Newcastle United Supporters Trust (NUST)

[FrenchWilliam]

Colo - Why are you assuming straight line deprecitation over the life of the contract? Makes very little sense from an accounting point of view. Much better from a balance sheet and income smoothing point of view to hold all the players on a fair value basis.

[Guest Roger Kint]

Colo - Why are you assuming straight line deprecitation over the life of the contract? Makes very little sense from an accounting point of view. Much better from a balance sheet and income smoothing point of view to hold all the players on a fair value basis.

 

From reply 9

 

http://www.newcastle-online.org/nufcforum/index.php/topic,59575.0.html

[Dave]

I think more were just saying the £7m per month thing was ridiculous HF, rather than the club making any profit at all.

[Liam Liam Liam O]

I think more were just saying the £7m per month thing was ridiculous HF, rather than the club making any profit at all.

 

[Colos Short and Curlies]

Colo - Why are you assuming straight line deprecitation over the life of the contract? Makes very little sense from an accounting point of view. Much better from a balance sheet and income smoothing point of view to hold all the players on a fair value basis.

 

Simples, thats the rules. And I don't agree that fair value accounting would be appropriate here, players values are so subjective that it would be very difficult to get a fair comparison between clubs and would create too many opportunities to boost profitability

[Colos Short and Curlies]

It amazes me that someone can try and make a comparison between WBA & NUFC when all he has shown are Turnover/Wages and a profit figure clearly showing that even without running costs any theory of them running at a profit looks dubious. The only reason their accounts show a profit is via transfers which makes the whole thing a complete pile of dogshit as an argument

 

If buying players only affects the P&L over time (ie spend over the period of the contract), surely the same is the case for selling players?

 

Profits/losses on player sales are shown in the year the player is sold.

 

Example: Player is bought for £8 million on a 4 year contract. The P&L is charged (amortisation) £2 million every year of the contract. If however the player is sold after 2 years for £6 million then the P&L will show a profit that year of £2 million  - being £6 million less the written down value of the player of £4 million(8-4). 

 

Edit: Just for clarification - once the player has been sold no further charges are made to the P&L and the player disappears from the club accounts.

 

So given what we paid for the players sold in the last 5 months, shouldn't the profit on players in the last 5 months be hefty?  Genuine question....

Bassong is bought for £0 on a 4 year contract. The P&L is charged (amortisation) £0 million every year of the contract. However the player is sold after 1 year for £8 million then the P&L will show a profit that year of £8 million   - being £8 million more the marked up value of the player of £8 million(8-0). 

 

and the other players were Martins Beye and Duff who's combined profit/loss is dwarfed by the size of the bassong deal.

 

Similarly large profits would have been realised on Given, Nzogbia and Milner recently too if I understand you right.  No?

 

I've got a feeling that you're thinking along the lines of highlighting this "profit" as reasons against Ashley when the accounts are released, non?

 

Not particularly.

 

The only thing I slag Ashley off for is lying.

 

I'm only posting in here because people are saying it's ridiculous to think for a moment that the club could currently be making money and I still can't see how it isn't (at least before profit is used to satisfy the debt to Ashley).

 

That's not to say Ashley has taken out more than he's put in or that if he were to sell at the moment he would walk off with a profit.

 

You have got to remember that its only an accounting profit anyway. I'm sure we have in reality lost money on Martins in terms of fees paid and received, but the accounts will show a profit

[Happy Face]

It amazes me that someone can try and make a comparison between WBA & NUFC when all he has shown are Turnover/Wages and a profit figure clearly showing that even without running costs any theory of them running at a profit looks dubious. The only reason their accounts show a profit is via transfers which makes the whole thing a complete pile of dogshit as an argument

 

If buying players only affects the P&L over time (ie spend over the period of the contract), surely the same is the case for selling players?

 

Profits/losses on player sales are shown in the year the player is sold.

 

Example: Player is bought for £8 million on a 4 year contract. The P&L is charged (amortisation) £2 million every year of the contract. If however the player is sold after 2 years for £6 million then the P&L will show a profit that year of £2 million  - being £6 million less the written down value of the player of £4 million(8-4). 

 

Edit: Just for clarification - once the player has been sold no further charges are made to the P&L and the player disappears from the club accounts.

 

So given what we paid for the players sold in the last 5 months, shouldn't the profit on players in the last 5 months be hefty?  Genuine question....

 

Bassong is bought for £0 on a 4 year contract. The P&L is charged (amortisation) £0 million every year of the contract. However the player is sold after 1 year for £8 million then the P&L will show a profit that year of £8 million   - being £8 million more the marked up value of the player of £8 million(8-0). 

 

and the other players were Martins Beye and Duff who's combined profit/loss is dwarfed by the size of the bassong deal.

 

Similarly large profits would have been realised on Given, Nzogbia and Milner recently too if I understand you right.  No?

