midds Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? That is half right. He also paid 140m in CASH to Shepherd and the Halls for the club, so even if his initial loan is paid back through profits that the club makes, there is still the initial capital cost of 140m. I think his total investment in the club is around 280m. If he makes a 40m profit for the past year and uses that to reduce the debt, then his net investment in the club will still be north of 200m, which means that if he sells for anything less than that, he'll have made a loss. And for what it's worth, when you invest almost 300m in anything, you expect returns every year. He's obviously not had any return on his investment over the past 4 years, so there is an opportunity cost to factor into it. A rough estimate of his investment so far is probably around 350m (without taking into account last year's profits). Does he have to disclose any of this? Is it possible to join the dots from the published accounts and find out exactly how the club was bought and who is owed the money? Sorry for sounding like an idiot I just want to understand where the club is financially. Link to post Share on other sites More sharing options...
Guest johnson293 Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? He spent 130+ million of his money to buy the club. Then he had to repay loans the previous owners had at the amount of around 70 million, and spend 66 million to keep the club going. He did this by loaning the club around 150 million from his own pocket. The first sum he will only get back if he sells the club, the second sum the club will have to repay him, but with no interest. ^ That's how I understood the situation to be. Can't understand where this idea is coming from that the original purchase price is now also 'club debt', so that is being paid off, so he ultimately hopes to get the club for free, and sell it for a massive profit? But I haven't seen all the recent account docs, either. Link to post Share on other sites More sharing options...
FrenchWilliam Posted September 1, 2011 Share Posted September 1, 2011 If you're all assuming the scenario is: 1. Ashley "lends" SJH 138 million 2. SJH buys club for 138 million. Transfers debt to club. 3. Gives club to Ashley for $0.00 4. Club revenue pays down 138m debt Where does MA get any money out of it? I don't know if the club pays him a salary, but even if it's a big six figure one, it doesn't seem like ti'd justify the above carry on for that alone. Because if he sells the club for 150 million, its a profit Well, yeah, but only 12m. And so what? calculate again mate, he didn't spend a penny to buy the club in this scenario , he used the club's money to buy out the club, it mean he got the club free, any money earn will be his profit He spent his own money to buy the club. Whether it was done through a holding company, and whether the debt is on the books of the holding company and/or the club is largely irrelevant. It's his business so whether he chooses to put it as a debt on the club balance sheet, pay it off in chunks, pay it off now is up to him. It all boils down to the same thing really. It would be that simple if the club had created all of the debts on there own but he's added £138m to the clubs debt which wasn't there before he bought it. That's whats so bad about this not whether he chooses to pay it back or not or makes a profit on sale. Well in my eyes anyway. Yes, but whether that debt is on the balance sheet or not, doesn't matter much to anything. It's basically only him officially marking what return he wants out of the club, as someone else said above. He could choose to not have the debt on the balance sheet, draw a 14m a year salary for 10years, and it would still be the same thing. You can only suggest he's making the club worse off* if he's taking out disproportionately more than he's investing in comparison with the previous owners. (Who, i think, weren't putting a penny in) *Purely in a financial sense, and ignoring any managemenet/football type decisions. Link to post Share on other sites More sharing options...
Taylor Swift Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? He spent 130+ million of his money to buy the club. Then he had to repay loans the previous owners had at the amount of around 70 million, and spend 66 million to keep the club going. He did this by loaning the club around 150 million from his own pocket. The first sum he will only get back if he sells the club, the second sum the club will have to repay him, but with no interest. Ok this kinda explains my last question. But is there anything to stop him getting the first sum back before he sells the club? If the club makes a profit every year and he's able to pay back all the debt, then the profits after that will be cash sitting in the club's coffers which is payable as dividends or used simply to increase the cost of the sale of the club. But that's far, far, far into the future. It won't happen. No Premiership club makes profits year after year after year. Owning a Premiership club isn't good for business. Link to post Share on other sites More sharing options...
ToonTastic Posted September 1, 2011 Share Posted September 1, 2011 Thank you Link to post Share on other sites More sharing options...
Guest Rainforest Posted September 1, 2011 Share Posted September 1, 2011 I can see how that makes sense, however it basically values the club at excactly zero pounds, with the initial loan to buy the club flashing like a neon sign in the finances for all to see. Link to post Share on other sites More sharing options...
Guest bimpy474 Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? He spent 130+ million of his money to buy the club. Then he had to repay loans the previous owners had at the amount of around 70 million, and spend 66 million to keep the club going. He did this by loaning the club around 150 million from his own pocket. The first sum he will only get back if he sells the club, the second sum the club will have to repay him, but with no interest. Ok this kinda explains my last question. But is there anything to stop him getting the first sum back before he sells the club? This why we havent been sold yet, he wants his money he bought the club with back plus the loans he put in to keep the club going, so the price goes from £130m to £250m+, as the debt to him goes down we have more chance to be bought, as it stands no one is going to buy the club for twice what its worth. Link to post Share on other sites More sharing options...
