quayside

Who? Villa? No West Ham who;ve just found £7.5m for 19 year old Brescia striker Savio Nsereko. Surely West Ham are in worse financial straits than NUFC, and if £7.5m is the going rate for promising young talent Dennis must be shopping at Netto? Bellamy's replacement making the club about £6m in the process I imagine. And were about to sell Given for £10m and havent reinvested the Milner money. West Ham have broken their transfer record to land this kid. It us like us spending £20m. We had a net spend of £5,000 in the summer window so I think we did reinvest the Milner money. If we get £10 million for Given I'd be surprised if we don't invest it in the squad. We aren't showing a lot of ambition here but I believe there is a pattern emerging.

I agree with most of the stuff you are saying I think people it is time to be United once again we have to back Ashley and his long term strategy. He bought back Keegan in a ways by thinking he would be great for us. HE WAS GREAT to some time but for what ever reason it didn't work out why are we so harsh on a person who spends 230 mil on us? It is really insane we think we are against Ashley but indirectly we are against Newcastle United. We have to stop this tit for tat know and move on. Time to be positive for Ashley Whatever anyone may think about Ashley there is no doubt that work has gone in securing young players for the future. But none of us will know if this strategy has worked for a while yet. And in the mean time you look at the state of our first team squad and the fact that we have a management structure that is shall we say "unappealing" to a proven manager and you simply think wtf (well I do). Arsenal have built from the bottom but they have always made sure that their first team squad is competitive. This area is being neglected by Ashley and you really can't discount the potential for it all to go seriously wrong.

The Times is quoting figures from the parent company St James Holdings btw, which was formed in May 2007. So the accounts cover 13 months hence there are some differences in stuff reported on this thread, which are purely from the club accounts (which cover a 12 month period). Same basis though...

I'm in the same boat as you when it comes to finances and accountancy, having read this thread i'd taken it that if a player is 'bought' then he's included on the accounts as being worth that amount, but like a car depreciates over time, the players asset value would decrease by the transfer fee/years of contract. If bought for £10m on a 4 year contract he would be counted on the books as. 1st year - asset worth £10m 2nd year - asset worth £7.5m 3rd year - asset worth £5m 4th year - asset worth £2.5m The way i'd read this thread means that in theory if he signed another contract then he'd still be counted in accounts as being worth £0m. Presume this applies to free transfers and anyone we've brought through in the ranks. I'm prepared to have this all wrong though. You have got it right. Hence the desired "business model" for someone owning a football club is the though the ranks route and pretty much what Wenger has done, and what Ashley is trying to do. But do we have a Wenger in our current management structure?

Gottlob - I read both secanarios and neither is wrong. You can't write up the value of a player (you get the accounting credit for a good signing only when he's sold) but there are situations where the club can take a view on the value of a player and accelerate the write down process. It rarely happens but we did it with Luque. Generally when it comes to this sort of stuff accounting rules require you to take a "prudent" or "conservatve" approach. Discretion and judgement can still play a part - but only downwards .

He funded a net spend of £5,000 in the transfer window after June 30th.

He's paid the debt off. as a loan As opposed to doing what? Genuine question. as opposed to 'putting his hand in his pocket to pay off the debt' something for which most on here praised him. for over a year. probably repeated a thousand times over. people thought that, dont try and reinvent the past to make it look like everyone thought it was a loan from the start. im not criticising Ashley for it but at the same time im not going to praise him as, thus far, we've not had the knock-on effect of the money freed up being used to make us better. So how would you account for it in the accounts? Putting his hand in his pocket is exactly what he has done. He's taken £100m from his bank & cleared the clubs debt with the loan holders. okay, maybe we should call it 'putting his hand in his pocket on the condition that he gets back at least the amount he took out of his pocket.' people on here seemed to think of it as a donation, not what it actually is. anyway, afk, donating to Oxfam on the condition that they give me all my money back in 4 years. You really don't get it, do you!?! If he "gives" the club the money, the value of the club goes up by that amount. If he "loans" the club the money, the value of the club stays the same and so does the debt. It equates to the same thing. If he sells the club he gets money for it, be that through an increased sale price or through repayment of debt, or are you hoping he'll give it away? The club was about £100m in debt when Ashley bought it, and it was still about £100m in debt at the end of the last full tax year. Hardly reason to ignore the state of the club is in two years after Ashley took over. The club was about £75 million in debt when Ashley took over and was £105 million in debt at the end of his first full year. He funded that additional £30 million. And we have made no progress despite that funding. There are all sorts of reasons but one of them has to be too many ordinary or injury prone players achieving little and earning too much money.

