Football Finances

[Rob W]

Facts?

 

on here!!

 

oh my God!!

 

 

:yikes:

 

[UV]

quayside

 

I have and will defend Hall & Shepherd for how they progressed this club to the level where it was capable under the correct management of getting into Europe, buying players that most other teams in the league wanted, and hanging onto most of the ones we wanted to keep. They were so successful at it that it got to the point that we as supporters expected to do these things, and took the money that came into the club for granted. This once again though is not about defending the previous regime, but trying to put into context the state of the club when Ashley took over and how that has changed. Additional costs incurred in the first years of Ashley's ownership were due to Ashley's decisions not because of the existing state of the club, and reduced revenues today are in no small part a consequence of how it has been run since.

 

You know very well those profit and loss figures are affected massively by amortisation. It's a useful accounting tool for valuing a business (although in the case of an asset like a club's playing squad it will be a wildly inaccurate one), but it can and often does show a very false picture of how the club did in any particular year. The valuation of the squad from one year to the next depends as much on who you sell as it does on what you sell them for, and a high spend one year will affect the amortisation figures for the next 4/5 years even if say you paid up front for players with a large transfer fee you received for an academy product.

 

I believe that

cash flow is the only real tool of running a business.

and to a large extent

the key thing is what the cash requirements are, the profit or loss is irrelevant.

 

When you say "the club lost £34m" I think you know very well that most people will interpret that as we spent £34m than we made which is not the case; you don't have to write out a cheque for the amortisation. The actual figure that most people would interpret as the loss is £5m (taking this from your post in the Enrique thread). In 2007 the club was paying interest on loans, did not have the shirt sponsorship money coming in, was paying the instalments on some of the players it had previously bought in like Owen & Luque, and made a £5m cash flow loss. There would have been some inevitable increases in costs in 2008, but knowing there was an increase in premiership TV money of £18m (overall was less as we weren't going to get UEFA TV money) there is no reason why the club could not have at worst broken even in cash flow terms. I don't have the 2008 accounts to analyse the cause, but the fact that you have said elsewhere there was a £34m cash flow loss in 2008 shows that Ashley must have drastically increased the costs in that year way in excess of how the club was previously being run. I would guess a major part of this was due to paying for players up front.

 

 

This isn't relevant to Ashley's running of the club, so I wont labour the point, but I have a mortgage on my house. That doesn't mean I can't take out a higher mortgage on it. The club WAS able to secure a major refinancing project, so I'm not sure why you keep trying to insist that it wouldn't be able to.

 

Once again it's not particularly relevant to the discussion - I was just trying to address most of Teasy's post - however I was under the impression the dividend issued in 2005 was taken as a scrip dividend by Hall & Shepherd the main shareholders at least. I stand to be corrected on this.

 

I have seen that article, I didn't comment specifically on it at the time because it's almost exactly the same as your opinion, and I've commented on that before. Unless I'm mistaken the same guy (it was an Arsenal supporter and they took the same line) has written stuff before about our accounts, and at that time he acknowledged that he had taken a lot of his figures, and the editorial standpoint from nufc-finances. This may well be one of the "independent experts" not mentioned. The person who ran that was no more qualified to do so than me and had an unashamedly anti-Shepherd agenda, (now that Shepherd has gone he's not interested in our accounts anymore, he'd rather work on the accounts of Spurs, Liverpool and Scottish clubs). The figures are useful, and I would hope people would draw their own conclusions from them. The comment is still opinion though, do not try to dress it up as fact. Specifically for example he doesn't address WHY the debt has increased so drastically under Ashley, and just accepts it as a fait accompli saying that the previous board wouldn't have been able to raise that much. Just because financial analysts agree doesn't make them right. Maybe I'm getting above my station, but if someone had asked me years ago whether self certified 100% mortgages were a good idea, I'd have gone against the financial experts. If you put a reduced wage bill in front of an accountant they'll probably say it's a great thing. That wont take into consideration the increased chance of relegation, the reduced ability to attract players and hang onto your best ones, the reduced interest from supporters in the club, and the reduced revenues in future years that will come from being just another also-ran which together may mean that you eventually have to cut the wage bill even further just to stay in the black.

