Newcastle United Finances - 2008 Accounts Recently Filed

[Liam Liam Liam O]

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

 

You can't do that because at the end of their contract's their value is nil.

 

If you didn't amortise it, we'd still be holding Owen as an asset in the accounts at what he cost us and writing the whole lot off in the summer in one go when he leaves.

[Guest Edd]

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 s*** 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).

 

You should always talk to the accountant my man  

 

I would always argue that you should look at what type of amortisation it is before deciding if its a valid cost. The amortisation of non bought goodwill or some such should always be ignored for example. The increase in values of a player is highly subjective (just look at differeing views on here about someone like Oba) whereas what the player cost isn't at all subjective. In any case if the player leaves an increase in value is reflected as a profit on sale.

 

Yeah I don't doubt it's standard accountancy procedure, just how accurate it is when applied to players values (although I can't honestly think of a more accurate way of reflecting that as anything else is equally hypothetical until the player is sold)

 

All academic anyway as the bigger picture from those accounts is what's important.  And it doesn't look pretty.

[fredbob]

I'd love to know what our wage bill is. The amount of players getting paid millions a year for doing f*** all is shocking.

 

Hence the stories of all of our top players being available for the right price and who can blame them?

These so called top players haven't got us anywhere near Europe which means they just aren't worth  their wages.

 

Why not get them out and bring in younger players for half the price and half the wages? Providing you can of course identify those who have the talent to perform in the first team.

 

It's all making a lot more sense now. Ashley should have just been more open about all this from the outset.

 

 

 

You don't get anywhere as a football club by selling your best players and then bringing inferior ones in to replace them.

 

And havent these "top players" conclusively proved that they arent worth it. Top 4 wages, top 15 perfromances....

 

By referring to top players I thought it was obvious by mentioning people like Given, Martins, Beye etc

 

Not the players like Duff who are on top 4 wages but giving top 15 performances.

 

Obviously not though.

 

Thats pretty subjective dont you think? Surely you need an objective measure, that being the type of wages they're on and whther they represent the value.

 

[UV]

 

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.

 

 

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?

[Mick]

these accounts were up to 30th June 2008.

 

So how much has gone into the club since then for season tickets etc? Obviously player wages will have gone out.

 

Shame that these things are so far behind, meaning we don't have a really clear picture of the status quo during the current transfer window.

 

Do you realise that these accounts cover a 12 month period which still includes season ticket money and that this season we've got reduced gates.

[KaKa]

I'd love to know what our wage bill is. The amount of players getting paid millions a year for doing f*** all is shocking.

 

Hence the stories of all of our top players being available for the right price and who can blame them?

These so called top players haven't got us anywhere near Europe which means they just aren't worth  their wages.

 

Why not get them out and bring in younger players for half the price and half the wages? Providing you can of course identify those who have the talent to perform in the first team.

 

It's all making a lot more sense now. Ashley should have just been more open about all this from the outset.

 

 

 

You don't get anywhere as a football club by selling your best players and then bringing inferior ones in to replace them.

 

And havent these "top players" conclusively proved that they arent worth it. Top 4 wages, top 15 perfromances....

 

By referring to top players I thought it was obvious by mentioning people like Given, Martins, Beye etc

 

Not the players like Duff who are on top 4 wages but giving top 15 performances.

 

Obviously not though.

 

Of course we do have some who have been great. Like you say Given, Beye and Martins.

 

However, when these stories came out the names you kept hearing about being sold were Smith, Barton and Owen.

 

Smith - Hopeless player and no reason he should be sat here earning what he was. Keegan wanted to keep him though! If I was the owner that would have pissed me off.

 

Barton - Okay player. However his behaviour was idsgusting considering his previous and all the hassle it took getting him in in the first place. Could easily find someone on the continent to do what he does for half the price. How much did Digard cost Boro for example?

 

Owen - Scores goals when fit, but all in all ... just not woethit I don't think. When you consider the fitness record and the wages being pulled in is it enough? Besides they only tried to flog him after he rejected the initial contract of less money. Can you really blame ownership for offering him less though? No.

 

Keegan wanted them all thoughand I bet the rift was centred around this sort of thing. We clearly couldn't afford to keep them and bring in more players, and tbh they really weren't vital to us anyway.

