Finances 09/10 - 'Our vision for the club is to finish 10th or above every year'

[Matt]

Ashley taking a repayment of his loan doesn't affect our corporation tax because it doesn't affect the profit or loss for the year. He wouldn't pay tax on receiving it either. It is simply a cash transaction.

 

For capital repayment yes, but these types of loans are rarely repaid and it's all about the interest (usually charged at someo eye-watering amount).

 

If he waives outright the interest payable for the year, then this will improve the P&L as it reduced interest costs. In turn this increases the corporation tax for the period (although past losses would likely wipe this out anyway).

 

What Ashley could do is choose to roll the interest into the capital PIK-style, that way he can elect to pay interest in cash or 'waive' that payment- but as the payment increases the size of the liability, this is still a deduction for corporation tax purposes.

[Guest michaelfoster]

so if he valued the club at £100m for arguements sake and wanted to recoup his debt he would put the club up for sale at £232,144,000

 

i always crap at A-Level Business

[Colos Short and Curlies]

Ashley taking a repayment of his loan doesn't affect our corporation tax because it doesn't affect the profit or loss for the year. He wouldn't pay tax on receiving it either. It is simply a cash transaction.

 

For capital repayment yes, but these types of loans are rarely repaid and it's all about the interest (usually charged at someo eye-watering amount).

 

If he waives outright the interest payable for the year, then this will improve the P&L as it reduced interest costs. In turn this increases the corporation tax for the period (although past losses would likely wipe this out anyway).

 

What Ashley could do is choose to roll the interest into the capital PIK-style, that way he can elect to pay interest in cash or 'waive' that payment- but as the payment increases the size of the liability, this is still a deduction for corporation tax purposes.

 

Interest free isn't it?

 

 

[Matt]

ive got the accounts in front of me but don't properly understand

 

'the company's outstanding loan from M J W Ashley, of £132,144,000 (2009 - £131, 944,000) is unsecured, non interest bearing and repayable on demand'

 

So is that how much he will include in any future sale price of the club?

 

For the purposes of selling the club, ignore it. Either way it's Ashley getting money for selling the club- but to be clear there is no way the debt would remain on the books post sale- even if the sale price is for less than the book value of the debt.

[Colos Short and Curlies]

so if he valued the club at £100m for arguements sake and wanted to recoup his debt he would put the club up for sale at £232,144,000

 

i always crap at A-Level Business

 

Yeah if he wanted to recoup his loan it would be:

 

Value of loan + value of club = sales price

[Matt]

Ashley taking a repayment of his loan doesn't affect our corporation tax because it doesn't affect the profit or loss for the year. He wouldn't pay tax on receiving it either. It is simply a cash transaction.

 

For capital repayment yes, but these types of loans are rarely repaid and it's all about the interest (usually charged at someo eye-watering amount).

 

If he waives outright the interest payable for the year, then this will improve the P&L as it reduced interest costs. In turn this increases the corporation tax for the period (although past losses would likely wipe this out anyway).

 

What Ashley could do is choose to roll the interest into the capital PIK-style, that way he can elect to pay interest in cash or 'waive' that payment- but as the payment increases the size of the liability, this is still a deduction for corporation tax purposes.

 

Interest free isn't it?

 

 

I could well be wrong, I don't have the accounts to hand.

 

Of course he can amend the terms whenever he likes, so the logic still holds.

[Colos Short and Curlies]

ive got the accounts in front of me but don't properly understand

 

'the company's outstanding loan from M J W Ashley, of £132,144,000 (2009 - £131, 944,000) is unsecured, non interest bearing and repayable on demand'

 

So is that how much he will include in any future sale price of the club?

 

For the purposes of selling the club, ignore it. Either way it's Ashley getting money for selling the club- but to be clear there is no way the debt would remain on the books post sale- even if the sale price is for less than the book value of the debt.

 

Not strictly true.

