Save Newcastle United

[AyeDubbleYoo]

But if loan repayments only came out of revenue, then the debt would increase indefinitely wouldn't it? Because the club was spending more than it was bringing in, hence the need for finance in the first place.

 

At some point someone would need to raise additional money to start clearing some debt, or pay it off out of their own pocket (i.e. as Ashley did).

 

Especially risky if income forecasts are based on regular European football etc, as ours probably were.

[Mick]

Some bloke called Peter Lee has just been on Century claiming that he's trying to raise £300 million from the fans to buy the club.

[Guest optimistic nit]

it would be quite funny if they mananged to raise all that money and then got outbid by an arab consortium who took control of the club

[Teasy]

More like misleading really.  Who knows, you might be right he might have meant money from his own personal bank account, so there should have been spare revenue from the last two seasons plus £40 million from Ashley available for transfers this summer, anyone believe that?

 

 

the club was making a loss, and how do you know money wasn't available? but just not spent? also there is no reason to think it was going to be spent on transfers, and last season i think he invested a bit more than £20million.

 

The club was making a loss when Freddy was spending massive transfer fee's on the likes of Owen.  We would not be making a loss now with such a small amount of money being spend on transfers, we'll be making profit, especially with the extra TV money.  I'm sure money was available, I've always been one of the people who's said that just because money isn't spent it doesn't mean its not available.  But I don't believe for a second that amount of money was available.

 

Last season we spent something like £8 million on transfers by the way.  This season around £4 million.

[Guest gggg]

I'd love to know how the club is making a loss of £20m a year when our revenue is £95-110m our wages are £50-60m and the vast majority of the debt has been paid off, oh and our net spend is £0m. Somebody put a plaster on the hole or we'll sink.

 

 

 

[Teasy]

But if loan repayments only came out of revenue, then the debt would increase indefinitely wouldn't it? Because the club was spending more than it was bringing in, hence the need for finance in the first place.

 

At some point someone would need to raise additional money to start clearing some debt, or pay it off out of their own pocket (i.e. as Ashley did).

 

Especially risky if income forecasts are based on regular European football etc, as ours probably were.

 

Revenue doesn't stay static, for instance our revenue will have increased quite a lot recently with the extra TV money.  Also any board, not just the likes of Shepherd or Ashley, can go out and do things to bring extra money in, which then increased revenue.

 

We were spending more then we were bringing in because we were spending quite a lot on transfers, our revenue covered our wages, operating costs, repayments on loans with money left over.

[AyeDubbleYoo]

But if loan repayments only came out of revenue, then the debt would increase indefinitely wouldn't it? Because the club was spending more than it was bringing in, hence the need for finance in the first place.

 

At some point someone would need to raise additional money to start clearing some debt, or pay it off out of their own pocket (i.e. as Ashley did).

 

Especially risky if income forecasts are based on regular European football etc, as ours probably were.

 

Revenue doesn't stay static, for instance our revenue will have increased quite a lot recently with the extra TV money.  Also any board, not just the likes of Shepherd or Ashley, can go out and do things to bring extra money in, which then increased revenue.

 

We were spending more then we were bringing in because we were spending quite a lot on transfers, our revenue covered our wages, operating costs, repayments on loans with money left over.

 

I agree about the transfers, which is why I think more sensible spending was a very good idea.

 

I know we have more TV money, but at the same time we've missed out on Europe regularly now, where before we were in Champs League/UEFA every year. That must have an impact, not only on prize money also on worldwide exposure and thus merchandise revenue and things.

 

I'm sure if it was as easy as just going out and increasing revenue, then everyone would have done it. I don't think it is though, especially in the current economic climate.

[Guest Stephen927]

Hold on what are you attempting to save the club from?

[Guest Alan Shearer 9]

cockneys/foreigners

[Guest optimistic nit]

More like misleading really.  Who knows, you might be right he might have meant money from his own personal bank account, so there should have been spare revenue from the last two seasons plus £40 million from Ashley available for transfers this summer, anyone believe that?

 

 

the club was making a loss, and how do you know money wasn't available? but just not spent? also there is no reason to think it was going to be spent on transfers, and last season i think he invested a bit more than £20million.