[quayside]

A bit more info in response to some of the questins on here:

 

1) Income (last year in brackets)

 

Matchday £32 million (£34 million)

Media £41 million (£26 million)

Commercial £26 million (£27 million)

 

 

2) Players wages £70 million (£65 million) bringing the ratio of wages/turnover down to 70% from 74%.

 

 

3) Cash flow in basic terms:

 

 

Operating cash flow - £5 million

Finance servicing costs - £8 million

Net capital spend  - £21 million

Loan repayment - £70 million

 

Total out = £104 million

 

 

 

This was financed by :

 

Ashley £100 million

Overdraft £4 million

Total £104 million

 

[ChezGiven]

A bit more info in response to some of the questins on here:

 

1) Income (last year in brackets)

 

Matchday £32 million (£34 million)

Media £41 million (£26 million)

Commercial £26 million (£27 million)

 

 

I guess that means the 3 years of season tickets are not included in these accounts then?

[madras]

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 s*** 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

 

You can't do that because at the end of their contract's their value is nil.

 

If you didn't amortise it, we'd still be holding Owen as an asset in the accounts at what he cost us and writing the whole lot off in the summer in one go when he leaves.

yes but at the same time you may buy a player for £1mill on a four year deal,he's fantastic and clubs are offering £15 million at the end of season one (not unlike palacios) yet the books would show his value at £750,000 ?

 

someone mentioned earlier that perhaps a better way to look at how things are run is to look at the cash flow.

 

 

 

 

ps. let me know if i'm in over my head here.

[UV]

So in real terms (discounting the reduction in the valuation of the company due to the estimated value of the players) the club lost £5m?

 

If so, that's not bad considering the one-off costs of a takeover. All other things being equal, if we'd not been taken over we'd probably have made a profit.

[BottledDog]

So in real terms (discounting the reduction in the valuation of the company due to the estimated value of the players) the club lost £5m?

 

If so, that's not bad considering the one-off costs of a takeover. All other things being equal, if we'd not been taken over we'd probably have made a profit.

 

Ya what? 

[quayside]

 

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 dont 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.

 

 

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.

[TRon]

I'd love to know what our wage bill is. The amount of players getting paid millions a year for doing f*** all is shocking.

 

Hence the stories of all of our top players being available for the right price and who can blame them?

These so called top players haven't got us anywhere near Europe which means they just aren't worth  their wages.

 

Why not get them out and bring in younger players for half the price and half the wages? Providing you can of course identify those who have the talent to perform in the first team.

 

It's all making a lot more sense now. Ashley should have just been more open about all this from the outset.

 

 

 

You don't get anywhere as a football club by selling your best players and then bringing inferior ones in to replace them.

 

And havent these "top players" conclusively proved that they arent worth it. Top 4 wages, top 15 perfromances....

 

That's the crux of the problem, and has been since Shepherd's last couple of seasons. Big spending, big wages and shit performances. Look at the three games against Hull this season as an example. Michael owen probably gets paid more than their whole team put together.

[johnnypd]

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.

 

I'm sorry but that is possibly the worst post I think you have ever posted on here.

 

Of course he was expecting payback for his loan, we all knew that from day one that if he was a sensible businessman, the money was only going to be given in an assumption that the £100m was going to be given back to him via an increased valuation of the club.

 

And quaysides OP makes it clear that he has underwritten a £20m loss in the past year, hence giving that £20m a year he promised.

 

With that in mind, it is clear that it is unrealistic to expect anyone coming in to do much difference unless they are genuine multi-billionaires who want some personal glory.

 

All Ashley's faults must therefore by with regards to his handling of management affairs, as opposed lack of investment.

 

Sorry mate, but how many times have we heard people praise ashley for putting his hand in his pocket to clear our debts? a thousand times? ten thousand times? this is just a big YOURE WRONG to all those ashley arse lickers. funny how great financial brains like LLLO missed that one, yet i suggested it over a year ago. 

 

clearing debt can be great if the club is up for sale as it means the new owners dont have to address that and inherit a club with a good balance sheet. this doesnt apply in our case as ashley wants this money paid to him. it can be good for a second reason - avoiding interest and loan repayments means money can be put back into the club for the manager to spend - once again, this doesnt apply to us. for us fans, you know, people who watch football being played on a football pitch, it can be good if having a reduced debt consequently improves our on field performance. i dont need to tell you that this has not happened.

