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Newcastle United Finances - 2008 Accounts Recently Filed


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Just to be clear about the 20m, 17.5m of it is just accounting, its not real money that ashley has to transfer out of the sportsdirect coffers into northern rock, its just a reduction in the value of the playing staff. The real loss is 2.5m as far as i can tell. If you think about the amount of money that will be freed up when one of those asset values falls to zero, the financial picture is not that bleak. 

 

 

That's what I was getting at earlier, just didn't phrase it that well. :)

 

So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team?

 

It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation  (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still.

 

 

where do you think that's gone, considering wages only went up £5m and player trading only cost half a mil net? is it a case of one-off costs associated with the takeover or is the club just not being ran all that well?

 

I posted this earlier, it's the best I can do given the time and information at my disposal. It just shows where the cash went under fairly broad headings.

 

Cash flow in basic terms:

 

 

Operating cash flow - £5 million (ie cash loss on day to day business)

Finance servicing costs - £8 million (mostly interest on loans now paid off)

Net capital spend  - £21 million (net spending on assets, haven't had time to look closer yet!)

Loan repayment - £70 million (obvious)

 

Total out = £104 million

 

 

 

This was financed by :

 

Ashley £100 million

Overdraft £4 million

Total £104 million

 

 

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what needs to happen is that we need to stop putting managers on stupid wages and contracts

 

it's cost this club 10 million to sack allardyce and souness in the last 3 years, that 10 million could have went on some players

 

wages need to be brought down around 20-30 million which is achievable for getting rid of owen, duff, barton, butt, smith, viduka, geremi whom offer very little to the team

 

once this happens the club can move forward

 

rubbish. what needs to happen is to make sure we get the right manager and back him. that'll probably cost a bit, but then so does appointing the wrong manager. trying to cut costs on the most important position at the club would be counter productive.

 

dont disagree about wages, too many oldies on too much money, some of whom have already been shifted on by the club.

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The thing that throws me about this amortisation thing is that the linear depreciation model just doesn't really work. If we buy a £15m player then it stands to reason that he must be pretty good, or at the very least pretty highly rated by the selling club/other potential buyers. If he's good then his value won't depreciate in a linear fashion - it might even go up - yet the amortisation 'cost' each year will make the accounts look shit.

 

At the end of his contract though he is worth nothing (potentially anyway)

 

How would you write off the cost of purchasing Owen?

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Can the financial wizards answer this question:

 

Amortisation being depreciation for intangible assets, does it not serve the purpose to retain profits (if any) to build funds to replace the assets?

 

I.e. are we not purely talking about (for the main part) a paper loss that has very little relevance to the club's bank account and the availability of money for investment if any has been made available?

 

At some point the money has been paid - the paper loss (i.e ammortisation) is just spreading it over a few years.

 

 

For the most part that would have been pre-Ashley though. Let's face it, he's not exactly spunked loads on new players, has he?

 

It follows suit that in years to come we will make profits on paper (what with the likes of Owen fully written off), but just like paper losses, paper profits don't prevent/allow investment, do they?

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The thing that throws me about this amortisation thing is that the linear depreciation model just doesn't really work. If we buy a £15m player then it stands to reason that he must be pretty good, or at the very least pretty highly rated by the selling club/other potential buyers. If he's good then his value won't depreciate in a linear fashion - it might even go up - yet the amortisation 'cost' each year will make the accounts look shit.

 

As I've mentioned earlier Dave I agree with you to an extent, but the more I think about it the more sense it makes and I can't think of a better way of doing it.  A players value might well go up, but that's only a theoretical value until he's actually sold and you can't base your accounts off that. (if you valued a player at £10m but he ends up selling for half that do you show a £5m loss on the accounts?)

 

Also some people have said that in a years time we'll be much better off as the amortisation for Owen will be £0.  True, but it also means he's left the club and we, in theory, have to splash more on a replacement.

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Can the financial wizards answer this question:

 

Amortisation being depreciation for intangible assets, does it not serve the purpose to retain profits (if any) to build funds to replace the assets?

 

I.e. are we not purely talking about (for the main part) a paper loss that has very little relevance to the club's bank account and the availability of money for investment if any has been made available?

 

At some point the money has been paid - the paper loss (i.e ammortisation) is just spreading it over a few years.

