NUFC summer spend quite well explained...

[AyeDubbleYoo]

Hope him and Mrs Ashley don't have a joint bank account. She's not going to be happy when the statement arrives.

[Spider Jerusalem]

Hope him and Mrs Ashley don't have a joint bank account. She's not going to be happy when the statement arrives.

 

He probably bought shitloads from porn shops on his debit card to try and hide his secret shame. 

[UV]

As I said above it was 2016. How could the debt be affordable if the club was leaking cash at an alarming rate? Affordable means sustainable out of the clubs existing and future cash flows. Up until that point the club had simply plugged cash flow leaks with more loans at ever increasing interest rates.

 

It was affordable because it was taken out to finance the expansion of the stadium to 52,000 seats and a significant increase in our corporate hospitality capabilities- this was drawing in considerably more than the cash required to service the debt. If net-net the expansion makes money, it doesn't matter what the position is for the overall business. You need to look at that in isolation as a sensible move for the business.

 

We had not (as far as I am aware) plugged cash flow gaps with additional loans, although the club was in a very worrying position with regards to its overdraft (and only a banker's sneeze away from being in a very uncomfortable position)- which is why I still find it odd that Ashley paid so much for the club when it was headed for a very rocky 12 months cash-flow wise.

 

 

I don't think anyone would dispute the financial merits of the decision to expand the stadium, it was a truly excellent move in every respect. But in order to be able to afford to service a loan you have to be generating positive cash flows from your day to day business. And at the time Ashley took over we were not doing that.

 

Contrary to what you say we did plug cash flow leaks with other loans and this was not purely done through an overdraft it was done through a variety of loans. As I said earlier these were at increasing rates of interest. The proof is in the 2007 accounts and we had collected loans as follows:

 

 

- £42.5 million at 7.65% interest secured on future season ticket and hospitality income

- £13.1 million at 8.55% interest secured on future sponsorship income

- E4.5 million at interest of LIBOR +2.25% secured on the first team training ground

- £8 million at11.72% interest secured on future broadcasting income

- £1.5 million secured as a second charge on the training ground

 

plus an overdraft of £11 million.

 

Whatever method Ashley used to value the club it didn't have anything whatsoever to do with his perception of it's ability to generate positive cash flows. His lack of due diligence would have left him unaware of the true state of the finances.

 

Quayside in very sensible post non-shocker.

 

Yet one which doesn't give the whole picture.

 

There was also £9.3m cash (ie most of the overdraft) held in an account waiting to pay the annual capital and interest repayments on the stadium loan for the next year and a half as per the terms of that agreement.

 

 

 

Everything that Ashley did in the immediate aftermath of the sale and in the following years suggest that he would have paid off the stadium debt whether it was immediately owing or not. He paid up the other debts which were not repayable on change of ownership, and we started to pay up front for the whole of a player's transfer fee, which I think is unique at the top level, and is something even the mega-rich clubs don't do. The idea that having to repay the stadium debt changed his plans for the club, or stopped him investing as much as he otherwise would have liked just doesn't hold water.

[Colos Short and Curlies]

As I said above it was 2016. How could the debt be affordable if the club was leaking cash at an alarming rate? Affordable means sustainable out of the clubs existing and future cash flows. Up until that point the club had simply plugged cash flow leaks with more loans at ever increasing interest rates.

 

It was affordable because it was taken out to finance the expansion of the stadium to 52,000 seats and a significant increase in our corporate hospitality capabilities- this was drawing in considerably more than the cash required to service the debt. If net-net the expansion makes money, it doesn't matter what the position is for the overall business. You need to look at that in isolation as a sensible move for the business.

 

We had not (as far as I am aware) plugged cash flow gaps with additional loans, although the club was in a very worrying position with regards to its overdraft (and only a banker's sneeze away from being in a very uncomfortable position)- which is why I still find it odd that Ashley paid so much for the club when it was headed for a very rocky 12 months cash-flow wise.

 

 

I don't think anyone would dispute the financial merits of the decision to expand the stadium, it was a truly excellent move in every respect. But in order to be able to afford to service a loan you have to be generating positive cash flows from your day to day business. And at the time Ashley took over we were not doing that.

 

Contrary to what you say we did plug cash flow leaks with other loans and this was not purely done through an overdraft it was done through a variety of loans. As I said earlier these were at increasing rates of interest. The proof is in the 2007 accounts and we had collected loans as follows:

 

 

- £42.5 million at 7.65% interest secured on future season ticket and hospitality income

- £13.1 million at 8.55% interest secured on future sponsorship income

- E4.5 million at interest of LIBOR +2.25% secured on the first team training ground

- £8 million at11.72% interest secured on future broadcasting income

- £1.5 million secured as a second charge on the training ground

 

plus an overdraft of £11 million.

