Newcastle United Finances - 2008 Accounts Recently Filed

[Dave]

I think the point is though that that cost was the same before Ashley arrived and would be the same if he'd sold up. So if that's the same regardless of the owner, is it not fair to look beyond it?

 

I'm just wondering why it matters at all (to the Ashley debate) if it was always going to be that cost.

[quayside]

Some questions/points

 

We buy a player for 10M, he's given a 4 year deal.  From a balance sheet perspective, his value decreases 2.5m/year for 4 years.  So if we sell the player after 3 years for 6M the club would still record a "gain from sale of asset" of 3.5M right?  10-7.5 = 2.5 + 6 = 3.5???

 

Also if the parent company loans money to a sub, it has to have interest otherwise it isn't really a "loan" right?

 

If the loan does have interest, the new owner would assume the loan payments as the new owner unless their is some kind of provision included in the sale agreement.

 

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.

[OzzieMandias]

I think the point is though that that cost was the same before Ashley arrived and would be the same if he'd sold up. So if that's the same regardless of the owner, is it not fair to look beyond it?

 

I'm just wondering why it matters at all (to the Ashley debate) if it was always going to be that cost.

 

Because, in debate terms, those who want to say it doesn't matter will then spin that it into the following bollocks:

 

"The club wasn't already fucked financially before Ashley bought it."

 

and/or

 

"The club isn't making much of a loss and we can ignore this big aspect of playing staff expenditure on the accounts so there's no excuse for not spunking loadsamoney on players."

[James]

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.

 

This bolded bit you seem to be spouting every time this issue comes up is completely wrong.

 

For starters, when Ashley purchased the club, the club cost him £200-230m in real terms, in other words, £130m price plus the agreement to take on the debts. Its very laughable that clearing off the debts will make us more appealing, as the paid off debts just become part of the club's valuation. In fact, (now this tidbit is pure speculation) but a Tom Hicks figure would probably see the £130m + debts more appealing if it was possible to refinance these debts.

 

It was a no brainer, when losing huge amounts of interest, that if you have the capital, you pay off the debt and just stick the £100m onto the valuation. It is laughable for you to expect Ashley to keep the debt, and spend an eighth of his £800m wealth on players instead. You'd need an Ambramovich to fulfil your unrealistic expectations.

[quayside]

Thanks for posting this up, quayside; very interesting stuff.

 

So is the club in a much healthier state now or not?

 

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 

 

 

[BottledDog]

How do the wages paid to Mort, Wise, Jimenez, and Vetres fit into this? And what about Ashley, did he get some kind of dividend?

 

have you read the figures??

 

how can ashley take a dividend when he is financing the running of the club at the moment???

company directors take dividends out of loss making companies all the time. Haven’t you seen the news recently?

 

yes public company where they don't use there own money at all to buy the club etc

 

the figures show ashley is keeping the club alive with his own cash, so why would he take money out then

He hasn’t put any money in, he’s lent the club £100m.

 

His own money. 70 for the debt, and 30 to keep the club going (plus another £10 million on top in June according to the OP).

Ashley bought the club without checking the books and got well and truly shafted. If he hadn’t paid off the outstanding creditors he could have seen his £135m investment go down the pan. Yet your lauding him to the high heavens for saving his own skin and asking us to pay for it.

 

Last years accounts count for s*** anyway. It’s next years accounts that will show if you’re blind faith in Ashley is warranted or sorely misguided. My money would be on the latter as losing lots of customers very rapidly tends to do bad things to the balance sheet. 

 

Get a grip, I don't see anyone here with blind faith in him or lauding him to the high heavens for fucks sake. He deserves criticism, His nieve managerial choices, and his poor communication have been massively dissapointing. If he fucked off and sold to someone willing to pump absurd amounts of money into the club with no long term damage i'd be delighted.

 

However, it is also reasonable surely (rather than to just dismiss the accounts as you suggest) to take on board that the club was in a fucking dreadful situation and Ashley actions and continuing actions have at least stopped the rot to some degree. His decisions to put more emphasis on scouting and youth and not being held to ransom over inflated contract demands are sensible considering the climate. People were demanding to know where his £20 million a year investment was in simple term of incoming transfers, well now we know that the extra money was being put in but only just covers running costs. Ashley recognised this and was actively courting local businessmen to join him. If he had managed to secure that further local investment, we might have been in a much stronger position to get in the players Keegan wanted. Sadly that didn't work out.

 

I'm scared shitless over where we are heading under his stewardship this season, but I recognise the problems we have and I don't see any benefit in sticking the boot in at every opportunity as some seem to be doing.

[Dave]

Thanks for posting this up, quayside; very interesting stuff.

 

So is the club in a much healthier state now or not?

 

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?

[Syrette]

Does someone want to define the term 'amortisation' in the context of its relation to the club's finances? And yes I did try Googling it.

 

:-[

[Dave]

Does someone want to define the term 'amortisation' in context of it's relation to the club's finances. And yes I did try Googling it.

 

:-[

 

From what I've read in here;

 

It's a yearly depreciation of the players' values (based on their original transfer fee), displayed as a cost. Depreciation based on straight-line loss of value over the length of the original contract.

[James]

Does someone want to define the term 'amortisation' in the context of its relation to the club's finances? And yes I did try Googling it.

