Tooj Posted September 1, 2011 Share Posted September 1, 2011 ChezGiven has just put this up on Toontastic, makes for rather interesting reading. Well after a bitterly disappointing end to the transfer window, my mind has turned to the financial state of the club. Many apologies for being a boring bastard but for me if any sense is to be made of what is going on then some answers must come from the finances. I have said a few times on here that the Carroll money must be being used to cover the losses of the previous 2 seasons. Thats not offered in any capacity other than an explanation for why he wont spend. What troubles me more is that if the Carroll money has been used to cover these cash losses, then in effect these losses never occurred, its as though (financially) we stayed in the premiership, we just lost a player. However, given the increasing TV revenue and the massive reduction in wages then surely this last season should have seen a surplus and surely this surplus is what should have been invested. What possible reason is there for not having extra funds available? The only reason i can think of is the total debt of the club. Any surplus made is being funnelled to pay off debts, this has happened at low levels over the last few seasons. So i went back to the debt data and one thing struck me that i admit has always been in the back of my mind but never had the time to delve into (I did make some comments to the swiss rambler on this over the summer but he never got back to me). There has been a few discussions on here on this so maybe this has already been resolved and i missed it but i wanted to work out why we have £240m worth of debt? In the chart below you will see that the debt grew from £55 to £77m from 2005 to 2007. Our debt position was clearly getting worse but it then jumps by £138m in 2007, showing up in 2008. http://img30.imageshack.us/img30/3143/16newcastledebt.jpg Now, unless i'm mistaken regarding the liability of the club for debt held by SJH Ltd, it seems to me that Mike Ashley lent SJH Ltd £138m in 2007, which is the exact price Ashley paid for the club. Although not the exact definition of a leveraged buy-out, where a bank lends money secured against the asset, the principle is the same if the money earned from the business is then used to pay back this debt as per Man Utd. What causes me concern is the figure in the chart for 2009 which shows that the specific £138m debt to Ashley is reduced to £132m. Forgive me for not being a proper financial expert but in what way is this different from the Glazers using Man U funds to pay back the debts they used to buy the club? Surrely if the Carroll money covered the losses of the last 2 seasons and Ashley bought the club outright then the debt position should be slowly reducing itself from £77m as per 2007 accounts (which included stadium expansion). If i havent got this completely wrong (i dont really understand the financial relationship between the holding company and us and why the SJH Ltd debt is showing in our accounts), then was NUFC subject to a covert leveraged buy-out? Does this explain why we are so stifled financially? Was it a leveraged buy-out or similar in principle? Maybe this post is a waste of time but i dont get it. Link to post Share on other sites More sharing options...
Guest Antec Posted September 1, 2011 Share Posted September 1, 2011 Come on balance sheet worshippers, this is like christmas day for you Link to post Share on other sites More sharing options...
DJ_NUFC Posted September 1, 2011 Share Posted September 1, 2011 I don't get it. But I'm with you on this. Sack the board! Link to post Share on other sites More sharing options...
Revolution Number 9 Posted September 1, 2011 Share Posted September 1, 2011 Link to post Share on other sites More sharing options...
BlueStar Posted September 1, 2011 Share Posted September 1, 2011 Come on balance sheet worshippers, this is like christmas day for you I must have the chart upside down, thought Freddie got us all this debt and Ashley had been reducing it. Link to post Share on other sites More sharing options...
Sifu Posted September 1, 2011 Share Posted September 1, 2011 Interesting thoughts from Chez. Link to post Share on other sites More sharing options...
afar Posted September 1, 2011 Share Posted September 1, 2011 Interesting Link to post Share on other sites More sharing options...
Tachikoma Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Link to post Share on other sites More sharing options...
colinmk Posted September 1, 2011 Share Posted September 1, 2011 I don't really understand anything to do with money or finances, can someone put it in the simplest of terms for me what is being outlined here? Link to post Share on other sites More sharing options...
Tooj Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Pretty much. Mike loans the money to SJH Ltd, who actually buy the club. Now this loan has been added onto the club's debt, to be paid back to Mike. Link to post Share on other sites More sharing options...
Tachikoma Posted September 1, 2011 Share Posted September 1, 2011 Looks like we've given Ashley a hell lot less credit than he deserves, if that was true. Link to post Share on other sites More sharing options...
