Newcastle United’s release of their annual accounts revealed how much the club suffered financially under Steve McClaren's horrid tenure.
Managing Director Lee Charnley labelled the Magpies’ relegation to the Championship as “unacceptable and completely unexpected” after the club spent £70m on recruitment, which was only second behind Manchester City.
McClaren took over in at St James’ Park in June 2015 and was trusted the club’s biggest transfer kitty to date under owner Mike Ashley.
In two transfer windows, the former England manager oversaw the signings of Georginio Wijnaldum, Aleksandar Mitrovic, Florian Thauvin, Chancel Mbemba, Jonjo Shelvey, Andros Townsend and Henri Saivet for a combined total on £70.7m.
Only Shelvey, Mitrovic and Mbemba have remained on Tyneside this season after the club were relegated in last May.
Though despite United’s disastrous recruitment and relegation, the annual accounts showed a small profit of £4.6m, down from £32.5m in the previous year.
However, the full impact of the relegation is expected to be revealed in next year’s annual accounts, where losses up to £60m could be announced.
“Unacceptable and completely unexpected”
Charnley said: "The 2015/16 season was extremely disappointing for everyone connected with the club."
He also added that it was “unacceptable and completed unexpected” that the club fell into the Championship as "significant sums of money were spent to strengthen the playing squad in the summer 2015 and January 2016 windows.”
The largest recruitment the club has seen under Ashley “resulted in an increase in our annual wage bill. “In the context of this spend, relegation was both unacceptable and totally unexpected.”
Remy Cabella, Fabricio Coloccini, Papiss Cisse, Steven Taylor, Daryl Janmaat, Moussa Sissoko, Cheick Tiote, Townsend and Thauvin have all left Tyneside on permanent deals elsewhere.
“Our approach, following relegation, was to make further sizeable investment in our playing squad in preparation for the EFL Championship season ahead and our annual wage bill is, we believe, still above and beyond many current Premier League teams,” said Charnley.
“Whilst not without financial risks, this strategy was adopted in order to maximise our chances of promotion at the first time of asking.” The Magpies are on course to return to the top flight as they sit 10 points clear of third-placed Huddersfield Town with six games to go.
“The financial impact of relegation is difficult to overstate and this will become evident in our next set of financial results for the year ending June 2017.
"The biggest impact by far is the dramatic reduction in centrally distributed income that comes with dropping down a division; the reality being our income in this area is forecast to fall by over £30m compared to 2015-16.
"To highlight the differences, our 16 live TV games last season earned us £12m in revenue. Contrast this with 2016/17 EFL live fees which, based on our current number of confirmed appearances (12 away and 6 home), will earn us a total of £720k.
“To illustrate further the cost of relegation, 2016/17 marks year one of the new Premier League TV deal and the team that finishes in 18th place this season is expected to receive in the region of £30m more revenue than we did for the same place finish last year.
“Outgoing transfers will ultimately generate a significant net player trading surplus for the summer 2016 transfer window but, due to the cash profile of the deals, this will result in a net cash outlay in 2016-17.
"Our adopted strategy has therefore only been made possible by the cash injection from our owner, who continues to provide interest free funding to support the club’s operations, never more important than during this financially challenging season."