Ashley pays off further £45m of debt, Mort says club could well have folded

[ChezGiven]

What do you mean the club was worth £7m in January? It therefore went up in value by £126m in 5 months.

 

What about the £30m increase in Sky revenues? That increased income stream would allow more flexible finance in itself.

[UV]

Bit worrying that Ashley is such a poor businessman that he paid £134m for a company in such dire financial straits. If he'd just waited a couple of months he'd have been able to pick it up for nowt from the receiver. 

[Mick]

Bit worrying that Ashley is such a poor businessman that he paid £134m for a company in such dire financial straits. If he'd just waited a couple of months he'd have been able to pick it up for nowt from the receiver. 

 

 

The worrying thing is that most people debated the debt on here at the time the accounts were published yet they couldn't find out what we already knew.  I would guess the accounts were debated to death on most forums and they were headlines in the press.

[macbeth]

What do you mean the club was worth £7m in January? It therefore went up in value by £126m in 5 months.

 

I said

The club worth dropped from £56m in 1998 to £7m in January 2007

. This is the net assets of the club. So if they added up all the assets, like ground, players, company cars, etc and then took off the amount they still owed for buying those assets, they would have been left with £7m last January.

 

When they did that sum in 1998 they would have got £56m. The value in May was probably less than 0. If you have no assets to borrow against you are in trouble.

 

What about the £30m increase in Sky revenues? That increased income stream would allow more flexible finance in itself.

 

Yes but banks don't generally (!!)  want to lend more money to a business losing money hand over fist the way NUFC were running. The £30m increase would be if we won the Premiership, the likely figure is ~£20m. This is also mostly made up of prize money to be paid at the season end. The losses were likely to be roughly £20m for the year the extra money woudl just mean no losses, but only if there was no money borrowed/spent.

 

That Ashley, or anyone wanted to pay out the amount they did was just madness. That we were so close to going bust was also madness. Our chairmen do have something in common 

[ChezGiven]

What do you mean the club was worth £7m in January? It therefore went up in value by £126m in 5 months.

 

I said

The club worth dropped from £56m in 1998 to £7m in January 2007

. This is the net assets of the club. So if they added up all the assets, like ground, players, company cars, etc and then took off the amount they still owed for buying those assets, they would have been left with £7m last January.

 

When they did that sum in 1998 they would have got £56m. The value in May was probably less than 0. If you have no assets to borrow against you are in trouble.

 

What about the £30m increase in Sky revenues? That increased income stream would allow more flexible finance in itself.

 

Yes but banks don't generally (!!)  want to lend more money to a business losing money hand over fist the way NUFC were running. The £30m increase would be if we won the Premiership, the likely figure is ~£20m. This is also mostly made up of prize money to be paid at the season end. The losses were likely to be roughly £20m for the year the extra money woudl just mean no losses, but only if there was no money borrowed/spent.

 

That Ashley, or anyone wanted to pay out the amount they did was just madness. That we were so close to going bust was also madness. Our chairmen do have something in common 

 

Fine but by saying 'the company was worth £7m' it sounds like you mean that the value of the club was £7m, which it clearly wasnt. I'm also far more interested in 'value' as defined by the market than 'worth', as defined by macbeth.

 

[macbeth]

What do you mean the club was worth £7m in January? It therefore went up in value by £126m in 5 months.

 

I said

The club worth dropped from £56m in 1998 to £7m in January 2007

. This is the net assets of the club. So if they added up all the assets, like ground, players, company cars, etc and then took off the amount they still owed for buying those assets, they would have been left with £7m last January.

 

When they did that sum in 1998 they would have got £56m. The value in May was probably less than 0. If you have no assets to borrow against you are in trouble.

 

What about the £30m increase in Sky revenues? That increased income stream would allow more flexible finance in itself.

 

Yes but banks don't generally (!!)  want to lend more money to a business losing money hand over fist the way NUFC were running. The £30m increase would be if we won the Premiership, the likely figure is ~£20m. This is also mostly made up of prize money to be paid at the season end. The losses were likely to be roughly £20m for the year the extra money woudl just mean no losses, but only if there was no money borrowed/spent.

 

That Ashley, or anyone wanted to pay out the amount they did was just madness. That we were so close to going bust was also madness. Our chairmen do have something in common 

 

Fine but by saying 'the company was worth £7m' it sounds like you mean that the value of the club was £7m, which it clearly wasnt. I'm also far more interested in 'value' as defined by the market than 'worth', as defined by macbeth.

 

 

the figure I quoted was what the club put in their accoutns as the "net assets". I didn't make the number up, the club did.

