Newcastle defiant despite Premiership clubs’ deficit nearing £25m

Newcastle managing director Mick Hogan is confident the club can become a Premiership force despite incurring huge losses for a second successive year.
Falcons lost £3.6m in season 2013-14, up from £3.1m the year before, but Hogan predicts a vast improvement this time around.
He told The Rugby Paper: “The club paid a heavy price for relegation and then getting back up and maintaining that Premiership status. But the situation is improving and, although we’re not finalised, our losses for this year will significantly decrease.”
Falcons turned over just £6.1m in 2013-14, with wages swallowing up almost all of that, but Hogan added: “Our attendances are up 27 per cent and corporate-wise we’re up over 35 per cent, while we’ve trimmed costs in a lot of areas.
“You don’t turn around a £3.6m deficit inside 12 months, but we definitely think we can inside 24 months. We’ll continue to grow our business in a World Cup year and are unveiling new sponsors soon, so it’s looking more positive.”
A Rugby Paper survey reveals that the 12 Premiership clubs lost £24.5m collectively in 2013-14, with Worcester reporting an eye-watering £5.4m deficit in their relegation season – the first under rugby director Dean Ryan.
But chief executive Jim O’Toole told: TRP: “A decision was made to invest in our on and off-field infrastructure and in our coaching and academy, so whilst there was some financial pain, there is a clear vision for the club.
“That season, we had an imbalanced squad overloaded with players at the end of their careers. We had few young players coming through; the talent conveyor belt had dried up.
“That’s changed completely. We’re heading towards a much better place after a big, but necessary financial hit.”
The 2013-14 Premiership accounts reveal that Leicester boasted the highest turnover at £19.4m, while Sale‘s £6m was the lowest. Sale’s wage bill was the lowest, too, at £5.2m, compared with the Tigers’ £9.4m.
Four clubs made a profit, with Exeter achieving an impressive surplus of £1.6m on turnover of £11.3m, which rose from £9.2m in 2012-13.
Gloucester, Leicester and Northampton also turned a profit, but there was not such good news elsewhere with Saracens, Bath, Harlequins London Irish, Sale and Wasps all suffering heavy losses, although the latter’s outlook has changed.
New television money coming into the game from BT Sport has led to calls for the salary cap to be hiked significantly or even scrapped.
But despite those siren calls, Hogan reckons limits will remain in place for the foreseeable future.
He said: “A lot of clubs will want to keep the cap and having a lot of money doesn’t always equal success. It can give you a better chance but we believe it’s down to your academy, coaching, culture and building a team over time.
“If you look at teams that are spending a lot of money, they don’t necessarily achieve success. I’d say Northampton are the model club.”
NEALE HARVEY