 

 

I think we agree that the club would have made a cash flow profit this year regardless of Carroll's sale (as does that article), this will not come as a surprise to Ashley either, so I'd be interested in what you think the plan so "the club is run at a “break even” manner by the year 2015/2016" actually means? Do you think Ashley is aiming to pay off all the extra debt he has put onto the club in the next 5 years? Personally I have a nasty feeling that is the plan. If so, considering the already reduced revenues which put us back in amongst a lot of the teams we used to have an advantage over, do you think this is achievable without this extra handicap putting the club at major risk of another relegation?

 

 

Don't confuse the poor fellow with facts.

Invaluable contribution as ever Ozzie. Glad to see you're adding salient points to the argument and not just blindly cheerleading the side which is anti-Shepherd whilst not understanding a word of it.

[madras]

This isn't relevant to Ashley's running of the club, so I wont labour the point, but I have a mortgage on my house. That doesn't mean I can't take out a higher mortgage on it. The club WAS able to secure a major refinancing project, so I'm not sure why you keep trying to insist that it wouldn't be able to.

 

you could take put a higher mortgage on it if there was equity on it, alternativly you could take out a mortgage on more favourable terms....like i have done several times.

 

 

[AyeDubbleYoo]

This isn't relevant to Ashley's running of the club, so I wont labour the point, but I have a mortgage on my house. That doesn't mean I can't take out a higher mortgage on it. The club WAS able to secure a major refinancing project, so I'm not sure why you keep trying to insist that it wouldn't be able to.

 

you could take put a higher mortgage on it if there was equity on it, alternativly you could take out a mortgage on more favourable terms....like i have done several times.

 

 

Yes, but also if you had a load of other debts and your financial position was constantly worsening, the bank would be unlikely to agree to any refinancing.

[madras]

This isn't relevant to Ashley's running of the club, so I wont labour the point, but I have a mortgage on my house. That doesn't mean I can't take out a higher mortgage on it. The club WAS able to secure a major refinancing project, so I'm not sure why you keep trying to insist that it wouldn't be able to.

 

you could take put a higher mortgage on it if there was equity on it, alternativly you could take out a mortgage on more favourable terms....like i have done several times.

 

 

Yes, but also if you had a load of other debts and your financial position was constantly worsening, the bank would be unlikely to agree to any refinancing.

you'd think so wouldn't you, however i've been doing a lot of reading on why the economy fucked up with things like derivitives, SIV's, credit default swaps etc and the standard rules of credit seemed to have been thrown out of the window for a few years there. I also remember reading about portsmouth that they had been allowed to keep borrowing long after they should've been stopped.

[Guest neesy111]

This isn't relevant to Ashley's running of the club, so I wont labour the point, but I have a mortgage on my house. That doesn't mean I can't take out a higher mortgage on it. The club WAS able to secure a major refinancing project, so I'm not sure why you keep trying to insist that it wouldn't be able to.

 

you could take put a higher mortgage on it if there was equity on it, alternativly you could take out a mortgage on more favourable terms....like i have done several times.

 

 

Yes, but also if you had a load of other debts and your financial position was constantly worsening, the bank would be unlikely to agree to any refinancing.

you'd think so wouldn't you, however i've been doing a lot of reading on why the economy fucked up with things like derivitives, SIV's, credit default swaps etc and the standard rules of credit seemed to have been thrown out of the window for a few years there. I also remember reading about portsmouth that they had been allowed to keep borrowing long after they should've been stopped.

 

See Real Madrid, they've been technically insolvent for the last 12 years.