 

 

 

For the most part that would have been pre-Ashley though. Let's face it, he's not exactly spunked loads on new players, has he?

 

Hence being in debt

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The thing that throws me about this amortisation thing is that the linear depreciation model just doesn't really work. If we buy a £15m player then it stands to reason that he must be pretty good, or at the very least pretty highly rated by the selling club/other potential buyers. If he's good then his value won't depreciate in a linear fashion - it might even go up - yet the amortisation 'cost' each year will make the accounts look shit.

 

As I've mentioned earlier Dave I agree with you to an extent, but the more I think about it the more sense it makes and I can't think of a better way of doing it.  A players value might well go up, but that's only a theoretical value until he's actually sold and you can't base your accounts off that. (if you valued a player at £10m but he ends up selling for half that do you show a £5m loss on the accounts?)

 

Also some people have said that in a years time we'll be much better off as the amortisation for Owen will be £0.  True, but it also means he's left the club and we, in theory, have to splash more on a replacement.

 

No it doesn't

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Just to be clear about the 20m, 17.5m of it is just accounting, its not real money that ashley has to transfer out of the sportsdirect coffers into northern rock, its just a reduction in the value of the playing staff. The real loss is 2.5m as far as i can tell. If you think about the amount of money that will be freed up when one of those asset values falls to zero, the financial picture is not that bleak. 

 

 

That's what I was getting at earlier, just didn't phrase it that well. :)

 

So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team?

 

It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation  (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still.

 

 

where do you think that's gone, considering wages only went up £5m and player trading only cost half a mil net? is it a case of one-off costs associated with the takeover or is the club just not being ran all that well?

 

I posted this earlier, it's the best I can do given the time and information at my disposal. It just shows where the cash went under fairly broad headings.

 

Cash flow in basic terms:

 

 

Operating cash flow - £5 million (ie cash loss on day to day business)

Finance servicing costs - £8 million (mostly interest on loans now paid off)

Net capital spend  - £21 million (net spending on assets, haven't had time to look closer yet!)

Loan repayment - £70 million (obvious)

 

Total out = £104 million

 

 

 

This was financed by :

 

Ashley £100 million

Overdraft £4 million

Total £104 million

 

 

 

cheers. the £21m looks like the key figure. the debt repayment is switching to a more favourable lender (ashley), £8m no longer applies and as we wont be paying that we shouldnt really be making a loss. wonder what the £21m has been spent on, something to do with 'the system'?

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needing to repay the stadium debt in the event of the club being sold was highly publicised years before ashley came onto the scene. it's part of the cost of purchasingf the club and if ashley didnt know about it then he has only himself to blame as the info was freely available on websites like nufc finances. saying that, it seems he hasnt even paid that off, just switched our debt so that we owe him or his holding company. it is preferential as the rates may be lower, but then again they might not be.

 

:banghead:

 

He's paid the debt off. 

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Just to be clear about the 20m, 17.5m of it is just accounting, its not real money that ashley has to transfer out of the sportsdirect coffers into northern rock, its just a reduction in the value of the playing staff. The real loss is 2.5m as far as i can tell. If you think about the amount of money that will be freed up when one of those asset values falls to zero, the financial picture is not that bleak. 

 

 

That's what I was getting at earlier, just didn't phrase it that well. :)

 

So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team?

 

It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation  (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still.

 

 

where do you think that's gone, considering wages only went up £5m and player trading only cost half a mil net? is it a case of one-off costs associated with the takeover or is the club just not being ran all that well?

 

I posted this earlier, it's the best I can do given the time and information at my disposal. It just shows where the cash went under fairly broad headings.

 

Cash flow in basic terms:

 

 

Operating cash flow - £5 million (ie cash loss on day to day business)

Finance servicing costs - £8 million (mostly interest on loans now paid off)

Net capital spend  - £21 million (net spending on assets, haven't had time to look closer yet!)

Loan repayment - £70 million (obvious)

 

Total out = £104 million

 

 

 

This was financed by :

 

Ashley £100 million

Overdraft £4 million

Total £104 million

 

 

 

cheers. the £21m looks like the key figure. the debt repayment is switching to a more favourable lender (ashley), £8m no longer applies and as we wont be paying that we shouldnt really be making a loss. wonder what the £21m has been spent on, something to do with 'the system'?

