their average revenue position over that time too.  
 

Because Arsenal have the history, coefficient, the stadium, the location, the academy they are uniquely positioned to go from 450m in revenue to 600m. 
 

Thats allowed them to renew Saka and co. then go and splash money on Havertz, Rice, Merino, Cali etc. that’s allowed them to sustain a challenge for 3 years.  Can we renew Isak, keep the rest of our stars then go again the transfer market? 
 

Latest noise is that we can. So we’ll see. 

[The Prophet]

24 minutes ago, The College Dropout said:

But the rules and infrastructure are rigged for Arsenal to become long lasting competitive.  
 

For one, you take arsenals league finished since the Man City takeover. It’s surely an average of 4-5th. That’s their average revenue position over that time too.  
 

Because Arsenal have the history, coefficient, the stadium, the location, the academy they are uniquely positioned to go from 450m in revenue to 600m. 
 

Thats allowed them to renew Saka and co. then go and splash money on Havertz, Rice, Merino, Cali etc. that’s allowed them to sustain a challenge for 3 years.  Can we renew Isak, keep the rest of our stars then go again the transfer market? 
 

Latest noise is that we can. So we’ll see. 

 

My point was that we can become competitive (winning domestic trophies and qualifying for the Champions League) without hitting the amount of revenue that Arsenal are currently bringing in.

 

Yes, we'll probably want to get there eventually, but at the moment the rate at which we're growing at is fine.

 

 

Edited yesterday at 13:41 by The Prophet

[TRon]

9 minutes ago, The College Dropout said:

But the rules and infrastructure are rigged for Arsenal to become long lasting competitive.  
 

For one, you take arsenals league finished since the Man City takeover. It’s surely an average of 4-5th. That’s their average revenue position over that time too.  
 

Because Arsenal have the history, coefficient, the stadium, the location, the academy they are uniquely positioned to go from 450m in revenue to 600m. 
 

Thats allowed them to renew Saka and co. then go and splash money on Havertz, Rice, Merino, Cali etc. that’s allowed them to sustain a challenge for 3 years.  Can we renew Isak, keep the rest of our stars then go again the transfer market? 
 

Latest noise is that we can. So we’ll see. 

 

The only way to compete  on a level playing field with longstanding CL contenders is through owner funding as happened with Chelsea and Man City. We need an injection of cash into the squad for the next few years so that we are qualifying every year, and winning trophies. That will bring the worldwide fan base, and big hitting sponsorships and allow us to keep our best players while replacing those who age out. After that, a new stadium with all the added income that brings will put us into the same earnings category as the big boys. From that point all the FFP/PSR crap won't matter. We'll be in the same boat as the CL clubs.

[timeEd32]

4 hours ago, Unbelievable said:

I am not an idiot - I understand PSR, and also SCR, revolves around spending within the constraints of total revenue, but let’s have a look at what the owners can directly influence here:

 

- TV revenue is a function of PL finishing position, number of PL games televised and number of European/cup games televised. I.e this is entirely dependent on how well we do on the pitch. I think it’s fair to say we have performed at or above our expected level under these owners?

 

- Prize money likewise

 

- Matchday revenue depends on fans spending on tickets, food and beverages. I think there is some potential to increase this considering wr have a full house most games, but how popular would a significant price hike be? I think the owners deserve credit for, so far, not going down this road. SJP refurbishment or a new stadium will be vital here, which the club is working on.

 

- That leaves Commercial revenue. This is where Ashley mismanaged us grossly and why we are so far behind other big clubs in terms of revenue, and as such it is also the area where redemption can come from, as there is massive scope for improvement in this area. The club targets 30% growth year on year here, and so far have overachieved every year since the takeover. Also I’d suggest any dependency on Saudi companies is not necessarily healthy, and we need sponsors from outside too. Between the Adidas deal and the likes of Red Bull, this is coming along nicely and more will follow. 

 

I feel like we've had this same discussion three or four times. There's no reasonable way (absent saying there will no longer be any APT/FMV rules) to project our commercial revenue to continually grow at the rate it has. This is actually exactly how many companies fool themselves into thinking they are the next big thing.

 

And your points on matchday revenue are fair, but it needs to be part of the calculation. If we were to catch Arsenal and Spurs in commercials but remained £75-100m behind in matchday then we're still meaningfully behind. Now in reality I don't think it's at all possible to catch those clubs in commercial revenue without our matchday growing significantly because the two are heavily linked in a number of ways.