[madras]

This isn't relevant to Ashley's running of the club, so I wont labour the point, but I have a mortgage on my house. That doesn't mean I can't take out a higher mortgage on it. The club WAS able to secure a major refinancing project, so I'm not sure why you keep trying to insist that it wouldn't be able to.

 

you could take put a higher mortgage on it if there was equity on it, alternativly you could take out a mortgage on more favourable terms....like i have done several times.

 

 

Yes, but also if you had a load of other debts and your financial position was constantly worsening, the bank would be unlikely to agree to any refinancing.

you'd think so wouldn't you, however i've been doing a lot of reading on why the economy f***ed up with things like derivitives, SIV's, credit default swaps etc and the standard rules of credit seemed to have been thrown out of the window for a few years there. I also remember reading about portsmouth that they had been allowed to keep borrowing long after they should've been stopped.

 

See Real Madrid, they've been technically insolvent for the last 12 years.

thats real madrid, the spanish banks are shit scared to close them down..........didn't stop the same banks going after valencia.

[Village Idiot]

The saving banks that usually bankrolled Real Madrid and Barça's debt have now tighter lending regulations (Spanish bank regs are actually very tight, but they didn't apply to savings banks).

 

Also it wasn't banks cozying up to Real Madrid as much as it was to Florentino Pérez. The bank that holds most of Real Madrid's debt is a big investor in Pérez's businesses (and Madrid's debt is a drop in the ocean compared to those)

[Colos Short and Curlies]

When you say "the club lost £34m" I think you know very well that most people will interpret that as we spent £34m than we made which is not the case; you don't have to write out a cheque for the amortisation. The actual figure that most people would interpret as the loss is £5m (taking this from your post in the Enrique thread). In 2007 the club was paying interest on loans, did not have the shirt sponsorship money coming in, was paying the instalments on some of the players it had previously bought in like Owen & Luque, and made a £5m cash flow loss.

 

We wouldn't have paid any cash for Owen in 2007. The whole point of getting the sponsorship money up front was to pay for him - unless of course it was used to mask some other horrible cash loss or course

 

Oh and you do write a cheuqe for ammortisation - as you know it is spreading the value of a transfer fee over a period - it is ultimately a cash loss to a business

[madras]

The saving banks that usually bankrolled Real Madrid and Barça's debt have now tighter lending regulations (Spanish bank regs are actually very tight, but they didn't apply to savings banks).

 

Also it wasn't banks cozying up to Real Madrid as much as it was to Florentino Pérez. The bank that holds most of Real Madrid's debt is a big investor in Pérez's businesses (and Madrid's debt is a drop in the ocean compared to those)

weren't real madrid also massivly helped out by the municipality (?) when they 'sold' their training ground to the city of madrid ?

[Village Idiot]

The saving banks that usually bankrolled Real Madrid and Barça's debt have now tighter lending regulations (Spanish bank regs are actually very tight, but they didn't apply to savings banks).

 

Also it wasn't banks cozying up to Real Madrid as much as it was to Florentino Pérez. The bank that holds most of Real Madrid's debt is a big investor in Pérez's businesses (and Madrid's debt is a drop in the ocean compared to those)

weren't real madrid also massivly helped out by the municipality (?) when they 'sold' their training ground to the city of madrid ?

 

Yes, they got their training ground re-zoned and then they sold it to the city, at a huge expense to the taxpayer.

 

We actually tried to do the same but we have an honest city council

[quayside]

quayside

 

I have and will defend Hall & Shepherd for how they progressed this club to the level where it was capable under the correct management of getting into Europe, buying players that most other teams in the league wanted, and hanging onto most of the ones we wanted to keep. They were so successful at it that it got to the point that we as supporters expected to do these things, and took the money that came into the club for granted. This once again though is not about defending the previous regime, but trying to put into context the state of the club when Ashley took over and how that has changed. Additional costs incurred in the first years of Ashley's ownership were due to Ashley's decisions not because of the existing state of the club, and reduced revenues today are in no small part a consequence of how it has been run since.