 

the £20m loss is primarily player amortisation, a paper loss. if owen moves into the last year of his contract the club would lose, say, £4m from the value of a year of his tenure at the club, something restricted to the balance sheets rather than cash flowing out of the club. in fact, £17.8m of that £20m is player amortisation. as with previous accounts which saw us make something like a £30m loss, this was reduced to £300,000 once amortisation and trading was taken out of the equation. the club is making a small loss, nothing substantial, which is no suprise considering how poorly the club has been ran on the field in shepherd's final years and the entirety of ashley's reign. the way to improve this is to invest in the managerial & playing staff. any business that wants to move forward has to go into debt, you have to make expenditures in the short-term to reap the rewards in the medium to long term. if ashley is not prepared to do this he should bugger off. trying to run a premiership club on a shoestring is counter-productive - you end up in situations like the one we are in currently, and it could get worse. those who like to defend ashley any chance they get need to wake up and realise this.

[Mowen]

 

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 dont 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.

 

 

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?

[quayside]

A bit more info in response to some of the questins on here:

 

1) Income (last year in brackets)

 

Matchday £32 million (£34 million)

Media £41 million (£26 million)

Commercial £26 million (£27 million)

 

 

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.

[UV]

 

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.

 

 

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?

[Taylor Swift]

 

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 dont 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.

 

 

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?

 

My understanding is that his value would then be zero i.e. if we sold him, it would be all profit. No amortisation after contract renewals.

[TRon]

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.

 

I'm sorry but that is possibly the worst post I think you have ever posted on here.

 

Of course he was expecting payback for his loan, we all knew that from day one that if he was a sensible businessman, the money was only going to be given in an assumption that the £100m was going to be given back to him via an increased valuation of the club.

 

And quaysides OP makes it clear that he has underwritten a £20m loss in the past year, hence giving that £20m a year he promised.

 

With that in mind, it is clear that it is unrealistic to expect anyone coming in to do much difference unless they are genuine multi-billionaires who want some personal glory.

 

All Ashley's faults must therefore by with regards to his handling of management affairs, as opposed lack of investment.

 

Sorry mate, but how many times have we heard people praise ashley for putting his hand in his pocket to clear our debts? a thousand times? ten thousand times? this is just a big YOURE WRONG to all those ashley arse lickers. funny how great financial brains like LLLO missed that one, yet i suggested it over a year ago. 

 

clearing debt can be great if the club is up for sale as it means the new owners dont have to address that and inherit a club with a good balance sheet. this doesnt apply in our case as ashley wants this money paid to him. it can be good for a second reason - avoiding interest and loan repayments means money can be put back into the club for the manager to spend - once again, this doesnt apply to us. for us fans, you know, people who watch football being played on a football pitch, it can be good if having a reduced debt consequently improves our on field performance. i dont need to tell you that this has not happened.

 

the £20m loss is primarily player amortisation, a paper loss. if owen moves into the last year of his contract the club would lose, say, £4m from the value of a year of his tenure at the club, something restricted to the balance sheets rather than cash flowing out of the club. in fact, £17.8m of that £20m is player amortisation. as with previous accounts which saw us make something like a £30m loss, this was reduced to £300,000 once amortisation and trading was taken out of the equation. the club is making a small loss, nothing substantial, which is no suprise considering how poorly the club has been ran on the field in shepherd's final years and the entirety of ashley's reign. the way to improve this is to invest in the managerial & playing staff. any business that wants to move forward has to go into debt, you have to make expenditures in the short-term to reap the rewards in the medium to long term. if ashley is not prepared to do this he should bugger off. trying to run a premiership club on a shoestring is counter-productive - you end up in situations like the one we are in currently, and it could get worse. those who like to defend ashley any chance they get need to wake up and realise this.

 

Not that I don't agree Ashley has to invest in the squad, but if he doesn't want to dip his hand in his pocket, for him to bugger off, doesn't he need someone willing to buy the club for that to happen?

[Liam Liam Liam O]

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 s*** 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

 

You can't do that because at the end of their contract's their value is nil.

