What Now For Newcastle?

Relegation is devastating for any club but with Newcastle United crashing into the Championship this weekend after 16 years in the top flight, all eyes will be watching to see just how catastrophic the drop can be.

Leeds and Blackburn are two teams who have been in a similar position to Newcastle, spending big and trying to break into the top four or five spots consistently. The Toon Army have attempted this in recent years, throwing money at players wages in particular.

But the question on everyone’s lips is which path will Newcastle follow?  Will they return to the Premier League briskly like Blackburn, or will they continue to fall like Leeds did.

One thing on everybody’s mind is the money.  Newcastle have a huge wage bill, one that former manager Kevin Keegan was asked to cut by £10 million at the start of the season. 

The Magpies did lighten their load a little with the departures of James Milner and Shay Given this season, and were no doubt helped by the fees they received from said transfers. But the arrival of new players like Xisco, Coloccini, Guthrie, Bassong, and Gutierrez surely didn’t help in the effort to reduce the bill.

Figures released at the end of the 07-08 season revealed the wage and salary bill was a staggering £62.3 million, a huge increase of £10 million from the previous year.  This year's figures will not be known until the accounts are released in another month or so, but the figure is said to have risen to around £70 million.

Owner Mike Ashley will be extremely worried. With a number of managerial casualties this year no doubt adding to the bill (with compensation etc.), and the appointment of Alan Shearer for a figure some say to be as high as £1 million a game (although £4 million seems more realistic) the cost of this season could be well over the £70 million mark.

Any club facing relegation will need to cut costs, but with the wage bills at West Brom and Middlesbrough said to be around half of Newcastle’s, they already have a head start on the Geordies in the Championship and should be able to keep most of their players.

Of course, Newcastle could keep their players, but they won’t want to.  The loss of Premier League TV money is said to equate to around £30 million a year and, with a likely downturn in matchday revenues and commercial sales, the club, who made a loss of £20 million last season, have a lot of work to do if they are to break even. 

Cutting their wage bill in half, by around £35 million, would be a huge boost for Newcastle and would cover the loss of earnings from the Premier League. 

This is where Newcastle are going to struggle, and they will need a lot of luck and some help from other clubs to make up the money.  Two or three transfers could potentially raise the money needed without a huge amount of cuts, but this is only an option if they make promotion in their first season.  If they don’t, they will be in even deeper trouble.

The plus side for Newcastle is the almost certain departure of striker Michael Owen, and the fact that a few players such as Cacapa, Lovenkrands, and Mark Viduka are coming to the end of their contracts. The club can look to save up to £250,000 per week, even if they keep Viduka on a reduced wage.  Despite his age, Viduka will no doubt be a prize asset in the Championship, and his apparent willingness to stay will be a huge boost. 

The bad news comes with players like Duff, Smith, Coloccini, Geremi, and Barton amongst a few others.  It’s these players, who have inflated wages, especially considering their performances this season, that are going to cause a big problem for the Magpies. 

Damien Duff, said to be earning around £60,000 a week, has pledged to stay in the North East and play in the Championship, which seems very admirable, but he is unlikely to earn that money anywhere else, even in the Premier League. 

Age, discipline problems, and bad performances this season will have put a lot of potential buyers off, and the result is United could be stuck with four or five players in the squad earning over £50,000.

This could be disastrous from a business point of view, especially with the club looking to cut around £700,000 per week from the wage bill.

The club does have another couple of lifelines on the money front, with the well paid and highly thought of Obafemi Martins and defender Steven Taylor potentially bringing in some much needed transfer money, while cutting something like £125,000 from the wage bill. 

Taylor, a Geordie lad, will face a difficult decision, especially if he performs well with England in the Under 21 Championships this summer and some good offers come in for him.

It would seem Newcastle desperately need to sell a couple of players for big money, and even then, depending on how many players they can get rid of, they are still not out of trouble.

Newcastle have a dilemma. Get rid of too many players and they won’t be able to compete in the Championship, languishing in mid-table, or even worse falling further down the football league. But if they don’t get rid of enough, they will need to make an immediate return to the Premier League or face some serious financial trouble.

I for one will be looking forward to see how Newcastle cope with the times ahead, and hope for the sake of English football they go the way of Blackburn rather than Leeds.