 

I too have never been anything other than appreciative of where the previous board took us from what conservatively could be described as a low point in the club’s history. The regular Premiership football, qualifying for Europe were great achievements from where the club had been not many years before. And St James’ Park is one of great iconic stadia in the country.

I totally agree with you about finances being taken for granted. Post Souness I used to berate Shepherd for not getting the cheque book out and remember my utter disbelief when we signed the likes of Sibierski and Olly Bernard (second time around).  To be honest despite my financial background I was never in the slightest bit interested or bothered about the club finances until Ashley took over. The fact though is that Shepherd and Hall got amply rewarded for where they took the club and by the time they moved on it was in a mess. That really is my point and one I have total conviction in, you do not accumulate £93 million of trading losses if you are running a successful business. What Ashley has or has not done is a different matter.

 

There were undoubtedly costs incurred and revenues lost as a result of decisions made by Ashley, I have never argued otherwise.   

 

 

You know very well those profit and loss figures are affected massively by amortisation. It's a useful accounting tool for valuing a business (although in the case of an asset like a club's playing squad it will be a wildly inaccurate one), but it can and often does show a very false picture of how the club did in any particular year. The valuation of the squad from one year to the next depends as much on who you sell as it does on what you sell them for, and a high spend one year will affect the amortisation figures for the next 4/5 years even if say you paid up front for players with a large transfer fee you received for an academy product

 

I believe that

cash flow is the only real tool of running a business.

and to a large extent

the key thing is what the cash requirements are, the profit or loss is irrelevant.

 

When you say "the club lost £34m" I think you know very well that most people will interpret that as we spent £34m than we made which is not the case; you don't have to write out a cheque for the amortisation.

 

 

Let’s be clear on a couple of points about amortisation. Firstly it derives from a cash transaction. We buy a player for £10 million on a five year contract and the profit for the year is hit by £2 million of amortisation every year of that contract.  But the purchase of that player is still a cash item, and £10 million cash will leave the business, whether it is paid by instalments or as a lump sum. People mistakenly believe that amortisation isn’t a real cost and somehow doesn’t count, but it is the way that cash spend on players is recognised in the results for the year. I disagree with your comment about writing out a cheque for amortisation, in effect you pay for it when you buy a player.

 

Of course cash is the main driver in a business but the absolute key is future cash flows and not historical ones, hence my comment above about all trading losses impacting on a business at some point. And I would say that it is equally possible that some of the cash flow effect of a trading loss can occur in earlier years as well as in later years.

 

 

The actual figure that most people would interpret as the loss is £5m (taking this from your post in the Enrique thread). In 2007 the club was paying interest on loans, did not have the shirt sponsorship money coming in, was paying the instalments on some of the players it had previously bought in like Owen & Luque, and made a £5m cash flow loss. There would have been some inevitable increases in costs in 2008, but knowing there was an increase in premiership TV money of £18m (overall was less as we weren't going to get UEFA TV money) there is no reason why the club could not have at worst broken even in cash flow terms. I don't have the 2008 accounts to analyse the cause, but the fact that you have said elsewhere there was a £34m cash flow loss in 2008 shows that Ashley must have drastically increased the costs in that year way in excess of how the club was previously being run. I would guess a major part of this was due to paying for players up front.

 

 

As far as I am aware the club did not start paying for players up front until after the June 2008 financial year. Club income did indeed increase from 2007 to 2008 and yes this was mostly on the back of increased media revenue, although the lack of European football pushed matchday and commercial revenues down a bit, giving a £12m increase year on year. And yet the club still made an accounting loss of £20 million so in very simplistic terms, even though the wage bill increased it was compensated by savings in other areas, and the only difference between 2008 and 2007 was the media revenue. I think as far as the wage bill at that time goes Ashley knew nothing about the club or the industry (some would no doubt argue nothing has changed) but importantly he hadn’t done due diligence and hadn’t got any sort of a grip on the finances. He got sucked in to investing in Allardyce’s vision before deciding he didn’t like it one bit. And he has completely rejected that philosophy, no one could accuse him of splashing big bucks on wages or transfers these days.

