I wondered whether there was some profit released by Abramovich writing off any loans to the club as this would normally have an impact, at least on the balance sheet and possibly on the P/L. I understood though that FFP was related only to operating costs/profit, and did not include accounting adjustments.
This is correct. Essentially the club is debt free. It means they can take on more debt relatively easily vs many peers. It doesn't affect the profitability and sustainability calculations on allowable losses. What they make in revenue and subsequently lose in operating costs is entirely divorced from how much debt props it up... barring the fact they don't have bad debt repayments to cover from the P&L.
I meant more that when debt is removed from the balance sheet as it is forgiven it can be considered as ‘profit’ by the tax office and taxed. However it wouldn’t count towards operating profit for FFP calculations.
Out of interest, how does the Lewis Hall deal (loan with obligation), impact FFP for us currently? Additional wages I get, but any other impact financially?
Newcastle United hurt by UEFA's revenue distribution It is undoubtedly great news for Geordies everywhere that Newcastle United are back in the Champions League for the first time in 20 years, pushing the dark days of the Mike Ashley era to the back of supporters’ minds. The club has described this as a game-changer, but how much will this adventure really be worth? Put another way, why will the Champions League not benefit Newcastle United as much as their rivals? Distribution The answer to this question lies in the way that UEFA distribute the Champions League riches. A total of €1.0 bln is available, which is then split into four elements: Participation €501m (25%) Prize money €601m (30%) UEFA coefficient €601m (30%) TV pool €300m (15%) Participation Fee Each of the 32 clubs that qualify for the Champions League group stage receives €15.6m as a participation (starting) fee. Here, Newcastle are treated exactly the same as the other three English representatives. TV Pool However, Newcastle will receive a much lower TV pool than the other English clubs. Before a ball is kicked, their share will be €9.8m, which is only around half as much as Manchester City’s €18.3m. The TV pool comprises two parts. The first half is based on a club’s finishing position in the previous season’s Premier League. With four clubs qualified, the winners get 40%, while the clubs finishing second, third and fourth receive 30%, 20% and 10% respectively. As Newcastle finished fourth in 2022/23, their share of the first half of the TV pool is just 10%, which is worth €2.8m. The second half is based on a club’s progress in this season’s Champions League, calculated in line with the number of games played. As it stands, each club is only certain to play 6 games in the group, so they currently have an equal share of €7.0m, but this will obviously change if a club goes further in the competition. UEFA Coefficient So Newcastle’s TV pool is adversely impacted by qualifying in fourth place, but the real damage to their overall earnings comes with the UEFA coefficient, where their €4.5m pales into insignificance compared to the other three English clubs: Manchester City €33.0m, Manchester United €28.4m and Arsenal €25.0m. The UEFA coefficient payment was introduced in 2018/19 , based on a team’s performance in UEFA tournaments over the past 10 years, including bonus points for winning tournaments. This clearly benefits the established elite like Real Madrid, Bayern Munich and Barcelona, who all pick up well over €30m, having been rewarded (in some cases) by good performances many years ago. Newcastle don’t actually have any UEFA 10-year coefficient points, as the last time they played in Europe was 2012/13, when they reached the quarter-finals of the Europa League. However, a club’s ranking is determined by either the sum of all points won in the previous 10 years or by the national association’s coefficient over the same period, whichever metric is the higher. In this way, Newcastle benefit a little from England’s high country coefficient, though they are still ranked 29th out of the 32 clubs in the group stage, only ahead of Union Berlin, Lens and Antwerp. Total Revenue Putting these three elements together, Newcastle’s earnings are currently €30m, which is less than half of Manchester City’s €67m, and also miles below Manchester United €57m and Arsenal €56m. The Geordies have basically been hammered for the crime of not playing in Europe for ages, so it does not really matter how good (or bad) the current team is, which means that Ashley’s dismal legacy still lingers on. Conclusion Clearly, Newcastle United will benefit financially from qualifying for the Champions League, which will help the club meet its FFP targets among other things. That’s good news, but the prize will not be as much as it might have been, given the way that the UEFA coefficient effectively punishes “newbies”. ****MORE PROTECTION FOR BIG THE BOYS****
I thought you might ask that... Prize Money Of course, all of the analysis to date has ignored prize money, so Newcastle could redress the balance by doing the business on the pitch. In the group stage, each win is worth €2.8m, while a draw earns €930k. There is then more prize money for each additional stage reached: last 16 €9.6m, quarter-final €10.6m, semi-final €12.5m, final €15.5m and winners €20.0m. Therefore, the difference between winning and losing the final is €4.5m. So, if Newcastle were to beat the odds and win the Champions League (winning all six of their group games in the process), they would earn a maximum of €69.5m in prize money - report was written pre Tuesday! Dream scenario Based on these extravagant assumptions, Newcastle could potentially earn a massive total of €106m from the Champions League. This illustrates just how much money can be made in Europe’s leading competition, though even the most one-eyed fan would probably not bet too much on this outcome.
The CL trophy. P.S. Read to the end before adding witty comment, read to the end before adding witty comment, read to the end before adding witty comment, read to the end before…..