 

Yes - Martins will have a decent profit on him btw as we had owned him for a while so his value will have been relatively small.

 

We should see the proft for Given, N Zog and Milner in these accounts, Bassong et al next year.

 

You will see two numbers in the accounts.

 

Profit/Loss before player trading (which will exclude these sales)

Profit/Loss (which includes them)

 

You want the profit in the first one to be a high proportion of the second one, otherwise it shows that on a day to day basis we are in the shit!

 

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Similarly we can only profit from the transfers out, and given the deals struck for Bassong and Martins it should compare favourably.

[Happy Face]

I think more were just saying the £7m per month thing was ridiculous HF, rather than the club making any profit at all.

 

I'll believe we're making a profit when I see it. Might even offer to eat my hat, I'll have a think about it.

 

I am struggling to see how we could make a profit though.

I cant see any way we're making profit this year reduced income wages while lower still are a huge percentage of our current income

 

etc.

[Happy Face]

If we were making a £7 million a month profit, why did Ashley have to put £20 million in at the end of October? 

 

Who says he did?

 

[quayside]

It amazes me that someone can try and make a comparison between WBA & NUFC when all he has shown are Turnover/Wages and a profit figure clearly showing that even without running costs any theory of them running at a profit looks dubious. The only reason their accounts show a profit is via transfers which makes the whole thing a complete pile of dogshit as an argument

 

If buying players only affects the P&L over time (ie spend over the period of the contract), surely the same is the case for selling players?

 

Profits/losses on player sales are shown in the year the player is sold.

 

Example: Player is bought for £8 million on a 4 year contract. The P&L is charged (amortisation) £2 million every year of the contract. If however the player is sold after 2 years for £6 million then the P&L will show a profit that year of £2 million  - being £6 million less the written down value of the player of £4 million(8-4). 

 

Edit: Just for clarification - once the player has been sold no further charges are made to the P&L and the player disappears from the club accounts.

 

So given what we paid for the players sold in the last 5 months, shouldn't the profit on players in the last 5 months be hefty?  Genuine question....

Bassong is bought for £0 on a 4 year contract. The P&L is charged (amortisation) £0 million every year of the contract. However the player is sold after 1 year for £8 million then the P&L will show a profit that year of £8 million   - being £8 million more the marked up value of the player of £8 million(8-0). 

 

and the other players were Martins Beye and Duff who's combined profit/loss is dwarfed by the size of the bassong deal.

 

Similarly large profits would have been realised on Given, Nzogbia and Milner recently too if I understand you right.  No?

 

I've got a feeling that you're thinking along the lines of highlighting this "profit" as reasons against Ashley when the accounts are released, non?

 

Not particularly.

 

The only thing I slag Ashley off for is lying.

 

I'm only posting in here because people are saying it's ridiculous to think for a moment that the club could currently be making money and I still can't see how it isn't (at least before profit is used to satisfy the debt to Ashley).

 

That's not to say Ashley has taken out more than he's put in or that if he were to sell at the moment he would walk off with a profit.

 

You have got to remember that its only an accounting profit anyway. I'm sure we have in reality lost money on Martins in terms of fees paid and received, but the accounts will show a profit

 

Yup - cash flow is the only real tool of running a business. You can show a profit in the P&L but if a good chunk of your income is in stage payments (for example) then you can still have negative cash flows and need to stick money in for working capital in order to survive.

[Colos Short and Curlies]

I think more were just saying the £7m per month thing was ridiculous HF, rather than the club making any profit at all.

 

I'll believe we're making a profit when I see it. Might even offer to eat my hat, I'll have a think about it.

 

I am struggling to see how we could make a profit though.

I cant see any way we're making profit this year reduced income wages while lower still are a huge percentage of our current income

 

etc.

 

Transfers are a red herring yes, personally I would never include them in determining the Profit or Loss (I would also exclude the ammortisation of the transfer fee, but thats just me).

 

As an accountant I would say that it is possible that we will scrape a profit either last year or this, however as a fan I would say that we have made a Loss on the Martins transfer etc and therefore would say that the club has been losing money.

 

 

[huss9]

the bottom line is that clubs dont really make money - if they do it needs to be reinvested. why ask people to risk their pension funds? admittedly I'm not very good when it comes to financial matters, but would there be that definite risk that ordinary punters could lose their pensions if things went tits up?

[Colos Short and Curlies]

the bottom line is that clubs dont really make money - if they do it needs to be reinvested. why ask people to risk their pension funds? admittedly I'm not very good when it comes to financial matters, but would there be that definite risk that ordinary punters could lose their pensions if things went tits up?

 

There's a risk that people can lose a lot of their pensions just by leaving it with the pension people!

[Guest Roger Kint]

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Are you on drugs? Turnover - £27m less wages - £21m is £6m

 

Do you lie in a world where football clubs dont pay any other costs?