 

This isn't relevant to Ashley's running of the club, so I wont labour the point, but I have a mortgage on my house. That doesn't mean I can't take out a higher mortgage on it. The club WAS able to secure a major refinancing project, so I'm not sure why you keep trying to insist that it wouldn't be able to.

 

Clearly I can only speculate on what the refinancing project was. Banks never have and never will lend money without security. My guess is that Shepherd knew his future cash flows weren’t going to allow him to make the repayments and he went to the banks for a restructuring arrangement on the repayments. The banks would have had little option but to accept it. There is an old principle in banking – if you owe the bank £78 it is your problem, if you owe the bank £78 million it is the bank’s problem. But let’s face it if everything financially was ok in the house, as you seem to think it was, why did the club even need to think about refinancing?

 

Once again it's not particularly relevant to the discussion - I was just trying to address most of Teasy's post - however I was under the impression the dividend issued in 2005 was taken as a scrip dividend by Hall & Shepherd the main shareholders at least. I stand to be corrected on this.

 

 

Some of that dividend was taken as a scrip, but it is a dividend none the less. The only reason I referred to it was to emphasise that the previous owners were constantly taking out of the club. It is highly likely that at some point Ashley, assuming he doesn’t get a good offer to sell, will be looking to get some or all of his loan back. I can see any loan repayments being greeted with hoots of anger but if he does go down that path he isn’t taking money out of the club in the way his predecessors did, he’s simply getting back what he put in.

 

 

 

I have seen that article, I didn't comment specifically on it at the time because it's almost exactly the same as your opinion, and I've commented on that before. Unless I'm mistaken the same guy (it was an Arsenal supporter and they took the same line) has written stuff before about our accounts, and at that time he acknowledged that he had taken a lot of his figures, and the editorial standpoint from nufc-finances. This may well be one of the "independent experts" not mentioned. The person who ran that was no more qualified to do so than me and had an unashamedly anti-Shepherd agenda, (now that Shepherd has gone he's not interested in our accounts anymore, he'd rather work on the accounts of Spurs, Liverpool and Scottish clubs). The figures are useful, and I would hope people would draw their own conclusions from them. The comment is still opinion though, do not try to dress it up as fact. Specifically for example he doesn't address WHY the debt has increased so drastically under Ashley, and just accepts it as a fait accompli saying that the previous board wouldn't have been able to raise that much. Just because financial analysts agree doesn't make them right.

 

There is no secret as to why the debt has increased under Ashley, it is because the club has carried on losing money. The losses were reduced in 2008 (as referred to above) and again in 2009 but they were still losses, and I’m sorry to repeat it, accounting losses need funding with cash. You cannot carry on making accounting losses and not need to put cash at some point. 2010 will obviously have generated a further loss which he will have funded. 

 

 

Maybe I'm getting above my station, but if someone had asked me years ago whether self certified 100% mortgages were a good idea, I'd have gone against the financial experts. If you put a reduced wage bill in front of an accountant they'll probably say it's a great thing. That wont take into consideration the increased chance of relegation, the reduced ability to attract players and hang onto your best ones, the reduced interest from supporters in the club, and the reduced revenues in future years that will come from being just another also-ran which together may mean that you eventually have to cut the wage bill even further just to stay in the black.

 

 

 

You aren’t above your station but you have to appreciate that there is a huge difference between looking for an opinion on a piece of historical information (a set of audited accounts) as compared to seeking advice on something that can be affected by future unknown events (a mortgage). The accounts are there in black and white (no pun intended) and they are factual sadly. Try and find someone with any training in the financial profession who will tell you that everything was fine in those 2007 accounts. I am not in the banking sector but I asked a mate of mine, who works in corporate banking, to have a look and his view was that Barclays would have been crapping themselves at that point, which is probably why they wasted no time in calling the loan in when an opportunity arose.

