quayside

That's a very good assessment and I agree with a lot of that. The only thing to factor in is that Ashley had no choice but to pay off the debt. There's another thread on here about the club finances but the gist is that the annual report has now been published showing that the club was in a dreadful financial state when Ashley took over. Plus the club had £45 million loan notes that were repayable in instalments up to 2016. The loan notes contained a clause that said that on a change of ownership of the club the lender had the option to call in the full amount of the loan notes within 60 days. So Ashley got stuck with that - whether he knew it was coming or not is anybody's guess. According to the annual report after he bought the club he put a total of £75 million to refinance the club. In the circumstances the financial caution in the transfer market was understandable. There is little doubt that some of Sam's targets were missed because of it though and at the end of the day the result was that less than £10 million was invested in a lower mid table squad and thats just not enough in the current climate.

I agree with most of that except for where we would be with Allerdyce, I don't think we would have a single point more. In some ways I wish he was still here, just so he could get the stick he deserves and suffer the s**** we're having to suffer, instead of sitting at home with all those £millions. Well I don't think we'd have been humped like we have recently under Allardyce but who's to know. Would we have been better off spending £6 million on sacking Allardyce or keeping him on and spending that money on Lassana Diarra?

I'm not sure we could repeat our early results now under Keegan, I also don't think we could repeat them now if Allardyce was still here. The only result which I think might have been different under him would have been Stoke at home in the FA Cup, I doubt we'd have scored so many goals. As for the spending, I think £12 million of what was spent could have been spent on better than Smith and Barton. Of course Barton has been an utter disaster and Smith was no replacement for Dyer. But my point was that I don't think we would have risked relegation under Allardyce although it might have been ugly. Sacking rather than backing a manager in early January, when we weren't totally safe, was high risk especially when the (second choice) replacement hasn't managed a club for 3 years. If Sam wasn't Ashley's man then 12th May 2008 was the date for saying goodbye.

Do you mean like the team who has given Derby almost 50% of the 9 points they've won to date. Do you think we could beat Spurs, Everton or even West Ham at home right now? Or draw with Arsenal or Aston Villa at home? Or beat Bolton away when they had both Anelka and Diouf playing? Spending less than £10 million on a squad that came 13th last season and expecting too much is why we are where we are right now. they didn't play Diouf till like 60-70 minutes. When they started to dominate. Not sure whether Anelka was playing, think he was on bench too. Diouf played second half, Anelka played 90 minutes and scored.

Do you mean like the team who has given Derby almost 50% of the 9 points they've won to date. Do you think we could beat Spurs, Everton or even West Ham at home right now? Or draw with Arsenal or Aston Villa at home? Or beat Bolton away when they had both Anelka and Diouf playing? Spending less than £10 million on a squad that came 13th last season and expecting too much is why we are where we are right now.

Thought this one might have been put to bed by now. Could never disagree with anyone who says cash is king. And yes businesses go bust because they run out of cash not because they make losses. But all losses have to be funded eventually. Slugsy is right about Chelsea being insolvent technically. The last balance sheet I saw showed net liabilities of about £250 million. There is a difference between us (pre Ashley) and Chelsea though. And that is that the main lender of funds to Chelsea is the owner of the club. He has about £500 million of loan sitting in their balance sheet with no precise finance terms. Pre Ashley our debt was externally sourced and had very precise payment terms and also was incurring interest charges. I didn't know Barclays were going to re finance us. I had assumed that the aborted refinance project that cost £2.9 million was aimed at finding some new source of finance as the existing funders weren't going to play. I have absolutely no proof of that by the way. I doubt the club would have gone bust too. I'm sure someone would have stepped in. But I was surprised to see the state of the balance sheet - no one could call that annual report healthy. And I could believe Ashley got a shock as well.

Yes true enough - it doesn't reflect a possible upward valuation. You'd only get that coming through in your results if you did sell the player. But the practice does reflect the actual cash cost of the player. You can't write players values up. Taylor and Zoggy's values in our books are nothing and next to nothing respectively for example. You can buy a player for £10 million and he turns out to be a crock of shyte. At the end of 1 year he's shown as being worth £7.5 million yet in reality his value to the club is nowt much. You can do an impairment write down on him if you want and write his value down quicker than the normal process. isn't there another way to work out the amortisation aswell instead of just dividing it equally between the years of the contracts duration. Maybe. The contract years method is the only one I've ever heard of though.

Yes true enough - it doesn't reflect a possible upward valuation. You'd only get that coming through in your results if you did sell the player. But the practice does reflect the actual cash cost of the player. You can't write players values up. Taylor and Zoggy's values in our books are nothing and next to nothing respectively for example. You can buy a player for £10 million and he turns out to be a crock of shyte. At the end of 1 year he's shown as being worth £7.5 million yet in reality his value to the club is nowt much. You can do an impairment write down on him if you want and write his value down quicker than the normal process.