 

The loan could reamain as a way of deferring the payment for the club if MA was desperate to sell and it was the best way to structure a deal.

[Jayson]

He is more or less asset stripping surely if hes repaying his own loan via money hes made from transfer fees.

 

He just does it in a manner in which he has set up a scouting system so that he can replace the assets he finds, with other supposed bargains. Lessens his loan so that he doesnt have to ask for as much when he sells the club.

[Colos Short and Curlies]

He is more or less asset stripping surely if hes repaying his own loan via money hes made from transfer fees.

 

He just does it in a manner in which he has set up a scouting system so that he can replace the assets he finds, with other supposed bargains. Lessens his loan so that he doesnt have to ask for as much when he sells the club.

 

To be seen tbh.

 

Ashley's history in retail would also suggest he is of the mentality to stick 2 fingers up to the established route to the top of football and do it his own way, trying to prove he is the number one at something else

[quayside]

Ashley taking a repayment of his loan doesn't affect our corporation tax because it doesn't affect the profit or loss for the year. He wouldn't pay tax on receiving it either. It is simply a cash transaction.

 

For capital repayment yes, but these types of loans are rarely repaid and it's all about the interest (usually charged at someo eye-watering amount).

 

If he waives outright the interest payable for the year, then this will improve the P&L as it reduced interest costs. In turn this increases the corporation tax for the period (although past losses would likely wipe this out anyway).

 

What Ashley could do is choose to roll the interest into the capital PIK-style, that way he can elect to pay interest in cash or 'waive' that payment- but as the payment increases the size of the liability, this is still a deduction for corporation tax purposes.

 

Interest free isn't it?

 

 

I could well be wrong, I don't have the accounts to hand.

 

Of course he can amend the terms whenever he likes, so the logic still holds.

 

As Colo says the loans are specifically stated in the accounts as being interest free and they are structured in a formal agreement. So I think interest is a non issue tbh.

[AyeDubbleYoo]

He is more or less asset stripping surely if hes repaying his own loan via money hes made from transfer fees.

 

He just does it in a manner in which he has set up a scouting system so that he can replace the assets he finds, with other supposed bargains. Lessens his loan so that he doesnt have to ask for as much when he sells the club.

 

It's hardly asset stripping if he's repaying money he's already lent to the club. And interest free as well.

[TheGuv]

Not going to happen this season then.

 

Good vision Ashley

[Jayson]

He is more or less asset stripping surely if hes repaying his own loan via money hes made from transfer fees.

 

He just does it in a manner in which he has set up a scouting system so that he can replace the assets he finds, with other supposed bargains. Lessens his loan so that he doesnt have to ask for as much when he sells the club.

 

It's hardly asset stripping if he's repaying money he's already lent to the club. And interest free as well.

 

What reason is there to believe we will keep any of our decent players? Seems like he is intent on taking back money via profit he gets from players transfer fees rather than investing in Newcastle being successful, increasing our turnover & paying back his loan in that manner.

 

Even then i dont necessarily disagree with him doing that, he made a mistake in buying a business running at a loss but it worked out in our benefit financially that he would cover us.

 

The problem is as Kevin Keegan has said, i dont see much reason to believe he has much football knowledge and he looks to be calling the shots on whether a player is worth their wages/transfer fees or not. We will see by the end of the window and next season how that turns out. Banking on moving on proven players for more tiote's is a risky tactic.

[tmonkey]

You've missed out a couple of costs:

 

http://img43.imageshack.us/img43/5264/newcastlepl.jpg

 

Matchday and Commercial was not 60M but 58.3M, this went down to 48.4M in 2009 so let's split the difference at 53M.

Amortisation was 18M in 2008 - I'd expect this to be less - let's say 10M.

"Other expenses" in 2008 amounted to 28M.

Plus depreciation/net interest.

 

2009's matchday/commercial is significantly lower than the other years', would it be fair to say that much of this is down to the negative press, boycotts, etc, which happened that year?