 

Obviously I understand your point about the club declining but am not as convinced as you are that we are on a continuous downward path at present. We were not in great shape football wise in 2007 and were only 5 points from the relegation zone when the season closed. As of now I think we have 4 players in the side who are as good as anyone I can remember playing in their positions. As Brummie posted on another thread there are a number of clubs at our level, the world has been changed by the likes of Chelsea and Man City, and if you want us to compete with the top four any time soon you are destined for a bitter old age.

 

 

I think we agree that the club would have made a cash flow profit this year regardless of Carroll's sale (as does that article), this will not come as a surprise to Ashley either, so I'd be interested in what you think the plan so "the club is run at a “break even” manner by the year 2015/2016" actually means? Do you think Ashley is aiming to pay off all the extra debt he has put onto the club in the next 5 years? Personally I have a nasty feeling that is the plan. If so, considering the already reduced revenues which put us back in amongst a lot of the teams we used to have an advantage over, do you think this is achievable without this extra handicap putting the club at major risk of another relegation?

 

 

 

As far as the debt is concerned you may well be right. Let’s face it there is no such thing in the commercial world as a loan that isn’t repayable. Do you honestly think the banks didn’t want their money back when we were externally financed? Other than there appears to be no interest accruing on the loan and Ashley can take a relaxed view on how he gets it back - what’s the difference? All I can say on the relegation issue is that it is not in Ashley’s interest for that to happen. And if he is looking for an exit a side performing well on the pitch is a definite plus. Can he do that with his business model? F*ck knows tbh.

[quayside]

And sorry for the length of that post 

[High Five o]

I have not anything to add, just want to say i really appreciate your posts quayside.

Always good reading!   

[Guest Roger Kint]

I have not anything to add, just want to say i really appreciate your posts quayside.

Always good reading!   

 

Totally agree. Looking forward to quayside's favourite time of the year in the next few weeks where he spends 10 hours a day explaining our accounts to people and addressing amortisation til his fingers hurt

[Benwell Lad]

And sorry for the length of that post 

 

....not to mention the colour of it too 

 

Very interesting and informative as always.

[bealios]

 

It is highly likely that at some point Ashley, assuming he doesn’t get a good offer to sell, will be looking to get some or all of his loan back. I can see any loan repayments being greeted with hoots of anger but if he does go down that path he isn’t taking money out of the club in the way his predecessors did, he’s simply getting back what he put in.

 

Surely the safest way for him to take his loan money out would be to refinance part of the loan and gear the club to a sustainable level i.e. borrow (say) £60m from Barclays and use it to pay off his own loan. You can see him writing off the balance (given that he was at one point writing off the whole thing). This is easy enough to sell to supporters since most clubs are leveraged to a far lesser extent, and still manage to pay the interest.

[AyeDubbleYoo]

What's with the red text?

[quayside]

 

It is highly likely that at some point Ashley, assuming he doesnt get a good offer to sell, will be looking to get some or all of his loan back. I can see any loan repayments being greeted with hoots of anger but if he does go down that path he isnt taking money out of the club in the way his predecessors did, hes simply getting back what he put in.

 

Surely the safest way for him to take his loan money out would be to refinance part of the loan and gear the club to a sustainable level i.e. borrow (say) £60m from Barclays and use it to pay off his own loan. You can see him writing off the balance (given that he was at one point writing off the whole thing). This is easy enough to sell to supporters since most clubs are leveraged to a far lesser extent, and still manage to pay the interest.

 

He could do that.

 

But I don't think he's too bothered about what the supporters think of him so the PR aspect of a financial manoeuvre won't be high on his list of priorities. I don't think any of us can really have a clue what his attitude to that loan is tbh.

[quayside]

What's with the red text?