Unfortunately I am at work so can't give this fascinating discussion my full undivided attention. Life's a bitch sometimes. And what's wrong with a 20 minute turnround anyway? I think the answer to your question is we show a loss of £2.5 million for 4 years rather than a loss of £10 million for 1 year. Bored shitless to be honest.

So for the following four years we make a loss then? (all things being equal) Not sure where this is going to be honest. But lets try a simple example: We buy a player for £10 million on a 4 year contract. The £10 million for the player disappears from the club's cash resources immediately so represents a negative cash flow in one hit. In determining whether you make a profit or a loss for the year accounting practice doesn't allow you to write the whole £10 million off in your accounts in one hit - it requires you to spread the £10 million over, in this case, 4 years at £2.5 million per year. The £2.5 million is called amortisation in the accounts. So the charge of £2.5 million is a real cost as it relates to the £10 million that was spent in year 1. At the end of 4 years the whole cost of £10 million has been charged in the club's accounts and if the club is making losses it is incorrect to say that the annual amortisation charges of £2.5 million shouldn't count. To do so is effectively to say that the player was never bought.

The revenues from the hypothetical CL campaign are shown as revenue in the year in which they are recived. The full costs of buying the players aren't. Those costs are spread over say 4 years. We have already paid for the depreciation when we bought the player. But over time you can't use accounting policies to hide a period of heavy trading losses.

And how did the club acquire a squad worth £50 million? With monopoly money?

The Luque thing was a one off. But the amortisation of players and the finance costs are charges that occur every year and just about every football club has them though. Accumulated losses of £93 million at 30/06/07. Not healthy. Amortisation is just a way of valuing your assets and is not a real cost though. We all know that spending 16m on Owen doesnt mean we still have a 16m asset. Noone comes along and takes that depreciated value off us. I thought you said you had qualified? Of course its a cost. If you don't amortise the costs of purchasing, for example, Michael Owen then you would take the hit of £16 million in your profit and loss account in one go. All amortisation does is spread that cost .i.e. £4 million over 4 years. So you think we didn't shell out that money on Owen then? Its not a fictional cost ffs. It doesnt affect the cash flow is what i meant, you seemed to inisinuate we were paying money. Its just deprecation in the value of assets, nothing more. The cash on the players has gone, its spent. The amortisation through the profit and loss allows the club to spread that cash spend over the years of the players' contracts. Its a very real cost, relates to real money and you can't just brush it off. It really does not relate to something mythical that never happened. And by the way I have no agenda. I was curious about what happened and had a look. I read all the stuff about Ashley paying off the debt and the club being in a worse state than he'd thought etc and thought that Mort might be portraying it as being more heroic than it actually was. Not especially you but if anyone can look at the clubs balance sheet as at 30/06/07 and think that its ok lets hear why. Accumulated trading losses of £92 million And net liabilities of £16 million No agenda and yet you've put words in my mouth twice now. 'Fictional cost', never said that 'something mythical that never happened', never said that either. The key issue is that revenues and costs were balanced, the club makes a loss due to the acccounting practice but that loss doesnt mean the club is anymore in debt. It may increase its debt position elsewhere (for other reasons) but the 'recorded losses' dont mean that our real costs are greater than our revenues hence pushing the club towards bankruptcy. Its not like we had spent all 87m and then had to borrow money to pay the amortisation costs is it? They just get written down in the accounts and affect the tax position (in this case in a positive way). You can run a business like that forever as long as all operating costs are met. I had assumed that when you said that amortisation was not a real cost (just checked and you did say that) that you were implying that it was in some way "fictional" or "mythical". Both of those words, I believe, mean not real. As I said - the club had accumulated trading losses of £92 million at 30/06/07. There is no accounting practice that the club adopts that has contributed to that being anything other than not very good. All losses have to be funded with real money eventually. The club was in a mess in my opinion.

You need to be a qualified accountant to earn that sort of money for a bit of aborted advice Transfer fees go into the prfit or loss on disposal of players registrations - in our case that showed a loss of £2 million for the year. I should think that Boumsong may have contributed to that.