 

I'm comfrtoable with your market definition. If no one had ceom in to buy the club, whcih was the case up to Ashley did that make the club worthless ?

 

I alwas disliked your definition. It made the club hang on to say Titus or Carl Cort too long cos they saw them as being "worth" £6m (or whatever it was) that they had paid. That no on else was interetsed didn't seem to register. If Ashley decided tomorrow to sell up and no was prepared to pay more than £50m would that be the true worth? Just doesn't make sense. There must be some absolute value on what the club is worth. Somewhere

[NE5]

Chez Given shooting holes in the agenda driven all on his own  mackems.gif

 

I see even Mandiarse had something to say, no mention of Stephen Spence though.  mackems.gif

 

Also interesting is the observation that the top 4 all have debts which haven't stopped them winning trophies, and signing top players. Also is the lack of comments from those who say they supported the club pre-1992 that the regime before the Halls and Shepherd actually really did come within a hairs breadth of bankruptcy.

 

Dare we mention who saved it ?

 

Somebody said that it always pays to pay off debts. Precisely. He's added to the saleable value of the club, whether he elects to stay or not. And personally, I would like him to stay, we may get a shite board taking over like those Hedge Funds, or one like those who have been running the vast majority of other big city clubs over the past 15 years that, unlike us, don't back their managers.

 

 

[ChezGiven]

What do you mean the club was worth £7m in January? It therefore went up in value by £126m in 5 months.

 

I said

The club worth dropped from £56m in 1998 to £7m in January 2007

. This is the net assets of the club. So if they added up all the assets, like ground, players, company cars, etc and then took off the amount they still owed for buying those assets, they would have been left with £7m last January.

 

When they did that sum in 1998 they would have got £56m. The value in May was probably less than 0. If you have no assets to borrow against you are in trouble.

 

What about the £30m increase in Sky revenues? That increased income stream would allow more flexible finance in itself.

 

Yes but banks don't generally (!!)  want to lend more money to a business losing money hand over fist the way NUFC were running. The £30m increase would be if we won the Premiership, the likely figure is ~£20m. This is also mostly made up of prize money to be paid at the season end. The losses were likely to be roughly £20m for the year the extra money woudl just mean no losses, but only if there was no money borrowed/spent.

 

That Ashley, or anyone wanted to pay out the amount they did was just madness. That we were so close to going bust was also madness. Our chairmen do have something in common 

 

Fine but by saying 'the company was worth £7m' it sounds like you mean that the value of the club was £7m, which it clearly wasnt. I'm also far more interested in 'value' as defined by the market than 'worth', as defined by macbeth.

 

 

the figure I quoted was what the club put in their accoutns as the "net assets". I didn't make the number up, the club did.

 

I'm comfrtoable with your market definition. If no one had ceom in to buy the club, whcih was the case up to Ashley did that make the club worthless ?

 

I alwas disliked your definition. It made the club hang on to say Titus or Carl Cort too long cos they saw them as being "worth" £6m (or whatever it was) that they had paid. That no on else was interetsed didn't seem to register. If Ashley decided tomorrow to sell up and no was prepared to pay more than £50m would that be the true worth? Just doesn't make sense. There must be some absolute value on what the club is worth. Somewhere

 

Titus and Carl were worth what the market was prepared to pay for them in exactly the same way the club was / is. I wont have the irrefutable economic law of value shoved back in my face like this 

 

Its why we have supply and demand curves to help us through these perplexing times, information matches willingness to pay and willingness to sell. If the market price is £50m and it should be £200m, there is a market failure because the information that makes some believe it is worth £200m isnt getting through to the buyers. If that information is available, more buyers enter the market and the price goes up.

 

You dont just borrow against your assets and your assets have very little to do with value. To see this conundrum look at the market value of google in the last few years. Low profits and assets that arent that valuable (well the database is now incredibly valuable but thats tied to its current market position). Yet the market value of google was enormous and people were throwing money at them. Sometimes its referred to FGV i think (?), its a bet on the company based on estimated rates of growth in the future. Whether we are at the apex of the football market, as per the Celtic chairman, i'd like to wait and see. Broadband HDTV ppv at £15 per game looks like a nice earner for a club with an expanding fan base.

 

I believe we have the right man in charge now to guide us through these coming changes but i dont believe for one second that we were a 'house of cards' before he came in.

[Mick]

Chez Given shooting holes in the agenda driven all on his own  mackems.gif

 

I see even Mandiarse had something to say, no mention of Stephen Spence though.  mackems.gif

 

Also interesting is the observation that the top 4 all have debts which haven't stopped them winning trophies, and signing top players. Also is the lack of comments from those who say they supported the club pre-1992 that the regime before the Halls and Shepherd actually really did come within a hairs breadth of bankruptcy.