 

In the financial world black is for profits and red is for losses 

[Benwell Lad]

 

It is highly likely that at some point Ashley, assuming he doesnt get a good offer to sell, will be looking to get some or all of his loan back. I can see any loan repayments being greeted with hoots of anger but if he does go down that path he isnt taking money out of the club in the way his predecessors did, hes simply getting back what he put in.

 

Surely the safest way for him to take his loan money out would be to refinance part of the loan and gear the club to a sustainable level i.e. borrow (say) £60m from Barclays and use it to pay off his own loan. You can see him writing off the balance (given that he was at one point writing off the whole thing). This is easy enough to sell to supporters since most clubs are leveraged to a far lesser extent, and still manage to pay the interest.

 

He could do that.

 

But I don't think he's too bothered about what the supporters think of him so the PR aspect of a financial manoeuvre won't be high on his list of priorities. I don't think any of us can really have a clue what his attitude to that loan is tbh.

 

Perhaps our greatest reassurance is that he is a mega-wealthy individual and major shareholder in a very successful business. i.e. what he has in NUFC is not life and death to him.

That said he didn't become that person by being charitable so it's fair to assume he's going to want it back sometime.

I do (genuinely) love Newcastle United but if they owed me money I'd want it back.

[UV]

I will try and illustrate what I mean by amortisation skewing the picture with an example.

 

A player comes through the academy and is sold by the club in the Summer for £20m cash up front. The club goes out and buys 2 players for £10m each, cash up front, on 5 year contracts. The club has broken even over those transactions, there is no cash to pay or be paid in the future. This is the reality of the situation.

 

The accounts however at the end of that year will show for those transactions that the club made a £16m profit. Every subsequent year, assuming the players are retained the accounts will show a £4m loss even though no cash was paid out in those years. There are no £4m cheques being written to amortisation FC or the office of amortisation.

 

Anomalies like this are why I think it is far more relevant to focus on the cashflow. If a player is paid for up front, that is reflected in the cash flow and will result in a larger debt in that year. If a player in paid for in instalments that is reflected in the cash flow for each year you are paying those instalments. This is surely a much better reflection of how a club is doing financially year to year.

 

In 2007, turnover was £87.1m, the cash flow was -£5m. In 2008, turnover increased to £99.4m but the cash flow was -£34m! That's an extra £41.3m of outgoings in 2008. That has nothing to do with amortisation, that's additional cash going out of the club in 2008 compared to 2007. There will be exceptional items and takeover costs which may account for some of those additional costs, but personally I consider that an astonishing figure and would hope those who are looking at those accounts would be trying to work out the causes of that and explaining where the massive increases came from. Unfortunately I have never even seen that pointed out let alone explained as sadly it seems things like the extra shares in the club that Hall and Shepherd took in 2005 is far more worthy of analysis and criticism.

[Stu]

 

It is highly likely that at some point Ashley, assuming he doesnt get a good offer to sell, will be looking to get some or all of his loan back. I can see any loan repayments being greeted with hoots of anger but if he does go down that path he isnt taking money out of the club in the way his predecessors did, hes simply getting back what he put in.

 

Surely the safest way for him to take his loan money out would be to refinance part of the loan and gear the club to a sustainable level i.e. borrow (say) £60m from Barclays and use it to pay off his own loan. You can see him writing off the balance (given that he was at one point writing off the whole thing). This is easy enough to sell to supporters since most clubs are leveraged to a far lesser extent, and still manage to pay the interest.

 

Why do we want any debt? Especially to an external creditor?

[Stu]

I have not anything to add, just want to say i really appreciate your posts quayside.

Always good reading!    

 

Totally agree. Looking forward to quayside's favourite time of the year in the next few weeks where he spends 10 hours a day explaining our accounts to people and addressing amortisation til his fingers hurt

 

Echo these sentiments entirely - quayside does a fantastic job

[Rob W]

nice to see a thread properly argued and not descend into the pit as so many do on here