 

If you didn't amortise it, we'd still be holding Owen as an asset in the accounts at what he cost us and writing the whole lot off in the summer in one go when he leaves.

yes but at the same time you may buy a player for £1mill on a four year deal,he's fantastic and clubs are offering £15 million at the end of season one (not unlike palacios) yet the books would show his value at £750,000 ?

 

someone mentioned earlier that perhaps a better way to look at how things are run is to look at the cash flow.

 

ps. let me know if i'm in over my head here.

 

No you're right, thats where the profit or loss would come from.

 

Say you've a player cost you £10m, and you're writing that off over his 5 year contract then the amortisation is £2m per year in simple terms.

 

Say after year 3 (when his value is now at £4m), someone gives you £7m for him, the profit from the player trading would be £3m.

 

The cashflow is certainly another way of looking at it, and is probably better for what people are wanting (ie the one year performance and the investment made by Ashley)

[johnnypd]

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.

 

I'm sorry but that is possibly the worst post I think you have ever posted on here.

 

Of course he was expecting payback for his loan, we all knew that from day one that if he was a sensible businessman, the money was only going to be given in an assumption that the £100m was going to be given back to him via an increased valuation of the club.

 

And quaysides OP makes it clear that he has underwritten a £20m loss in the past year, hence giving that £20m a year he promised.

 

With that in mind, it is clear that it is unrealistic to expect anyone coming in to do much difference unless they are genuine multi-billionaires who want some personal glory.

 

All Ashley's faults must therefore by with regards to his handling of management affairs, as opposed lack of investment.

 

Sorry mate, but how many times have we heard people praise ashley for putting his hand in his pocket to clear our debts? a thousand times? ten thousand times? this is just a big YOURE WRONG to all those ashley arse lickers. funny how great financial brains like LLLO missed that one, yet i suggested it over a year ago. 

 

clearing debt can be great if the club is up for sale as it means the new owners dont have to address that and inherit a club with a good balance sheet. this doesnt apply in our case as ashley wants this money paid to him. it can be good for a second reason - avoiding interest and loan repayments means money can be put back into the club for the manager to spend - once again, this doesnt apply to us. for us fans, you know, people who watch football being played on a football pitch, it can be good if having a reduced debt consequently improves our on field performance. i dont need to tell you that this has not happened.

 

the £20m loss is primarily player amortisation, a paper loss. if owen moves into the last year of his contract the club would lose, say, £4m from the value of a year of his tenure at the club, something restricted to the balance sheets rather than cash flowing out of the club. in fact, £17.8m of that £20m is player amortisation. as with previous accounts which saw us make something like a £30m loss, this was reduced to £300,000 once amortisation and trading was taken out of the equation. the club is making a small loss, nothing substantial, which is no suprise considering how poorly the club has been ran on the field in shepherd's final years and the entirety of ashley's reign. the way to improve this is to invest in the managerial & playing staff. any business that wants to move forward has to go into debt, you have to make expenditures in the short-term to reap the rewards in the medium to long term. if ashley is not prepared to do this he should bugger off. trying to run a premiership club on a shoestring is counter-productive - you end up in situations like the one we are in currently, and it could get worse. those who like to defend ashley any chance they get need to wake up and realise this.

 

Not that I don't agree Ashley has to invest in the squad, but if he doesn't want to dip his hand in his pocket, for him to bugger off, doesn't he need someone willing to buy the club for that to happen?

 

aye. sadly that's not going to happen (not least because of his insistence on recouping his loan in one go).

[KaKa]

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.

 

I'm sorry but that is possibly the worst post I think you have ever posted on here.

 

Of course he was expecting payback for his loan, we all knew that from day one that if he was a sensible businessman, the money was only going to be given in an assumption that the £100m was going to be given back to him via an increased valuation of the club.

 

And quaysides OP makes it clear that he has underwritten a £20m loss in the past year, hence giving that £20m a year he promised.

 

With that in mind, it is clear that it is unrealistic to expect anyone coming in to do much difference unless they are genuine multi-billionaires who want some personal glory.

 

All Ashley's faults must therefore by with regards to his handling of management affairs, as opposed lack of investment.

 

Sorry mate, but how many times have we heard people praise ashley for putting his hand in his pocket to clear our debts? a thousand times? ten thousand times? this is just a big YOURE WRONG to all those ashley arse lickers. funny how great financial brains like LLLO missed that one, yet i suggested it over a year ago. 