 

Players as well

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The thing that throws me about this amortisation thing is that the linear depreciation model just doesn't really work. If we buy a £15m player then it stands to reason that he must be pretty good, or at the very least pretty highly rated by the selling club/other potential buyers. If he's good then his value won't depreciate in a linear fashion - it might even go up - yet the amortisation 'cost' each year will make the accounts look shit.

 

As I've mentioned earlier Dave I agree with you to an extent, but the more I think about it the more sense it makes and I can't think of a better way of doing it.  A players value might well go up, but that's only a theoretical value until he's actually sold and you can't base your accounts off that. (if you valued a player at £10m but he ends up selling for half that do you show a £5m loss on the accounts?)

 

Also some people have said that in a years time we'll be much better off as the amortisation for Owen will be £0.  True, but it also means he's left the club and we, in theory, have to splash more on a replacement.

 

No it doesn't

fair point :)  Although in Owens case it very much looks like it will mean that.

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One last thing before I'm off: Suppose Owen signs a contract this summer. I know, I know.... but suppose he signs it - is he still on the books as being worth £0? His 'worth' will have decreased by about £4m a year so in a few months time he'll be worth nothing. If he signs a new contract is he still listed as being worth nothing in the books? I'm guessing he is?

 

So if he doesn't sign the we let a player worth £0 go and it doesn't affect the books (I'm aware we'd have to replace him with someone else). If he does sign we stand a chance of turning a(n accounting) profit on him should we sell him later.

 

Same applies for Viduka. Also, if we sign someone on a Bosman for a 4 year deal, how much is he worth?   

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The thing that throws me about this amortisation thing is that the linear depreciation model just doesn't really work. If we buy a £15m player then it stands to reason that he must be pretty good, or at the very least pretty highly rated by the selling club/other potential buyers. If he's good then his value won't depreciate in a linear fashion - it might even go up - yet the amortisation 'cost' each year will make the accounts look shit.

 

As I've mentioned earlier Dave I agree with you to an extent, but the more I think about it the more sense it makes and I can't think of a better way of doing it.  A players value might well go up, but that's only a theoretical value until he's actually sold and you can't base your accounts off that. (if you valued a player at £10m but he ends up selling for half that do you show a £5m loss on the accounts?)

 

Also some people have said that in a years time we'll be much better off as the amortisation for Owen will be £0.  True, but it also means he's left the club and we, in theory, have to splash more on a replacement.

 

So it makes sense to offer him a very good contract offer. I get you.

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The thing that throws me about this amortisation thing is that the linear depreciation model just doesn't really work. If we buy a £15m player then it stands to reason that he must be pretty good, or at the very least pretty highly rated by the selling club/other potential buyers. If he's good then his value won't depreciate in a linear fashion - it might even go up - yet the amortisation 'cost' each year will make the accounts look shit.

 

As I've mentioned earlier Dave I agree with you to an extent, but the more I think about it the more sense it makes and I can't think of a better way of doing it.  A players value might well go up, but that's only a theoretical value until he's actually sold and you can't base your accounts off that. (if you valued a player at £10m but he ends up selling for half that do you show a £5m loss on the accounts?)

 

Also some people have said that in a years time we'll be much better off as the amortisation for Owen will be £0.  True, but it also means he's left the club and we, in theory, have to splash more on a replacement.

 

I think Chelsea are the only club that actually values their players as assets and includes them in the accounts as such. They are far away from breaking even, which was Abramovich's 5 year plan. Another Russian failing with a 5-year plan ;)

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indeed. if the £6.6m was our last loan repayment then you'd assume we're going to make a profit this season (take away a couple of mil from reduced crowds/tho that might be offset with 3 yr ticket payments coming in, i dunno). of course Ashley might have arranged it that we make reduced rate repayments to SJH instead, in which case we're not that different from how we were under Shepherd, certainly when you consider most of the loan was a long-term debt secured against season ticket sales from the expanded ground (i think over £50m of the £70m with the rest made up overdraft and other loans).

 

The gates are 5,000 down so the season ticket sales wouldn't have paid off the loan, the ground expansion cost £42 million.

 

gates down 3856 and some of that will be fewer away fans spending on what for most is the longest away trip in the league. also we've some big home games left which will probably push the average up - mackems, man utd, arsenal, chelsea. some tickets have gone up in price since then too.