Guest Antec Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Pretty much. Mike loans the money to SJH Ltd, who actually buy the club. Now this loan has been added onto the club's debt, to be paid back to Mike. I think I mentioned the 250m a while back, can't remember what came of it though. I realise that's no help Link to post Share on other sites More sharing options...
teohgk Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Pretty much. Mike loans the money to SJH Ltd, who actually buy the club. Now this loan has been added onto the club's debt, to be paid back to Mike. so Ashley didn't spend a penny at all and got himself Newcastle United? this is getting better, is this even legalize? Link to post Share on other sites More sharing options...
Tooj Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Pretty much. Mike loans the money to SJH Ltd, who actually buy the club. Now this loan has been added onto the club's debt, to be paid back to Mike. I think I mentioned the 250m a while back, can't remember what came of it though. I realise that's no help Link to post Share on other sites More sharing options...
Interpolic Posted September 1, 2011 Share Posted September 1, 2011 Looks like we've given Ashley a hell lot less credit than he deserves, if that was true. Eh? Link to post Share on other sites More sharing options...
Guest axel Posted September 1, 2011 Share Posted September 1, 2011 Looks like we've given Ashley a hell lot less credit than he deserves, if that was true. wat Link to post Share on other sites More sharing options...
Tachikoma Posted September 1, 2011 Share Posted September 1, 2011 Looks like we've given Ashley a hell lot less credit than he deserves, if that was true. Eh? Re: Ashley being an idiot for not checking the books, etc, mixed in with a fair bit of sarcasm. Link to post Share on other sites More sharing options...
Interpolic Posted September 1, 2011 Share Posted September 1, 2011 Looks like we've given Ashley a hell lot less credit than he deserves, if that was true. Eh? Re: Ashley being an idiot for not checking the books, etc, mixed in with a fair bit of sarcasm. Thank fuck for that. Link to post Share on other sites More sharing options...
Guest Antec Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Pretty much. Mike loans the money to SJH Ltd, who actually buy the club. Now this loan has been added onto the club's debt, to be paid back to Mike. I think I mentioned the 250m a while back, can't remember what came of it though. I realise that's no help I think quayside talked me through it iirc, I might have a look back Link to post Share on other sites More sharing options...
toon25 Posted September 1, 2011 Share Posted September 1, 2011 Just out of interest, when do people reckon he's going to sell, if at all? Link to post Share on other sites More sharing options...
Guest north shields lad Posted September 1, 2011 Share Posted September 1, 2011 This is against the law in lots of country's but unfortunly not in the UK. Ask Liverpool. Whats even more worrying if it is true, is that we are selling season tickets for the next 12 years. If someone come in and bought the club, they would find that a proportion of the profits from tickets for the next 12 years, has already gone in the back pocket of the former owner. Infact that makes us look like a bad proposistion to buy. Link to post Share on other sites More sharing options...
Ginola Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Pretty much. Mike loans the money to SJH Ltd, who actually buy the club. Now this loan has been added onto the club's debt, to be paid back to Mike. Would make sense as to why we've not spent much. Of course the main problem with us doing this as opposed to Man Utd (who weren't very happy with the Glazers take over anyway) is that we don't have nearly as much money coming in as they do, resulting the net debt growing while the St James Holdings debt is being paid back. A lot more selling of players to come if that's the case. Link to post Share on other sites More sharing options...
Revolution Number 9 Posted September 1, 2011 Share Posted September 1, 2011 Don't think he will unless he gets a very good offer. Link to post Share on other sites More sharing options...
Tachikoma Posted September 1, 2011 Share Posted September 1, 2011 When do people reckon he's going to sell, if at all? At the rate we're going, never? He'll probably make 20-30 mil off the club every year with our current policy, so that's the cost of buying the club covered in a few years. Link to post Share on other sites More sharing options...
Tooj Posted September 1, 2011 Share Posted September 1, 2011 So Mike buys the club for 138m and labels the entire cost of the purchase as "club debt". Have I gotten it right? Pretty much. Mike loans the money to SJH Ltd, who actually buy the club. Now this loan has been added onto the club's debt, to be paid back to Mike. I think I mentioned the 250m a while back, can't remember what came of it though. I realise that's no help I think quayside talked me through it iirc, I might have a look back Hopefully you can find it. Link to post Share on other sites More sharing options...
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