THE potential ramifications of relegation from the Premier League have been laid bare by the financial accounts published by Newcastle United this morning.

Newcastle generated a profit after tax of £32.4m in the financial year ending on June 30, 2015, an increase of almost £24m from the previous year.

The Magpies had a net cash inflow of £39.1m, but more than £23m of that sum was spent during the financial year on additions to the playing squad.

The remainder was spent, or was contracted to be spent, in the period since July, with significant sums being committed to the purchase of Georginio Wijnaldum, Aleksandar Mitrovic, Chancel Mbemba and Florian Thauvin, who were signed at the end of the summer transfer window, and Jonjo Shelvey, Andros Townsend and Henri Saivet, who arrived in January.

The two transfer windows saw a net spend of around £80m, with Newcastle’s investment into their playing squad effectively emptying the club’s reserves.

Mike Ashley admitted the “bank was empty” in an interview last week, and the accounts effectively confirm the veracity of that statement.

That might not be too much of a problem if Newcastle retain their Premier League status next month, as the lucrative new television deal which is due to begin next season guarantees every top-flight club a minimum income of £100m.

However, if the Magpies drop out of the top-flight, the financial impact will be hugely damaging and will either require the sale of a large number of high-earning players in an attempt to balance the books or a significant injection of funds from Ashley in order to cover the inevitable shortfall.

Turnover, which stood at £128.8m in today’s accounts, would reduce by more than 50 per cent if Newcastle were to spend next season in the Championship.

The club’s current wage bill is around £60m (50.5 per cent of turnover), so the income from a season in the second tier would not even be sufficient to pay the players in the current squad.

When Newcastle were last relegated in 2009, Ashley effectively covered the financial hit as the club retained a number of their senior players and successfully achieved promotion at the first attempt.

Whether the Magpies owner would be willing to do the same thing again is open to debate given that he is already owed £129m in the form of a series of interest-free loans. Today’s accounts confirm that none of that money has been repaid to Ashley.

“We appreciate that at the present time, football results and not financial results are what our supporters want to see from us,” said managing director Lee Charnley. “That said, it would be wrong for the club not to acknowledge the submission of our accounts for the period July 14 to June 15.

“We understand, however, that what you want to see are results on the pitch. There are still 21 points to play for and lots can, and likely will, happen over the next seven games. 

“We of course acknowledge the seriousness of our situation. However we must remain positive and retain the belief that we can secure our Premier League status and we are doing everything we can to support Rafa (Benitez) and the team.”

Newcastle’s match-day revenue to June 2015 increased by three per cent from the previous year, largely because the club played one extra home cup match.

Media revenue fell by one per cent, with the club’s drop from tenth position to 15th accounting for the fall, and commercial revenue fell by three per cent, largely because of the income from a Kings of Leon concert being included in the previous accounts.