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One last thing before I'm off: Suppose Owen signs a contract this summer. I know, I know.... but suppose he signs it - is he still on the books as being worth £0? His 'worth' will have decreased by about £4m a year so in a few months time he'll be worth nothing. If he signs a new contract is he still listed as being worth nothing in the books? I'm guessing he is?

 

So if he doesn't sign the we let a player worth £0 go and it doesn't affect the books (I'm aware we'd have to replace him with someone else). If he does sign we stand a chance of turning a(n accounting) profit on him should we sell him later.

 

Same applies for Viduka. Also, if we sign someone on a Bosman for a 4 year deal, how much is he worth?   

 

Viduka will be worth nothing, so any money raised would be pure 'profit' on the books.

 

Perhaps (and I'm fucking hoping here) that's the reasoning behind signing Ameobi up.

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One last thing before I'm off: Suppose Owen signs a contract this summer. I know, I know.... but suppose he signs it - is he still on the books as being worth £0? His 'worth' will have decreased by about £4m a year so in a few months time he'll be worth nothing. If he signs a new contract is he still listed as being worth nothing in the books? I'm guessing he is?

 

So if he doesn't sign the we let a player worth £0 go and it doesn't affect the books (I'm aware we'd have to replace him with someone else). If he does sign we stand a chance of turning a(n accounting) profit on him should we sell him later.

 

Same applies for Viduka. Also, if we sign someone on a Bosman for a 4 year deal, how much is he worth?   

 

Viduka will be worth nothing, so any money raised would be pure 'profit' on the books.

 

Perhaps (and I'm fucking hoping here) that's the reasoning behind signing Ameobi up.

 

We're on the same wavelength here Dave. :nods:

 

Getting something for someone who's always been worth nothing has got to look good.

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needing to repay the stadium debt in the event of the club being sold was highly publicised years before ashley came onto the scene. it's part of the cost of purchasingf the club and if ashley didnt know about it then he has only himself to blame as the info was freely available on websites like nufc finances. saying that, it seems he hasnt even paid that off, just switched our debt so that we owe him or his holding company. it is preferential as the rates may be lower, but then again they might not be.

 

:banghead:

 

He's paid the debt off. 

 

as a loan

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The other question is, if amortisation as a cost is due to the players' values decreasing based on their original contracts, surely this would happen whoever the owner, whatever the year? If Owen at £16m goes down £4m per year, doesn't that mean he went down £4m last year and also the same this year?

 

Unless we've stated this year that the players we own have depreciated in value more than previously? But what would be the purpose of deliberately making the accounts look worse through pessimism?

 

Not sure if this helps:

 

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.

 

Yes but the fact is amortisation isn't useful when looking at what we actually made or lost in 2008 or what Ashley may have had to spend to continue to keep the club debt free.  As in the £17.8 million "loss" did not actually require Ashley to spend £17.8 million, because its a paper loss based on depreciation of players values who were bought 3 or 4 or even 5 years ago.

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needing to repay the stadium debt in the event of the club being sold was highly publicised years before ashley came onto the scene. it's part of the cost of purchasingf the club and if ashley didnt know about it then he has only himself to blame as the info was freely available on websites like nufc finances. saying that, it seems he hasnt even paid that off, just switched our debt so that we owe him or his holding company. it is preferential as the rates may be lower, but then again they might not be.

 

:banghead:

 

He's paid the debt off. 

 

as a loan

 

As opposed to doing what?  Genuine question.

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The other question is, if amortisation as a cost is due to the players' values decreasing based on their original contracts, surely this would happen whoever the owner, whatever the year? If Owen at £16m goes down £4m per year, doesn't that mean he went down £4m last year and also the same this year?

 

Unless we've stated this year that the players we own have depreciated in value more than previously? But what would be the purpose of deliberately making the accounts look worse through pessimism?

 

Not sure if this helps:

 

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.

 

Yes but why not instead just look at what we paid for the likes of Coloccini ect vs what we made on players sold at the same time.  That's a better indicator of real money lost and what Ashley might have had to put in himself to keep the club debt free.  The fact is amortisation doesn't reflect real losses in this particular year.  As in the £17.8 million "loss" did not actually require Ashley to spend £17.8 million, because its a paper loss based on depreciation of players values who were bought 3 or 4 or even 5 years ago.