 

Amortisation, as others have said, is a non-cash expense, which is not relevant here imo as I'm looking at a basic cash flow to see what the company can/can't invest in. The net cash flow from 2009/10 was more than £20m, and that was in the Championship, so it'd make sense that we'd be in a net position of £60m for 2010/11 given the increase in TV money.

 

Does "other expenses" not include fees for players signed, as we pay cash up front for our signings? I assumed it did as iirc the notes to the accounts don't clearly indicate where they've put transfer fees for incoming players in the P&L? Would appreciate anyone pointing this out to me. Also, would Keegan's tribunal, which iirc cost the club about £5m, not be in there too?  But even so, the wage bill for 2009/10 was £47m - I've probably over-estimated the bill for 10/11 at £60m, as we only added Kuqi, Tiote, Ben Arfa and Gosling (with Butt leaving).

[taxfree]

lee_ryder Lee Ryder

#nufc Chronicle to submit fan questions to club, live web chat on Friday. All welcome. See www.chroniclelive.co.uk for more details

 

[Spider Jerusalem]

lee_ryder Lee Ryder

#nufc Chronicle to submit fan questions to club, live web chat on Friday. All welcome. See www.chroniclelive.co.uk for more details

 

 

Are you sure that you posted this in the right thread?

 

They've done similar before and had most of the questions answered of the ilk 'Mr. Ashley, your leadership of NUFC seems to have the momentum of a runaway freight train. Why are you so popular?'.  There will no doubt be many hazardous questions posted, but the powderpuff ones answered and the others ignored 'due to time / printing constraints'.

[Tooj]

lee_ryder Lee Ryder

#nufc Chronicle to submit fan questions to club, live web chat on Friday. All welcome. See www.chroniclelive.co.uk for more details

 

 

Are you sure that you posted this in the right thread?

 

They've done similar before and had most of the questions answered of the ilk 'Mr. Ashley, your leadership of NUFC seems to have the momentum of a runaway freight train. Why are you so popular?'.  There will no doubt be many hazardous questions posted, but the powderpuff ones answered and the others ignored 'due to time / printing constraints'.

 

[quayside]

 

Does "other expenses" not include fees for players signed, as we pay cash up front for our signings? I assumed it did as iirc the notes to the accounts don't clearly indicate where they've put transfer fees for incoming players in the P&L? Would appreciate anyone pointing this out to me.

 

Also, would Keegan's tribunal, which iirc cost the club about £5m, not be in there too?  

 

But even so, the wage bill for 2009/10 was £47m - I've probably over-estimated the bill for 10/11 at £60m, as we only added Kuqi, Tiote, Ben Arfa and Gosling (with Butt leaving).

 

 

No - transfer fees don't appear in a  P&L account. They do appear in a cash flow statement though.

 

Keegan's tribunal costs were in the 08/09 accounts.  

 

You have maybe overestimated wages (although there was also Campbell) but "other costs" seem to run at about £25m per annum. I'm also not sure our income from tv, matchday and sponsorship would get to £107m but we'll all know the answer to that one in a few months time.

 

 

The exact "surplus" is a bit of speculation and fwiw I agree with you that it was a decent £number in 10/11.

 

[Matt]

Not strictly true.

 

The loan could reamain as a way of deferring the payment for the club if MA was desperate to sell and it was the best way to structure a deal.

 

Vendor loans happen, but it really would take a special kind of idiot to take one from Ashley.

[Guest Roger Kint]

 

2009's matchday/commercial is significantly lower than the other years', would it be fair to say that much of this is down to the negative press, boycotts, etc, which happened that year?

 

 

We averaged 1000 more a game that season in the league and 40000 more fans attended overall in 2008/09 than 2010/11. Reduced income could be partly down to 3 year discounts which started then i suppose coupled with less prawn sandwich people which was noticable since the start of that season.