 

Dare we mention who saved it ?

 

Somebody said that it always pays to pay off debts. Precisely. He's added to the saleable value of the club, whether he elects to stay or not. And personally, I would like him to stay, we may get a s**** board taking over like those Hedge Funds, or one like those who have been running the vast majority of other big city clubs over the past 15 years that, unlike us, don't back their managers.

 

 

 

I can't talk for anybody else but I was waiting for you to deliver some highly original post that hadn't been discussed before, you haven't disappointed.

[Mick]

 

Titus and Carl were worth what the market was prepared to pay for them in exactly the same way the club was / is. I wont have the irrefutable economic law of value shoved back in my face like this 

 

Its why we have supply and demand curves to help us through these perplexing times, information matches willingness to pay and willingness to sell. If the market price is £50m and it should be £200m, there is a market failure because the information that makes some believe it is worth £200m isnt getting through to the buyers. If that information is available, more buyers enter the market and the price goes up.

 

You dont just borrow against your assets and your assets have very little to do with value. To see this conundrum look at the market value of google in the last few years. Low profits and assets that arent that valuable (well the database is now incredibly valuable but thats tied to its current market position). Yet the market value of google was enormous and people were throwing money at them. Sometimes its referred to FGV i think (?), its a bet on the company based on estimated rates of growth in the future. Whether we are at the apex of the football market, as per the Celtic chairman, i'd like to wait and see. Broadband HDTV ppv at £15 per game looks like a nice earner for a club with an expanding fan base.

 

I believe we have the right man in charge now to guide us through these coming changes but i dont believe for one second that we were a 'house of cards' before he came in.

 

Regarding the house of cards, Ashley & Mort have never run a football club before but they know all about how to run a business and finance one, especially Mort.

 

I would think Mort is well aware of what sort of financial mess would lead to the kind of situation that could cause a business to fail, he hasn't been one to cause the previous owners and kind of embarrassment and always seems to pick his words with great care.  I'll take his word until he proves he's not to be trusted, so far I've seen nothing to doubt anything that he's said, he doesn't come across as being a Hall or Shepherd basher no matter what he thinks of them, what he thinks of them has remained private.

[ohmelads]

Bit worrying that Ashley is such a poor businessman that he paid £134m for a company in such dire financial straits. If he'd just waited a couple of months he'd have been able to pick it up for nowt from the receiver. 

 

[macbeth]

I understand the belief that football clubs are somehow different, even if I don't completley buy into it.

 

What I cannot get my head around is how any can suggest things were okay as the business merrily lost £62m in 9 years, had a £20m overdraft on top of the stadium "mortgage", and was losing money at a rate of £1.5m per month, with its main outgoing, player wages increasing at 14% every year over th last 8 years, and all the current player being on extra long contracts.

 

There was not a single positive in the last set of accounts from the club.

 

 

[quayside]

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.

[lovejoy]

what the fuck had they been doing

[womblemaster]

J.D.W.Barnes

 

john dwight wilhelm barnes 

 

Obvious really!

[Chris_R]

"horror story" doesn't even come close by the sounds of things.

 

Fat Fred wants to be ashamed of himself. Seems like he was doing a bit of a Robert Maxwell really, and papering over the cracks as much as he could and sticking his head in the sand even though he knew that eventually it would all catch up with him.

 

Pity he didn't own a yacht.

[La Parka]

:frantic:

 

:angry:

 

Not good...

[9]

So its fair to say...things could have been alot worse this season had MA and his bank account not walked through the door.

[NG32]

Phew!

[bulivye]

So its fair to say...things could have been alot worse this season had MA and his bank account not walked through the door.

 

mr. ashley:

 

[9]

So its fair to say...things could have been alot worse this season had MA and his bank account not walked through the door.

 

mr. ashley:

 

 

Its hard to appreciate what hes done with us struggling so badly on the pitch but at least we have a secure future whatever happens over the next 12 games.

[ChezGiven]

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.

 

 

 

 

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? 

[Dave]

The club received a total of £6.7 million from insurers and from the FA in respect of Michael Owen's injury.

 

Fucking hell.

[bulivye]

So its fair to say...things could have been alot worse this season had MA and his bank account not walked through the door.

 

mr. ashley:

 

 

Its hard to appreciate what hes done with us struggling so badly on the pitch but at least we have a secure future whatever happens over the next 12 games.

 

i agree & am grateful. 

[quayside]

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.

 

 

 

 

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.