 

Cashflow my friend

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Just to be clear about the 20m, 17.5m of it is just accounting, its not real money that ashley has to transfer out of the sportsdirect coffers into northern rock, its just a reduction in the value of the playing staff. The real loss is 2.5m as far as i can tell. If you think about the amount of money that will be freed up when one of those asset values falls to zero, the financial picture is not that bleak. 

 

 

That's what I was getting at earlier, just didn't phrase it that well. :)

 

So if the 'real' loss is £2.5m, are people justified in claiming Ashley should have spent more on the first team?

 

It wasn't the real loss in cash terms. We went from owing £70 million at 30th June 2007 to owing £100 million at 30th June 2008, increasing to £110 million after that. If you forget amortisation  (which is a perfectly good concept btw) and all that and just focus on Ashley's cash position it puts it into perspective. £30 million of extra cash was stuck into the business for the club to (at best) stand still.

 

 

where do you think that's gone, considering wages only went up £5m and player trading only cost half a mil net? is it a case of one-off costs associated with the takeover or is the club just not being ran all that well?

 

I posted this earlier, it's the best I can do given the time and information at my disposal. It just shows where the cash went under fairly broad headings.

 

Cash flow in basic terms:

 

 

Operating cash flow - £5 million (ie cash loss on day to day business)

Finance servicing costs - £8 million (mostly interest on loans now paid off)

Net capital spend  - £21 million (net spending on assets, haven't had time to look closer yet!)

Loan repayment - £70 million (obvious)

 

Total out = £104 million

 

 

 

This was financed by :

 

Ashley £100 million

Overdraft £4 million

Total £104 million

 

 

 

cheers. the £21m looks like the key figure. the debt repayment is switching to a more favourable lender (ashley), £8m no longer applies and as we wont be paying that we shouldnt really be making a loss. wonder what the £21m has been spent on, something to do with 'the system'?

 

Players as well

 

Definitely - we won't see a net spend like the Summer of 2007 for many a year to come  bluerazz.gif  

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Guest neesy111

Ashley has put £110 million of his own cash into the club to subsidise it, that's £106 million more than anybody else has ever put in.

 

That's all well and good (and we're all very grateful for him doing so if one supposes we were getting pretty close to trouble), but it doesn't help the here and now on the pitch does it?

 

How long will it excuse him of spending nothing on the first team?

 

but if he hadn't of put the money into the club would not exist as shepherd put in clause's so that the debt would be need to be repaid if a new owner takes charge

 

he needs to put cash in for signings, but he should be expecting more from what the current team are doing as he is bankrolling their wages basically and no wonder why it's 1 in, 1 out policy

 

we need a sound club behind the scene's before it can be successful on the pitch, the reverse happened at Leeds and look where they are now

 

needing to repay the stadium debt in the event of the club being sold was highly publicised years before ashley came onto the scene. it's part of the cost of purchasingf the club and if ashley didnt know about it then he has only himself to blame as the info was freely available on websites like nufc finances. saying that, it seems he hasnt even paid that off, just switched our debt so that we owe him or his holding company. it is preferential as the rates may be lower, but then again they might not be.

 

that stadium debt went up from 45 million to 70 million with only interest being paid

 

while at the same time shepherd take home 30 million in divinded's from 2001 to 2006

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needing to repay the stadium debt in the event of the club being sold was highly publicised years before ashley came onto the scene. it's part of the cost of purchasingf the club and if ashley didnt know about it then he has only himself to blame as the info was freely available on websites like nufc finances. saying that, it seems he hasnt even paid that off, just switched our debt so that we owe him or his holding company. it is preferential as the rates may be lower, but then again they might not be.

 

:banghead:

 

He's paid the debt off. 

 

as a loan

 

As opposed to doing what?  Genuine question.

 

as opposed to 'putting his hand in his pocket to pay off the debt' something for which most on here praised him. for over a year. probably repeated a thousand times over. people thought that, dont try and reinvent the past to make it look like everyone thought it was a loan from the start. im not criticising Ashley for it but at the same time im not going to praise him as, thus far, we've not had the knock-on effect of the money freed up being used to make us better.

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