 

I don't think any of the above is being negative; it's just being realistic. I'm still optimistic about where we're going, but I do think many have a warped sense of "catching up" just because Eddie has outperformed since arriving and also an inflated view of NUFC's stature relative to the biggest English clubs (we are tiny, globally).

[The College Dropout]

2 hours ago, timeEd32 said:

 

I feel like we've had this same discussion three or four times. There's no reasonable way (absent saying there will no longer be any APT/FMV rules) to project our commercial revenue to continually grow at the rate it has. This is actually exactly how many companies fool themselves into thinking they are the next big thing.

 

And your points on matchday revenue are fair, but it needs to be part of the calculation. If we were to catch Arsenal and Spurs in commercials but remained £75-100m behind in matchday then we're still meaningfully behind. Now in reality I don't think it's at all possible to catch those clubs in commercial revenue without our matchday growing significantly because the two are heavily linked in a number of ways.

 

I don't think any of the above is being negative; it's just being realistic. I'm still optimistic about where we're going, but I do think many have a warped sense of "catching up" just because Eddie has outperformed since arriving and also an inflated view of NUFC's stature relative to the biggest English clubs (we are tiny, globally).

Agreed. It's not negative. It's realistic. Thinking we'll grow 40% YoY without major changes to the rules is, in my opinion, naive and plain wrong. There's no reasonable forecast for that. There's not the obvious levers. We are like 2 or 3 deals away from our current ceiling.

 

New stadium and other things will raise our ceiling. But that's 5+ years from today.

[The Prophet]

1 hour ago, The College Dropout said:

Agreed. It's not negative. It's realistic. Thinking we'll grow 40% YoY without major changes to the rules is, in my opinion, naive and plain wrong. There's no reasonable forecast for that. There's not the obvious levers. We are like 2 or 3 deals away from our current ceiling.

 

New stadium and other things will raise our ceiling. But that's 5+ years from today.

 

I agree it'll be difficult to continue to grow 40% year on year as we begin to exhaust more options, but given I'll don't know loads about commercial sponsorship, where is this coming from?

[The College Dropout]

1 minute ago, The Prophet said:

 

I agree it'll be difficult to continue to grow 40% year on year as we begin to exhaust more options, but given I'll don't know loads about commercial sponsorship, where is this coming from?

Stadium sponsor, training kit sponsor maybe some more that i'm missing but these tend to be the biggest deals for clubs bar the ones we already have.

 

If we have a bunch of short-term deals we can increase that should help. But it's the major sponsors, gate receipts, TV, comp money, player sales that generate the big funds. 

[BoSelecta]

31 minutes ago, The Prophet said:

 

I agree it'll be difficult to continue to grow 40% year on year as we begin to exhaust more options, but given I'll don't know loads about commercial sponsorship, where is this coming from?

His arse.

[Harveys Barn]

As an Aussie who is used to our AFL clubs all having a strict salary cap, it seems wild to me that as fans in the Premier League, our money and support can actually - literally - lead to the club being able to buy better players.

 

I've explored buying a Newcastle membership even though I could never attend a game. It was surprising to me how cheap memberships were, and how little was available in terms of tiers and "other ways to support" the club from afar.

 

I mean, even a well-run and well marketed Patreon campaign (in style at least) could feasibly equate to one brand new 15-20m pound player.

 

It would just require exotic and exciting membership tiers and packages that make fans (even globally) feel special - and which also make the connection obvious that their $$$ led to one half of an Mbeumo. How exciting that would be.

 

 

Edited 4 hours ago by Harveys Barn

[JT24]

3 minutes ago, Harveys Barn said:

As an Aussie who is used to our AFL clubs all having a strict salary cap, it seems wild to me that as fans in the Premier League, our money and support can actually - literally - lead to the club being able to buy better players.

 

I've explored buying a Newcastle membership even though I could never attend a game. It was surprising to me how cheap memberships were, and how little was available in terms of tiers and "other ways to support" the club from afar.

 

I mean, even a well-run and well marketed Patreon campaign (in style at least) could feasibly equate to one brand new 15-20m pound player.

 

It would just require exotic and exciting membership tiers and packages that make fans (even globally) feel special - and which also make the connection obvious that their $$$ led to one half of an Mbeumo. How exciting that would be.

 

 

 

The club are in the (drawn-out) process of launching Official Supporter Clubs, I think these will include a need for a paid membership to join the OSC and whatever benefit that might come with it.

 

So that is probably the global membership tier you are referring to and why I think there is nothing right now.

[LFEE]