Directors at Newcastle Falcons have told how they are working on “a more self sustaining model” following a year in which it fell to a loss of £2.5m.
Newcastle Rugby Limited – which include figures for both the Gallagher Premiership team Newcastle Falcons and Newcastle Thunder rugby league club – has filed accounts for the year ended June 30 2022 which shows turnover rose from £8.9m to £12.2m, but the previous year’s profit of £3.6m fell to a loss of £2.5m as it tackled the aftermath of the pandemic. The previous year’s operating profit of £161,728 was converted to a loss of £1.9m.
The company – which employed 297 people in the year, up from 254 in 2021 – secured a big jump in marketing and ticket income, which rose from £1.3m, while its conference, banqueting and bars takings also increased, from £138,914 to £1.37m.
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Directors at the Kingston Park based business said they were satisfied with its performance, “given the current economic climate”, highlighting how, in the previous year, the adverse impact of the Covid pandemic on the group’s results had been offset against an increase of £3.8m in the value of investment in PRL Investor Limited. The group also received £300,000 in grants from the Government’s Coronavirus Job Retention Scheme to mitigate operating losses and safeguard jobs.
However, the company said: “The pandemic has remained a significant issue within the professional rugby environment as it continues to have an impact on fans coming back to the stadium. This is reflected in our attendances throughout the year.
“The club achieved a 12th placed finish in the Premiership, picking up six wins in the process. The club has a young and ambitious squad and are optimistic about the future.”
It said the 2021/22 season was one of the most challenging in the club’s history as a continued result of the pandemic, with the cancellation of its December 2021 home match having a large cash impact on the business. It added that the impact on the club’s finances was mitigated by a “substantial” loan from the Department for Digital, Culture, Media and Sport (DCMS), repayable over 20 years with no capital repayments due for three years.
Meanwhile, it said the 2021/22 season had been one of many new challenges for Thunder, with the club making the “difficult decision to return to part time status meaning a significant reduction in costs going forward”. It added: “Fan attendance to games remains relatively low due to the aftermath of the pandemic but the club are continuing to make every effort to attract fans back to matches.”
Looking ahead, directors said the demise of two premiership clubs – Wasps and Worcester – has forced other clubs to reassess their financial positions.
In his report, owner Semore Kurdi said: “This has caused others to take a hard look at club finances and Newcastle Rugby has taken significant steps towards a more self sustaining model. This will continue to come into fruition in the 2023/24 season and beyond. Management believe this emphasis on financial sustainability coupled with the continued investment into young, home grown talent will be something our faithful support can rally behind in the future months and years.”
At the year end the group had net liabilities of £18.3m, with in excess of £20m due to majority shareholder Mr Kurdi. However, it said Mr Kurdi “confirmed his willingness not to call on this debt, to meet the day to day working requirements of the group and also to continue to invest in the long term future of the group. “
It added: “The financial forecasts have been reviewed by the directors and they have concluded that there is a risk in respect of going concern due to the group’s historic and forecast trading performance and the consequential impact on operational cashflow. The directors firmly believe however that the group remains a going concern due to the continued support of the majority shareholder and the group’s move to a more sustainable financial model.”
The tough financial climate for rugby clubs has been shown by the demise of Wasps and Worcester, plus fears that London Irish could be the next Premiership team to follow them in going out of existence. Even top clubs like Leicester and Exeter have needed emergency support from owners in recent months.
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