 

The club was making a loss when Freddy was spending massive transfer fee's on the likes of Owen.  We would not be making a loss now with such a small amount of money being spend on transfers, we'll be making profit, especially with the extra TV money.  I'm sure money was available, I've always been one of the people who's said that just because money isn't spent it doesn't mean its not available.  But I don't believe for a second that amount of money was available.

 

Last season we spent something like £8 million on transfers by the way.  This season around £4 million.

 

Freddy shepheard has admitted we're still paying for owen and "1 or 2 others" so you have no point.

[Guest optimistic nit]

Hold on what are you attempting to save the club from?

 

capitalism. we're fighting the west (well now the east as well) HTT is the new che guevara.

[Teasy]

I agree about the transfers, which is why I think more sensible spending was a very good idea.

 

I know we have more TV money, but at the same time we've missed out on Europe regularly now, where before we were in Champs League/UEFA every year. That must have an impact, not only on prize money also on worldwide exposure and thus merchandise revenue and things.

 

I'm sure if it was as easy as just going out and increasing revenue, then everyone would have done it. I don't think it is though, especially in the current economic climate.

 

We didn't have Champions League Football for the season our last revenue data comes from, which is what I'm basing this off, our revenue was £88 million.  The season before when we had no European Football at all it was £84 million so yes we can say that no Uefa cup Football loses us a few million but not anything significant.  Add the extra TV money and we should still be well over £100 million at the moment.

 

I'm not saying its easy to dramatically increase revenue, I'm saying that there's no reason to believe a fans consortium run properly should have any more trouble doing it then any of the owners we've had in the past.  I'm also saying that at the end of the day everything is paid for from the club, none of the owners before have made charitable donations so I see no reason why a fans consortium should be at any disadvantage financially.

 

Note I'm not arguing that I think this consortium would work, it'll probably never happen and if it did it would have to be organised extremely well and have the right people behind it, even then you have fans in control to a degree and that could be a disaster.  Who knows, I'm only talking about financial stuff

[TRon]

Hold on what are you attempting to save the club from?

 

capitalism. we're fighting the west (well now the east as well) HTT is the new che guevara.

 

No doubt Citizen Owen will agree an equal pay scheme with Steve Harper in this new spirit of local brotherhood.

[Teasy]

Freddy shepheard has admitted we're still paying for owen and "1 or 2 others" so you have no point.

 

How exactly does that mean I have no point?   Yes we'll still be paying instalments for some players.  But its inevitable that the largest single payment will be paid up front, and it also doesn't change the fact that our revenue will now be at least 20% higher then it was then because of the new TV money.

[Skeletor]

Some bloke called Peter Lee has just been on Century claiming that he's trying to raise £300 million from the fans to buy the club.

 

I assume he's going to pay the other £180m out of his own pocket then?

[Guest optimistic nit]

it isn't inevitable that we payed the largest amount up front, we have no idea how the deal was structured.

[Guest Mcdonald36]

Fan buyout would be the best option, as long as it's based on the Barca model.

 

 

[Teasy]

it isn't inevitable that we payed the largest amount up front, we have no idea how the deal was structured.

 

You think we managed to get all, or even many, of our transfers to be little up front and spread of many years?  I don't see it as likely, most deals will be a significant portion up front with the rest spread over a few years.

[Guest optimistic nit]

it isn't inevitable that we payed the largest amount up front, we have no idea how the deal was structured.

 

You think we managed to get all, or even many, of our transfers to be little up front and spread of many years?  I don't see it as likely, most deals will be a significant portion up front with the rest spread over a few years.

 

just because thats how it works in fm...

 

 

and anyway, how we paid may be irrelivent, because i'm pretty sure the way it works itself onto the balence sheet is the transfer fee spread across the whole of his contract, so spenind 17m for owen on a 4 year contract would show up as 4 4.2 million's rather than one 17m.

[Teasy]

The likes of Owen's fee may be spread out like that in the accounts, I don't know so I'm not going to argue about it.  Either way if you spend big in a season it will still increase spending that season.  Due to the fact you then have past transfers still being paid for plus the new ones.  Each season players that were still being paid for will drop off the books and if you're not adding big fee's to the books in those seasons then you're going to start saving.