That's what I was getting at earlier, just didn't phrase it that well. So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team? It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still. where do you think that's gone, considering wages only went up £5m and player trading only cost half a mil net? is it a case of one-off costs associated with the takeover or is the club just not being ran all that well? I posted this earlier, it's the best I can do given the time and information at my disposal. It just shows where the cash went under fairly broad headings. Cash flow in basic terms: Operating cash flow - £5 million (ie cash loss on day to day business) Finance servicing costs - £8 million (mostly interest on loans now paid off) Net capital spend - £21 million (net spending on assets, haven't had time to look closer yet!) Loan repayment - £70 million (obvious) Total out = £104 million This was financed by : Ashley £100 million Overdraft £4 million Total £104 million cheers. the £21m looks like the key figure. the debt repayment is switching to a more favourable lender (ashley), £8m no longer applies and as we wont be paying that we shouldnt really be making a loss. wonder what the £21m has been spent on, something to do with 'the system'? The net capital spend is mainly players. We acquired £23 million of new players registrations and spent £3 million on "fixtures and fittings" (ie the clubs facilities such as the ground). This was Alardyce's transfer window and I think we can all remember who came in. As I remember we sold Dyer, Parker and Luque for money and let a few others go for nothing. I think we also bought Babayaro out of his contract. Anyway remembering that all transfer fees are not settled immediately the figure of £21 million in the cash flow above is the net amount that actually went out of the club during the year from all those transactions, and probably includes one or two other transfers (in and out) from previous years.

The full group accounts were filed at Companies House this week. They are now in the public domain. You can access them on the Companies House website - pay £1 and down load them.

I have had a look through that website but am absolutely nothing to do with it. I think whoever it is who runs it does post on here sometimes though.

That's what I was getting at earlier, just didn't phrase it that well. So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team? It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still. Forgive my ignorance quayside. But that figure of 70 million that we owed, was that including the interest? If not, does it not mean that the figure would have been closer to the 100 million by the time the interest was paid? The £70 million excludes interest.

That's what I was getting at earlier, just didn't phrase it that well. So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team? It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still. where do you think that's gone, considering wages only went up £5m and player trading only cost half a mil net? is it a case of one-off costs associated with the takeover or is the club just not being ran all that well? I posted this earlier, it's the best I can do given the time and information at my disposal. It just shows where the cash went under fairly broad headings. Cash flow in basic terms: Operating cash flow - £5 million (ie cash loss on day to day business) Finance servicing costs - £8 million (mostly interest on loans now paid off) Net capital spend - £21 million (net spending on assets, haven't had time to look closer yet!) Loan repayment - £70 million (obvious) Total out = £104 million This was financed by : Ashley £100 million Overdraft £4 million Total £104 million cheers. the £21m looks like the key figure. the debt repayment is switching to a more favourable lender (ashley), £8m no longer applies and as we wont be paying that we shouldnt really be making a loss. wonder what the £21m has been spent on, something to do with 'the system'? Players as well Definitely - we won't see a net spend like the Summer of 2007 for many a year to come

That's what I was getting at earlier, just didn't phrase it that well. So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team? It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still. where do you think that's gone, considering wages only went up £5m and player trading only cost half a mil net? is it a case of one-off costs associated with the takeover or is the club just not being ran all that well? I posted this earlier, it's the best I can do given the time and information at my disposal. It just shows where the cash went under fairly broad headings. Cash flow in basic terms: Operating cash flow - £5 million (ie cash loss on day to day business) Finance servicing costs - £8 million (mostly interest on loans now paid off) Net capital spend - £21 million (net spending on assets, haven't had time to look closer yet!) Loan repayment - £70 million (obvious) Total out = £104 million This was financed by : Ashley £100 million Overdraft £4 million Total £104 million

That's what I was getting at earlier, just didn't phrase it that well. So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team? It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still.

Well, ignoring profit and loss accounts, if you look at the cash he'd committed at the end of June, which is the real deal: He has stuck £70 million in to clear old debt plus an additional £30 million working capital. To some extent you can ignore the clearing of the debt as it transfers from one creditor to another. But if you bear in mind that the clubs overall cash position at the 30th June was broadly speaking neutral - where would we be without that £30m working capital million injection? And you can add in a further £10 million that he has put in since......

Is that the one that was sold for £175,000 by one brother to the other? Think it was sold outright by the club to Bruce Shepherd for the £175,000 you refer to and then the club rented it back for the £343,458 (as per indi) per annum

Kind of - the club is safer imo. The only debt is owed to the owner and not a third party who could call it in and trigger a receivership or something. Of course if the owner goes financially tits up then thats a different matter Cheers. How do these accounts stack up with the suggestion of a short-term 'loan'/spend as suggested by the TOTT letter as a solution to the current crisis? Are we in a position to gamble by investing in the first team or is it totally out of the question? Looking at our balance sheet and an insolvent position of £36 million. And thinking about what has happened in the banking world lately and thinking about how nervous any bank has to be to lend money right now, especially to a football club that isn't guaranteed Premiership football next season. I think you get where I'm heading... Any investment has to come from Ashley imo - or maybe another equity investor if he can find one. I have always had my doubts as to whether Ashley was rich enough to own a Premiership club tbh. I think he stretched himself to buy it and hasn't got the funds to kick it on. Recent carnage in the financial world won't have helped.

