Matchday revenue

Matchday revenue is the income generated by match going fans of the club through (season) ticket sales, catering, etc. Percentage-wise, this type of revenue represents an ever smaller part of a Premier League club’s income than before due to increased TV revenue – which is the largest and increasing type.

Despite this, this form of revenue (TV) is comparable for other Premier League clubs (apart for being partially dependent on the club’s finishing position in the previous PL campaign). Therefore, the spending power of a Premier League club in comparison to its competitors is largely dependent on matchday and commercial revenue, seeing as these can be influenced more directly by the clubs themselves.

 

The board recently highlighted this phenomenon themselves in a fan forum meeting (24 February 2014):

“The board clarified the importance of this point for the benefit of the meeting minutes. Looking at turnover, matchday and commercial revenue is a key driver because that’s where the Club can compete with – and outperform – others. In line with FFP, clubs’ own revenue can be used to enhance their spending capabilities.”

Source: NUFC.co.uk

 

Considering the above, the club’s performance since Mike Ashley’s takeover, in terms of matchday revenue (and commercial revenue) is extremely disappointing and worrying. It is a well-established fact that Newcastle United has the third largest match-going fan base of all English footballing pyramid clubs and one of the loyalist at that. Under the previous ownership, matchday revenue was very well developed (the stadium expansion allowing the club to compete at the highest level in terms of spending and ambition). At the height of the clubs popularity (in the late nineties and early noughties) there were waiting lists of thousands of fans wanting season tickets. However, since Mike Ashley took over Newcastle United, there has been a significant drop in this source of income, as depicted by the graph below:

Matchday_revenue

 

Matchday revenue has grown very slightly since relegation and stood at £25.9m in the last financial period, lower than any of the last four years under the previous owners, and substantially reduced from its peak of £35.3m in 2005 (representing a 26.6% drop).

Compared to its peers, this drop is well below par for Premier League clubs in the time-frame representing Mike Ashley’s ownership, as depicted by this diagram:

matchday_peer2

 

Chelsea are the only other club that have seen this income steam decline, probably more by design than by mismanagement in their case considering their benefactor. For comparison, Sunderland added more than 75% to their matchday revenue in the same period, showing growing revenue in this area can be done. Meanwhile, Newcastle United under Mike Ashley is the biggest loser by comparison, having lost nearly 23% of matchday income.

Newcastle managing director – Lee Charnley, rationalises this slump in a critical area by countering it with the club’s alleged ability to compete with other clubs in their  commitment to keeping ticket prices low (source: NUFC.co.uk). This is a bogus argument that puts the cart ahead of the horse. Although cheaper tickets are obviously not a bad thing for the fans, when Mike Ashley arrived there was no commitment whatsoever to cheap tickets. Nor was there the following season. It was only after the club were relegated that ticket prices began to fall, especially due to ten-year, fixed-ticket-fee deals that were being offered in an attempt to stop vast numbers of Newcastle fans turning their backs on it, in disillusionment of Mike Ashley’s running of the club .

 

It is our contention that Newcastle fans for the most part would be more than willing to pay more for their (season) tickets and buy more merchandise for a better matchday experience, if the club showed more ambition and if it was clear that the money generated by the club was being reinvested wisely. A better product commands a higher price. Notwithstanding the recognition by the board that the development of matchday revenue is critical for the club’s ability to compete. Mike Ashley has simply failed to do this effectively, seemingly preferring to provide a lower end product at a lower price to ensure bums on seats who don’t have too high demands, or expectations.