 

clearing debt can be great if the club is up for sale as it means the new owners dont have to address that and inherit a club with a good balance sheet. this doesnt apply in our case as ashley wants this money paid to him. it can be good for a second reason - avoiding interest and loan repayments means money can be put back into the club for the manager to spend - once again, this doesnt apply to us. for us fans, you know, people who watch football being played on a football pitch, it can be good if having a reduced debt consequently improves our on field performance. i dont need to tell you that this has not happened.

 

the £20m loss is primarily player amortisation, a paper loss. if owen moves into the last year of his contract the club would lose, say, £4m from the value of a year of his tenure at the club, something restricted to the balance sheets rather than cash flowing out of the club. in fact, £17.8m of that £20m is player amortisation. as with previous accounts which saw us make something like a £30m loss, this was reduced to £300,000 once amortisation and trading was taken out of the equation. the club is making a small loss, nothing substantial, which is no suprise considering how poorly the club has been ran on the field in shepherd's final years and the entirety of ashley's reign. the way to improve this is to invest in the managerial & playing staff. any business that wants to move forward has to go into debt, you have to make expenditures in the short-term to reap the rewards in the medium to long term. if ashley is not prepared to do this he should bugger off. trying to run a premiership club on a shoestring is counter-productive - you end up in situations like the one we are in currently, and it could get worse. those who like to defend ashley any chance they get need to wake up and realise this.

 

What kind of budget are Arsenal being run on?

 

[quayside]

 

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 dont 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.

 

 

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.

[Liam Liam Liam O]

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.

 

I'm sorry but that is possibly the worst post I think you have ever posted on here.

 

Of course he was expecting payback for his loan, we all knew that from day one that if he was a sensible businessman, the money was only going to be given in an assumption that the £100m was going to be given back to him via an increased valuation of the club.

 

And quaysides OP makes it clear that he has underwritten a £20m loss in the past year, hence giving that £20m a year he promised.

 

With that in mind, it is clear that it is unrealistic to expect anyone coming in to do much difference unless they are genuine multi-billionaires who want some personal glory.

 

All Ashley's faults must therefore by with regards to his handling of management affairs, as opposed lack of investment.

 

Sorry mate, but how many times have we heard people praise ashley for putting his hand in his pocket to clear our debts? a thousand times? ten thousand times? this is just a big YOURE WRONG to all those ashley arse lickers. funny how great financial brains like LLLO missed that one, yet i suggested it over a year ago. 

 

clearing debt can be great if the club is up for sale as it means the new owners dont have to address that and inherit a club with a good balance sheet. this doesnt apply in our case as ashley wants this money paid to him. it can be good for a second reason - avoiding interest and loan repayments means money can be put back into the club for the manager to spend - once again, this doesnt apply to us. for us fans, you know, people who watch football being played on a football pitch, it can be good if having a reduced debt consequently improves our on field performance. i dont need to tell you that this has not happened.

 

the £20m loss is primarily player amortisation, a paper loss. if owen moves into the last year of his contract the club would lose, say, £4m from the value of a year of his tenure at the club, something restricted to the balance sheets rather than cash flowing out of the club. in fact, £17.8m of that £20m is player amortisation. as with previous accounts which saw us make something like a £30m loss, this was reduced to £300,000 once amortisation and trading was taken out of the equation. the club is making a small loss, nothing substantial, which is no suprise considering how poorly the club has been ran on the field in shepherd's final years and the entirety of ashley's reign. the way to improve this is to invest in the managerial & playing staff. any business that wants to move forward has to go into debt, you have to make expenditures in the short-term to reap the rewards in the medium to long term. if ashley is not prepared to do this he should bugger off. trying to run a premiership club on a shoestring is counter-productive - you end up in situations like the one we are in currently, and it could get worse. those who like to defend ashley any chance they get need to wake up and realise this.

 

All the money will be paid to him from the sale either directly via the loan or via the holding company he set up to purchase the shares though.

 

You're in so far above your head it's frightening & you're making yourself look stupid.

[Guest toonlass]

So is amortisation a bit like depreciation on your car? And if you get more than you feel the depreciation was at that point in time, you could say you have made a profit?