Kind of - the club is safer imo. The only debt is owed to the owner and not a third party who could call it in and trigger a receivership or something. Of course if the owner goes financially tits up then thats a different matter

Yes - a profit of £3.5 million is recorded. I'm at home now and haven't got the accounts to hand. I think the loan agreement from Parent to sub in this case does have an interest clause in it (6.5% riings a bell), but Ashley hasn't taken any of it. It could be that if ever the loan gets repaid the interest all gets rolled and paid up in one hit. Also he's got a change of ownership clause in the loan agreement, exactly like the one that shafted him when he bought the club I'll have another look at all this tomorrow if I get time.

Mort was not paid a salary by the club, fees of £1,357,000 were paid to Freshfields for his services. Wise, Vetere etc are included in a lump sum of about £70 million spent on wages I guess. As I said a few posts up that Ashley has taken nothing out by way of salary or dividend - or interest on his loan for that matter.

I'm not sure about the fee bit Colo, I would have thought the way to treat it would be to amortise it over the length of the extension of the new contract. But anyway its a moot point as it highly unlikely to amount to very much money. I remember last year the club put through a hefty impairment cost against Bert Luque's contract, so there was an example of what you describe (and done in hindsight with knowledge of his value!). Can only agree with what you say re cashflow - I did post a fairly simple version of the one from the accounts a few posts back. It just emphasises that the club isn't paying its way and Ashley is funding it, and he's taken nothing out by way of salary or dividend.

Would not any money spent/received on player transfers be included in the operating expenses (whether it be for transfers in the current year or for delayed payments for transfers in previous years) ? No - money spent on players isn't charged against profit in operating expenses in the year it is incurred. That money physically (okay, electronically) moves from one place to another in a particular year though doesn't it. Surely it must be accounted for somehow in that financial year? It gets shown as an asset in the balance sheet. It is then, as discussed, amortised through the annual results over the life of the contract. Eg If a player cost £10 million we record a £10 million asset in our balance sheet. Say its a 4 year contract so £2.5 million gets written off every year against the overall profit/loss for the year. If he's sold in year 4 his value has been written down to £2.5 million by then, if we get £8.5 million the profit is recorded as £6 million in the result for the year. FWIW Given will be on the books at zero so if he's sold its all profit. I (believe I) understand how the player valuation as an intangible asset on the books works via amortisation, but how you describe it the accounts would look the same whether we paid all the money up front for a player or if we paid the money in stages over a number of years. Is there no difference to the accounts in the two significantly different scenarios? Yes a bit. You still show the player as an asset at full value on day 1, but the amount unpaid for him is shown as a liability of the company (creditor). So £10 million player, 4 year contract, payment terms £5 million up front and £2.5 over each of next two years. £10 million goes in as an asset, £5 million disappears from cash, and £5 million goes into creditors. The £10 million still gets amortised in exactly the same way as if the whole £10 million had been paid up front.

Would not any money spent/received on player transfers be included in the operating expenses (whether it be for transfers in the current year or for delayed payments for transfers in previous years) ? No - money spent on players isn't charged against profit in operating expenses in the year it is incurred. That money physically (okay, electronically) moves from one place to another in a particular year though doesn't it. Surely it must be accounted for somehow in that financial year? It gets shown as an asset in the balance sheet. It is then, as discussed, amortised through the annual results over the life of the contract. Eg If a player cost £10 million we record a £10 million asset in our balance sheet. Say its a 4 year contract so £2.5 million gets written off every year against the overall profit/loss for the year. If he's sold in year 4 his value has been written down to £2.5 million by then, if we get £8.5 million the profit is recorded as £6 million in the result for the year. FWIW Given will be on the books at zero so if he's sold its all profit. What happens if a contract is extended? I assume Owen will have gone from £16m to £4m, if he signed tomorrow (I know....) for another three years how would that affect things? Depends if a fee is paid to him or his agent for signing the extension. Otherwise he is still in the books at zero cost after the initial four years is up.

I guess that means the 3 years of season tickets are not included in these accounts then? No - season tickets income reflects that year only. Anything in advance is held as a provision in the balance sheet (buried somehere in creditors) and released as revenue in the relevant year.