[indi]

So then you're saying that Freddy Shepherd subsidised Newcastle United, because he took out loans?..

 

Of course loans have to be paid off, when did I say they didn't?  But the likes of Shepherd and Ashley don't pay them!  They are paid off by payments that come from revenue.  Just like they were under Shepherd, just like they still are under Ashley.  The same revenue that a fans consortium would have available to it.

 

What is your actual point here anyway?  My point is that any fans consortium would have the same money available to it as any Newcastle owner in the past.  None of them have actually put in personal money to pay players wages, or for club running costs or transfers, so why should it be a concern for a fans consortium?

 

BTW yet again Ashley paid off the mortgage on the stadium, not past transfer fee's ect

 

So, did the club take out the loans just for the fun of then?

 

No, they did not. They took out the loans because the club's income did not cover the club's outgoings.

 

Yes it is normal for a large item of expenditure, like the ground expansion, to be paid for by a loan, however that was not the only loan the club had taken out. The club was surviving day to day on money from loans secured against future income. In other words the club's income was being subsidised by money loaned from banks. Whether Shepherd paid it off himself or the club did at some point in the future is irrelevant, the club's present income needed to be consistently subsidised.

 

Think of the club as a real person. If that person has a mortgage on their house that's fine, it's normal and it's sustainable, that large piece of expenditure which the person would never be able to afford to pay in one go at the time has instaed been spread over a period of many years and the person can therefore afford to pay it off step by step. So long as they keep up the repayments, no problem.

 

Now think of a person who pays for all their living expenses on a credit card, yet never pays off the bill and only makes the minimum repayment each month. As time goes by their debt gets larger and larger as they because they are subsidising their current income by promising some their future income to the credit card company. At some point in the future they will have to pay that debt back. To be able to do that they have to either; increase their income to a level where they can cover both their outgoings and repay the debt, or; reduce their outgoings to a level that their income at that point is sufficient to repay the debt as well. The first one relies on something coming along to boost the person's income (a new job or whatever, don't see where that's gonna come from in the club's case like) and the second is nearly always seriously bad news and is the likely scenario for the club had Ashley not come in and paid off the debt with his own money.

 

The fact remains the club required its income to be subsidised either by means of loans or by Ashley paying out his own cash. He had to do this because Shepherd had been continually subsidising the income by means of loans, which had to be repaid and was therefore an unsustainable strategy. Therefore, Ashley effectively subsidised the club's running costs out of his own money, making your point that no-one had done this wrong. That is my point and it's a pretty simple one really.

 

BTW Yet again, I'll ask you how you know that the loans Ashley repaid were for the stadium and not anything else, which you previously ignored.

[Guest Stephen927]

I'm sorry if it's already been mentioned, but we could try sacking the board instead.

[Syrette]

I'm sorry if it's already been mentioned, but we could try sacking the board instead.

 

And when the fans take over said board, we'll be protesting against them soon enough as well.

 

"GEORDIE MAFIA OUT"

[Tsunami]

This such a bad idea. It will fail, we will again be judged to be deluded & possible investors will look at us and be very wary of a club where the supporters think they can run the club.

 

Please stop this before we make fools of ourselves.

[Teasy]

Indi, yes they took out loans to pay for a stadium extension and for transfers.  I get what you're saying, but I don't understand how it changes my point.  I think we're just misunderstanding each other here.  This stems from James post asking how a fans consortium would afford to pay for the likes of wages ect.  My point was and still is that Freddy Shepherd didn't "afford it", so why would a fans consortium need to?  Shepherd used money generated by Newcastle United and took loans out in Newcastle United name to pay for things, he didn't do it personally.  Mike Ashley came in and found that because of the contract the Halls had with the bank any new ownership meant that the stadium mortgage had to be paid off straight away.  Which is not a situation a fans consortium would find themselves in.  Everything to do with actually running the club is still being paid for by Newcastle United Football Club, not Ashley personally.  I mean I understand that technically because the stadium mortgage is linked to revenue at the club and so in turn running the club Ashley did sort of pay for past costs.  But do you see how that's really beside the point I was making?