 

Whatever method Ashley used to value the club it didn't have anything whatsoever to do with his perception of it's ability to generate positive cash flows. His lack of due diligence would have left him unaware of the true state of the finances.

 

Quayside in very sensible post non-shocker.

 

Yet one which doesn't give the whole picture.

 

There was also £9.3m cash (ie most of the overdraft) held in an account waiting to pay the annual capital and interest repayments on the stadium loan for the next year and a half as per the terms of that agreement.

 

 

 

Everything that Ashley did in the immediate aftermath of the sale and in the following years suggest that he would have paid off the stadium debt whether it was immediately owing or not. He paid up the other debts which were not repayable on change of ownership, and we started to pay up front for the whole of a player's transfer fee, which I think is unique at the top level, and is something even the mega-rich clubs don't do. The idea that having to repay the stadium debt changed his plans for the club, or stopped him investing as much as he otherwise would have liked just doesn't hold water.

 

So we were using the overdraft to pay off the loan installments?

[UV]

As I said above it was 2016. How could the debt be affordable if the club was leaking cash at an alarming rate? Affordable means sustainable out of the clubs existing and future cash flows. Up until that point the club had simply plugged cash flow leaks with more loans at ever increasing interest rates.

 

It was affordable because it was taken out to finance the expansion of the stadium to 52,000 seats and a significant increase in our corporate hospitality capabilities- this was drawing in considerably more than the cash required to service the debt. If net-net the expansion makes money, it doesn't matter what the position is for the overall business. You need to look at that in isolation as a sensible move for the business.

 

We had not (as far as I am aware) plugged cash flow gaps with additional loans, although the club was in a very worrying position with regards to its overdraft (and only a banker's sneeze away from being in a very uncomfortable position)- which is why I still find it odd that Ashley paid so much for the club when it was headed for a very rocky 12 months cash-flow wise.

 

 

I don't think anyone would dispute the financial merits of the decision to expand the stadium, it was a truly excellent move in every respect. But in order to be able to afford to service a loan you have to be generating positive cash flows from your day to day business. And at the time Ashley took over we were not doing that.

 

Contrary to what you say we did plug cash flow leaks with other loans and this was not purely done through an overdraft it was done through a variety of loans. As I said earlier these were at increasing rates of interest. The proof is in the 2007 accounts and we had collected loans as follows:

 

 

- £42.5 million at 7.65% interest secured on future season ticket and hospitality income

- £13.1 million at 8.55% interest secured on future sponsorship income

- E4.5 million at interest of LIBOR +2.25% secured on the first team training ground

- £8 million at11.72% interest secured on future broadcasting income

- £1.5 million secured as a second charge on the training ground

 

plus an overdraft of £11 million.

 

Whatever method Ashley used to value the club it didn't have anything whatsoever to do with his perception of it's ability to generate positive cash flows. His lack of due diligence would have left him unaware of the true state of the finances.

 

Quayside in very sensible post non-shocker.

 

Yet one which doesn't give the whole picture.

 

There was also £9.3m cash (ie most of the overdraft) held in an account waiting to pay the annual capital and interest repayments on the stadium loan for the next year and a half as per the terms of that agreement.

 

 

 

Everything that Ashley did in the immediate aftermath of the sale and in the following years suggest that he would have paid off the stadium debt whether it was immediately owing or not. He paid up the other debts which were not repayable on change of ownership, and we started to pay up front for the whole of a player's transfer fee, which I think is unique at the top level, and is something even the mega-rich clubs don't do. The idea that having to repay the stadium debt changed his plans for the club, or stopped him investing as much as he otherwise would have liked just doesn't hold water.

 

So we were using the overdraft to pay off the loan installments?

 

Not really, no. We had an overdraft to hold a cash amount in advance of it being due because those were the terms of the loan. The accounts are generated at a cash-low point in the season (in those days anyway, probably more performance related TV money comes in at the end of the season nowadays), a month or so later the season ticket money would be in and no doubt the overdraft paid off with some cash in the bank to be used through the season. Transfer spend and increased wages were what caused an overspend, not an inability to meet loan repayments. With the additional £18m TV revenue in 2008 there is no reason why the debt could not have been stabilised or even reduced if necessary without even the requirement for cuts.