[quayside]

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Are you on drugs? Turnover - £27m less wages - £21m is £6m

 

Do you lie in a world where football clubs dont pay any other costs?

 

WBA would have made a P&L loss without the profit on player transfers. For some reason their accounts don't include a cash flow but it looks like their cash usage was close to neutral over the 12 months. But as you said in an earlier post comparisons with us and WBA aren't too relevant.

[Happy Face]

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Are you on drugs? Turnover - £27m less wages - £21m is £6m

 

Do you lie in a world where football clubs dont pay any other costs?

 

You best write to the Guardian.

 

http://www.guardian.co.uk/football/2009/jun/03/english-premier-league-debt

 

Their reporters are clearly drugged up.

[Guest Roger Kint]

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Are you on drugs? Turnover - £27m less wages - £21m is £6m

 

Do you lie in a world where football clubs dont pay any other costs?

 

You best write to the Guardian.

 

http://www.guardian.co.uk/football/2009/jun/03/english-premier-league-debt

 

Their reporters are clearly drugged up.

 

Ahh so you dont have a clue other than what the Guardian feed you, thought so

[Guest Roger Kint]

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Are you on drugs? Turnover - £27m less wages - £21m is £6m

 

Do you lie in a world where football clubs dont pay any other costs?

 

WBA would have made a P&L loss without the profit on player transfers. For some reason their accounts don't include a cash flow but it looks like their cash usage was close to neutral over the 12 months. But as you said in an earlier post comparisons with us and WBA aren't too relevant.

 

Yeah i got that, just wondering why Happy seems to think football clubs only pay out wages and nothing else

[Dave]

Is there a particular reason you're being so arsey? With a few exceptions (that I don't think include you), none of us are accountants here.

[quayside]

I've got the WBA accounts in front of me and they show:

 

Income 28m

 

Less: Wages 22m

Less: Other costs 13m

 

So Loss before player trading = (7m)

 

 

Profit on player trading = 18m

So accounting profit for the year = 11m

 

Can we call it a day on WBA now and wait for our results to hit  

[Happy Face]

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Are you on drugs? Turnover - £27m less wages - £21m is £6m

 

Do you lie in a world where football clubs dont pay any other costs?

 

WBA would have made a P&L loss without the profit on player transfers. For some reason their accounts don't include a cash flow but it looks like their cash usage was close to neutral over the 12 months. But as you said in an earlier post comparisons with us and WBA aren't too relevant.

 

I was more interested in the kind of money we can expect in the Championship when mentioning them.  It was more of a contrast than a compare.

 

They got £14m tv money, it's safe to say we'll be getting more than that this year.

They got £2.2m in merchandise, it's safe to say we'll be getting more than that this year.

They got £4m other commercial income, it's safe to say we'll be getting more than that this year.

They got £7m gate + matchday, 43,000 paying £20 each over 23 games is £19.8m before pies or pints.

 

So where they earned £27.2m in the championship, it's unclear what we've earned but it's safe to say it's clearly in excess of £40m.  Llambias said it was £50m.

 

They spent £22m on wages (80%), we're spending £35m on wages (70%)

[Guest Roger Kint]

Is there a reason you're being so arsey? With a very few exceptions (that I don't think include you), none of us are accountants here.

 

Yes, yes there is.

 

 

[Guest Roger Kint]

I've got the WBA accounts in front of me and they show:

 

Income 28m

 

Less: Wages 22m

Less: Other costs 13m

 

So Loss before player trading = (7m)

 

 

Profit on player trading = 18m

So accounting profit for the year = 11m

 

Can we call it a day on WBA now and wait for our results to hit  

 

Thanks

 

 

[quayside]

In 2008 our other (non wages) costs were £50m - god knows how much of that is still there now, but the running costs of the training ground and SJP won't come cheap.

[Happy Face]

So whoever brought up transfers in the comparison with WBA, it was a red herring.  Whatever they bought or sold given the headline prices, their actual transfer frofit for that year worked out at a few million that takes what seems to be a £6m profit up to an £11m profit.

 

Are you on drugs? Turnover - £27m less wages - £21m is £6m

 

Do you lie in a world where football clubs dont pay any other costs?

 

WBA would have made a P&L loss without the profit on player transfers. For some reason their accounts don't include a cash flow but it looks like their cash usage was close to neutral over the 12 months. But as you said in an earlier post comparisons with us and WBA aren't too relevant.

 

Yeah i got that, just wondering why Happy seems to think football clubs only pay out wages and nothing else

 

I'd not done the sums and took the bottom line figures I read.  I was wrong to claim a £6m profit before player trading.  Can you find it in your heart to forgive me?  I can't promise i won't make a mistake like this in future, maybe this is why I identify with the NUST so much.