The Luque thing was a one off. But the amortisation of players and the finance costs are charges that occur every year and just about every football club has them though. Accumulated losses of £93 million at 30/06/07. Not healthy. Amortisation is just a way of valuing your assets and is not a real cost though. We all know that spending 16m on Owen doesnt mean we still have a 16m asset. Noone comes along and takes that depreciated value off us. I thought you said you had qualified? Of course its a cost. If you don't amortise the costs of purchasing, for example, Michael Owen then you would take the hit of £16 million in your profit and loss account in one go. All amortisation does is spread that cost .i.e. £4 million over 4 years. So you think we didn't shell out that money on Owen then? Its not a fictional cost ffs. It doesnt affect the cash flow is what i meant, you seemed to inisinuate we were paying money. Its just deprecation in the value of assets, nothing more. The cash on the players has gone, its spent. The amortisation through the profit and loss allows the club to spread that cash spend over the years of the players' contracts. Its a very real cost, relates to real money and you can't just brush it off. It really does not relate to something mythical that never happened. And by the way I have no agenda. I was curious about what happened and had a look. I read all the stuff about Ashley paying off the debt and the club being in a worse state than he'd thought etc and thought that Mort might be portraying it as being more heroic than it actually was. Not especially you but if anyone can look at the clubs balance sheet as at 30/06/07 and think that its ok lets hear why. Accumulated trading losses of £92 million And net liabilities of £16 million

The Luque thing was a one off. But the amortisation of players and the finance costs are charges that occur every year and just about every football club has them though. Accumulated losses of £93 million at 30/06/07. Not healthy. Amortisation is just a way of valuing your assets and is not a real cost though. We all know that spending 16m on Owen doesnt mean we still have a 16m asset. Noone comes along and takes that depreciated value off us. I thought you said you had qualified? Of course its a cost. If you don't amortise the costs of purchasing, for example, Michael Owen then you would take the hit of £16 million in your profit and loss account in one go. All amortisation does is spread that cost .i.e. £4 million over 4 years. So you think we didn't shell out that money on Owen then? Its not a fictional cost ffs.

The Luque thing was a one off. But the amortisation of players and the finance costs are charges that occur every year and just about every football club has them though. Accumulated trading losses of £93 million at 30/06/07. Not healthy.

Link / source plus explanation of the 33m loss in one year if net transfers were less than that. The rest of the business tends to run itself so am a bit surprised that the club could accumulate 33m in one year. Also how can net liabilities only be 16m when the debt was 75, again makes no sense. Are you a qualified accountant? I can't link it - go on to the companies house website and for a fee of £1 you can access the financial report of Newcastle United plc (company number 2529667). Look for yourself if you don't believe me. Since you ask - the profit and loss account looks like this: Revenue £87 million Operating expenses £87 million Amortisation of players registrations £16 million Impairment write off of Albert Luque (no joke) £7 million Loss on disposal of players registrations £2 million Finance costs £8 million Loss therefore = £33 million The balance sheet looks like this: Assets £145 million Liabilities £161 million So Net liabilities = £16 million And yes I am a qualified accountant. Why else would I bother to look at this stuff.

If anyone is interested the accounts for Newcastle United for the year ending 30th June 2007 have now been filed at Companies House. A horror story to be honest: - The club lost £33 million in the year. - The balance sheet shows a position that is technically insolvent (ie net liabilities) to the tune of about £16 million. - The change of ownership in July triggered a clause in the loan note agreement. This allowed the lenders to demand repayment of £45 million within 60 days instead of it being paid by instalments up to 2016. - After the takeover Ashley stuck in £75 million to pay off the loan notes and also to get the club's overdraft back within the agreed limits. Ashley had to give assurances that he would support the club financially. These assurances plus the £75 million cash injection means the club isn't insolvent and the auditors could give a clean report. - The directors now are Mort and S.J. Hayward and J.D.W.Barnes. No idea who those last two are. - The club received a total of £6.7 million from insurers and from the FA in respect of Michael Owen's injury. - The club spent £2.9 million on professional advice on a refinancing project. This was aborted when Ashley took over. - Douglas Hall got a payoff compensation for losing his job of nearly £1.2 million. Freddy Shepherd got nothing. I don't think Ashley did much due diligence so he probably got a bit of a shock when he found out the true state of things.

A lot of that is just the usual corporate patter that Mort trots out every so often to support whoever happens to need it at the time. The bit about someone spreading false rumours to disrupt the club is more entertaining though.

Giggs will be 35 years old next season and Scholes will be 34. Ferguson won't be letting Nani go anywhere.

Is it Keegan doing this? Or does some of this backroom stuff come under Dennis Wise? Or are they just going because they want out?

Other than Zoggy, maybe, we have no one who has the pace to stretch the other side's defence in the way Dyer could. Martins has the pace but, without wanting to get into another "is Martins crap" debate, he doesn't always use it effectively.

True enough but it wasn't only him. For example Dyer's return to fitness and form was also a major contribution to us staying up and Nicky Butt had a good season. Last season is history but Martins has been poor often this season, he got plenty of games playing in his preferred position but his poor positional sense and lack of touch was making it difficult for the team to play to him. One of KK's biggest challenges will be getting Oba to work in this team.