 

:-[

 

Michael Owen:

 

Four Year Contract

 

Year 0 - £16m

Year 1 - £12m £4m loss

Year 2 - £8m £4m loss

 

etc

[Thespence]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

[James]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

 

Only if Mike Ashley takes out a £100m loan and spends it on players, decreasing the clubs valuation after amortisation.

[Guest fading star]

I think the point is though that that cost was the same before Ashley arrived and would be the same if he'd sold up. So if that's the same regardless of the owner, is it not fair to look beyond it?

 

I'm just wondering why it matters at all (to the Ashley debate) if it was always going to be that cost.

 

Because, in debate terms, those who want to say it doesn't matter will then spin that it into the following bollocks:

 

"The club wasn't already f***ed financially before Ashley bought it."

 

and/or

 

"The club isn't making much of a loss and we can ignore this big aspect of playing staff expenditure on the accounts so there's no excuse for not spunking loadsamoney on players."

If the club was financially fucked why did Ashley buy it?

 

[Dave]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

 

There is nothing in the tin; we're losing money. I think.

 

In the September 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.

 

This is what we'll do in this window too by the looks of things.

 

The real question is: at what point will we be ABLE to spend more than nothing?

[Guest toonlass]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

 

Probably not. The biscuit tin is also available at the right price!

[Robster]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

Thats what I was going to ask 

All this financial talk is way over my head 

 

 

[indi]

I think the point is though that that cost was the same before Ashley arrived and would be the same if he'd sold up. So if that's the same regardless of the owner, is it not fair to look beyond it?

 

I'm just wondering why it matters at all (to the Ashley debate) if it was always going to be that cost.

 

Not 100% sure what you mean, but it matters because these are the club's accounts and they show that it's making a huge fuck-off loss which is being paid for out of Ashley's pocket. That money was spent by the club and however you account for it, it's not going to disappear, so we can't really just ignore it.

 

He said he'd put in £20m a year and he is, the problem is that's all being swallowed up by the losses - I have this memory of him mentioning that the £20m would include covering losses, at the time, is that right? - he's continually getting shit from people for not investing in the club, yet these accounts show that he's put in a serious amount of his own money and taken nothing out.

[James]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

 

There is nothing in the tin; we're losing money. I think.

 

In the September 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.

 

This is what we'll do in this window too by the looks of things.

 

The real question is: at what point will we be ABLE to spend more than nothing?

 

We'll have to restructure the playing personnel for it to happen.

[fredbob]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

 

There is nothing in the tin; we're losing money. I think.

 

In the September 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.

 

This is what we'll do in this window too by the looks of things.

 

The real question is: at what point will we be ABLE to spend more than nothing?

 

We spent £5,000 pounds this summer and still improved the first team, why cant we carry on doing the same?

 

Thats all any fan should ask as a minimum, until we do get ourselves into a position that Villa and Spurs found themselves in a few years ago.

[Guest aoliversaknob]

Anybody who actualy thought  ashley had simply put in £100m to clear the debt and that this would not be in the form of a loan to the club was living in cloud cuckoo land.  It is no suprise the loan in now on the clubs resale value and in reality all that has happend is ashely has refinaced the debt with himself to stop paying daft interest taken on by shepherd hall.  

 

As for any business acumen the man has well quite simply would you trust the byker scrap metal man without checking it all out first?

 

As for any football executive management acumen well look around you!

 

Quite simply financially and on the pitch we have been fooked over by a multi millionaire fool has has now idea!

[Thespence]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

Thats what I was going to ask 

All this financial talk is way over my head 

 

 

 

Every time I see Amortisation I think of the big Italian lad who played for Rangers.

[indi]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

 

There is nothing in the tin; we're losing money. I think.

 

In the September 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.

 

This is what we'll do in this window too by the looks of things.

 

The real question is: at what point will we be ABLE to spend more than nothing?

 

When they've got the yearly loss below £20m.

[Guest toonlass]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

Thats what I was going to ask 

All this financial talk is way over my head 

 

 

 

Every time I see Amortisation I think of the big Italian lad who played for Rangers.

 

Ahhhhh Lorenzo Amoruso, always spoke about himself in the 3rd person. Rangers fans loved him to bits as well.

[quayside]

Thanks for posting this up, quayside; very interesting stuff.

 

So is the club in a much healthier state now or not?

 

 

 

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.

[Fatwax]

Bottom line: HAVE WE GOT ENOUGH IN THE BISCUIT TIN TO SIGN PLAYERS WHO CAN PLAY FIRST TEAM FOOTBALL IN THE PL?

 

 

There is nothing in the tin; we're losing money. I think.

 

In the September 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.

 

This is what we'll do in this window too by the looks of things.

 

The real question is: at what point will we be ABLE to spend more than nothing?

 

We spent £5,000 pounds this summer and still improved the first team, why cant we carry on doing the same?

 

Thats all any fan should ask as a minimum.

 

We didn't improve the central midfield and we've failed to address the complete lack of depth in 3 transfer windows so far. We may have a better quality of player in some areas but if we constantly end up having  to sell to buy, which seems to be the case, then the entire thing is pointless as we'll never really deal with this massive flaw to the team.