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Newcastle United Finances - 2008 Accounts Recently Filed


quayside
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The accounts up to 30th June 2008 have now been filed for both Newcastle United Limited and St James Holdings Limited, the latter company is the parent company that Ashley has used for his investment in the club. Ok some points from both companies:

 

• Income is up to £99 million from £87 million last year. As has been discussed on here this is due to the increase in tv money.

 

 

• The club has made a pre tax loss of £20.5 million for the year, leaving the balance sheet technically insolvent to the tune of £36 million. Ernst and Young have signed off a clean audit report due to Ashley giving an undertaking that he will continue to support the club financially.

 

 

• How is the loss made up?

 

Loss before amortisation, player trading and exceptional items £2.2 million

Allardyce blow out cost £4.7 million

Amortisation of players contracts £17.8 million

Interest paid on the old debt before Ashley paid it off £6.6 million

 

Total loss from that lot = £31.3 million

 

We then have a profit from disposal of players £10.8 million

 

Leaving an overall loss of £20.5 million

 

• The question that has been much discussed is how much Ashley has put into the club.  And the answer is £100 million as a loan, £70 million of that was used to clear the old debt and £30 million has been put in to keep the club going. Since the 30th June he has put in a further £10 million of cash as working capital. He paid £138 million to buy the club, so his total investment is £248 million so far.

 

• Note 26 to the accounts informs us that in last Summer's transfer window the club spent £13,615,000 on new players and sold players for £13,610,000. This represents a net spend of £5,000.  The same note also tells us that Kevin Keegan resigned on the 4th September, there is no further comment in respect of this.

 

 

There will inevitably be some discussion on here at some point about amortisation of players’ contracts and whether it should really count as a cost. In my opinion it should because if you ignore it you don’t reflect the money paid out for players. In other words if you ignore it you are basically saying we got Owen, Duff, Martins, Collo etc for nothing.

 

Equally there is the argument that depreciation of the money spent on the stadium should not count but again I think it should. The revenue earned from the stadium is a decent chunk of income and it seems to me to be right to reflect some of the original cost of that asset in the results for the year.

 

There’s a lot more going on in the accounts than that obviously but I hope that the above is of interest. And I hope its understandable, I tried not to get too technical other than the bit on amortisation  :razz:

 

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So basically, the £20M Ashley claimed to be willing to invest in the club each year depends, with the current cost of running the club, on us making a profit on player sales. I can see why they've been pissing about with Owen's contract: we can't afford keeping him. They probably think the same of our other star players (and I agree).

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I'm not sure you should include amortisation TBH.  Unless you are going to include any increase in a players value too.  Not that I claim to be an expert in accountancy mind so I bow to your superior knowledge. :)

 

Either way it shows how much shit the club was in and how much trouble we'd now be in without someone paying off the debts and stumping up the cash to guarantee it's future.

 

I still expect plenty of people to be in denial mind :)

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Thanks for that quayside. :thup:

 

No wonder the old lot were so desperate to sell, the gamble with the debts had failed and they were fucked. He seems willing to plough the extra money in but all that is doing is keeping our head above water even after reducing the repayments.

 

Clearly Ashley, before the Keegan thing kicked off, was not just joking in the media that if anyone had a few billion spare he would welcome them to join him in the venture. While investing in youth was the sensible way to keep the club on a steady footing, he was deadly serious about the need for further investment if we had any chance of getting the players in needed to move back up the league.

 

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Guest Slippery Sam

No wonder he wants to sell up

 

No wonder the old board sold up.

 

And Ashley only has himself to blame for not doing his research first - so we are led to believe.

 

And wasn't some of that debt due to being forced by the bank to pay off the stadium expansion loan? Shepherd, I'm guessing, repeatedly re-mortgaged the loan for that expansion so he could keep the club afloat and players bought?

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I'm not sure you should include amortisation TBH.  Unless you are going to include any increase in a players value too.  Not that I claim to be an expert in accountancy mind so I bow to your superior knowledge. :)

 

Either way it shows how much shit the club was in and how much trouble we'd now be in without someone paying off the debts and stumping up the cash to guarantee it's future.

 

I still expect plenty of people to be in denial mind :)

 

When looking at buying up small business, our development team (where i work) dont talk to accountants to analyse the underlying strength of a prospective business.

 

Quayside is just following the rules (quite right too).

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Shows that things musn't have been good under Shepherd/Hall. The club must have been hemmoraging money.

 

What worries me though that the club seems to be heading back to the days of McKeag, where the primary concern is to balance the books and make a profit. Are the likes of Chelsea/Man Unitd/Arsenal and Liverpool ran like that? It's all well and good if the club stays up - but the best we can hope for without taking a bit of a risk is mid-table football for the forseeable future. God help us if we go down.

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So really Ashley's ambition went as soon as he discovered the extent of the debt, but more fool him for not seeing it before he took the club of the stock exchange.

 

The other question would be if he didn't have to pay the 70m worth of debt , how much of that would have gone into reshaping the 1st team?

 

Think Shepherd and the Halls had their part to play in why we're in the state we're in currently, but we knew that already.

 

Best we can hope for is get some half decent loan signings in the next 7 days, avoid relegation, and hope Ashley fucks off and we get someone in who has realistic ambitions to move us forward.

 

 

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so he's not paid the debt off he's just made us indebted to him instead. 'great bloke' 2.2m loss, so basically breaking even, take into account not paying debt repayments and we're looking at a tidy profit.

 

The club has made a pre tax loss of £20.5 million for the year, leaving the balance sheet technically insolvent to the tune of £36 million. Ernst and Young have signed off a clean audit report due to Ashley giving an undertaking that he will continue to support the club financially.

 

Even without the additional loan repayments, the club is still losing money. 

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This is why he put so much money into recruiting a top team for finding talent on the cheap and who can blame him. It is why all our players were said to be available for the right price with talented and cheaper, younger players to be brought in as replacements.

 

It's a tough one to pull off while keeping the team competitive but with the recruitment team he put together he seemed to believe in it working out. It was definitely more of a long term strategy, which he himself admitted to from the outset.

 

Can't imagine Keegan would have been to thrilled at the prospect though.

 

 

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