Newcastle United have recorded an overall profit for the second successive year while also re-entering the world's top 20 revenue-generating football clubs after increasing annual turnover to £93.3m.
Despite a 20% rise in the wage bill, the club's figures for the financial year ending June 2012 mean Newcastle will have no difficulties in meeting Uefa's new financial fair play regulations
After player amortisation, Newcastle recorded an overall profit of £1.4m. Although that was down on the £32.6m profit recorded 12 months ago, the latter figure was inflated by the £35m sale of Andy Carroll to Liverpool.
A 5.4% increase in turnover on the previous year was down to the team's fifth-place finish boosting television income. But although the average attendance at St James' Park rose to 49,936, ticket revenue fell by 7% after the club froze season ticket prices. Meanwhile commercial revenue fell by 12.7% at a club which has subsequently signed a lucrative new sponsorship deal with Wonga.
Operating costs remained stable at £21.6m but operating profit decreased from £13.3m to £7.5m. A key factor was an increase in the club's wage bill, which has risen by 20% to £64.1m following the signings of a number of key players, including Yohan Cabaye, Davide Santon and Papiss Cissé. Their arrival helped push Newcastle's wages-to-turnover ratio up to a less than ideally desirable 68.7%, an increase of 8.1% on last year.
Derek Llambias, Newcastle's managing director, hopes to see the ratio of wages to turnover fall back to "around 64%" next year, adding: "We have a feelgood factor about what we are doing as a company. We are pleased with any profit, considering where we were in 2008-09. We had a £17m operating loss in our first year. We were in shock."
Llambias also launched a staunch defence of the controversial agreement with Wonga and claimed he was not expecting a drop in sales of replica shirts. "It seems to be flavour of the month to criticise the deal, but you have clubs in partnerships with betting companies and drink companies," he said.
"Wonga are above the payday loan companies. They are the cream of that group. They have no problem with regulatory laws. They are very proactive. They have not asked us for our database, they are not trying to sell loans to our database, they are trying to show they are a financial institution that is trying to give something back to us and we should be privileged we have a sponsor who is paying fair money and who wants to help."
Llambias also indicated that Mike Ashley, Newcastle's owner, is willing to invest further in the squad during the summer when he hinted that they may diverge from the current policy of shopping almost exclusively in France. "There is money available," said Llambias. "We are looking at several playing positions. Next year we will have extra TV money, there is a budget to spend.
"But our transfer policy remains the same. No trophy buys. Basically, we will continue our model as it is. It works so we won't break it. We are actively looking at players and have been since October. All over Europe. It's not just France. That's been a good market for us but there are only so many you can get from there."