NG32 Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? He spent 130+ million of his money to buy the club. Then he had to repay loans the previous owners had at the amount of around 70 million, and spend 66 million to keep the club going. He did this by loaning the club around 150 million from his own pocket. The first sum he will only get back if he sells the club, the second sum the club will have to repay him, but with no interest. Ok this kinda explains my last question. But is there anything to stop him getting the first sum back before he sells the club? If the club makes a profit every year and he's able to pay back all the debt, then the profits after that will be cash sitting in the club's coffers which is payable as dividends or used simply to increase the cost of the sale of the club. But that's far, far, far into the future. It won't happen. No Premiership club makes profits year after year after year. Owning a Premiership club isn't good for business. Correct, which makes me believe he only bought NUFC to then quickly sell to a yank or an oil rich arab group. He bought a bit of a dog finance wise and has been stuck with it ever since. The fat mong. Link to post Share on other sites More sharing options...
Guest ovesbar Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? He spent 130+ million of his money to buy the club. Then he had to repay loans the previous owners had at the amount of around 70 million, and spend 66 million to keep the club going. He did this by loaning the club around 150 million from his own pocket. The first sum he will only get back if he sells the club, the second sum the club will have to repay him, but with no interest. Ok this kinda explains my last question. But is there anything to stop him getting the first sum back before he sells the club? If the club makes a profit every year and he's able to pay back all the debt, then the profits after that will be cash sitting in the club's coffers which is payable as dividends or used simply to increase the cost of the sale of the club. But that's far, far, far into the future. It won't happen. No Premiership club makes profits year after year after year. Owning a Premiership club isn't good for business. And for the club to run with a massive profit over time it would have to be very successful on the pitch. So for a fan of the club, Mike Ashley getting all his money back through profits would be the dream. Link to post Share on other sites More sharing options...
teohgk Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? That is half right. He also paid 140m in CASH to Shepherd and the Halls for the club, so even if his initial loan is paid back through profits that the club makes, there is still the initial capital cost of 140m. I think his total investment in the club is around 280m. If he makes a 40m profit for the past year and uses that to reduce the debt, then his net investment in the club will still be north of 200m, which means that if he sells for anything less than that, he'll have made a loss. And for what it's worth, when you invest almost 300m in anything, you expect returns every year. He's obviously not had any return on his investment over the past 4 years, so there is an opportunity cost to factor into it. A rough estimate of his investment so far is probably around 350m (without taking into account last year's profits). Ashley borrow 140m ---> SJH pay 140m ----> Shepherd club owe 140m ---> SJH owe 140m-----> Ashley i think that's the case in the above scenario, i had no idea at all why you have the amount of 280m Link to post Share on other sites More sharing options...
Taylor Swift Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? That is half right. He also paid 140m in CASH to Shepherd and the Halls for the club, so even if his initial loan is paid back through profits that the club makes, there is still the initial capital cost of 140m. I think his total investment in the club is around 280m. If he makes a 40m profit for the past year and uses that to reduce the debt, then his net investment in the club will still be north of 200m, which means that if he sells for anything less than that, he'll have made a loss. And for what it's worth, when you invest almost 300m in anything, you expect returns every year. He's obviously not had any return on his investment over the past 4 years, so there is an opportunity cost to factor into it. A rough estimate of his investment so far is probably around 350m (without taking into account last year's profits). Does he have to disclose any of this? Is it possible to join the dots from the published accounts and find out exactly how the club was bought and who is owed the money? Sorry for sounding like an idiot I just want to understand where the club is financially. Yeah, you'll be able to see everything from the yearly accounts published. When he repays a bit of the debt back this year, it'll show up in the accounts as a smaller gross debt (which is what I expect to see). Our cashflow is probably not good yet because we're paying out transfers up front and selling in installments, but from a financial perspective, things are improving and the medium term future looks good (low wages, high revenue = profits). Maybe the cash-flow situation will actually look good because we got all the Carroll money up front. If that's the case then our overdraft will be significantly lower than the 36m that it was in the last set of accounts. The trouble is maintaining lower wages which is impossible to do for good players, so you either have to sell them and replace them with players whose wages are lower, or pay them more which will reduce the profit. I'm just giving you an objective look on the finances, by the way. It's obviously no fun as a fan to see negative net spending every window and us having to suffer through watching shite like Ameobi and Lovenkrands when we should realistically be watching the likes of Gameiro and Ruiz. Link to post Share on other sites More sharing options...
Guest Rainforest Posted September 1, 2011 Share Posted September 1, 2011 So I Guess we should be thankful that he is sitting with the debt then..for the time being? Link to post Share on other sites More sharing options...
HawK Posted September 1, 2011 Share Posted September 1, 2011 Waiting for Mike Ashl- *cough* I mean Ian to defend this now. Link to post Share on other sites More sharing options...
Guest Rainforest Posted September 1, 2011 Share Posted September 1, 2011 HARRY HARRY HARRY HARRY HARRY HARRY HARRY HARRY Link to post Share on other sites More sharing options...
Guest ovesbar Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? He spent 130+ million of his money to buy the club. Then he had to repay loans the previous owners had at the amount of around 70 million, and spend 66 million to keep the club going. He did this by loaning the club around 150 million from his own pocket. The first sum he will only get back if he sells the club, the second sum the club will have to repay him, but with no interest. Ok this kinda explains my last question. But is there anything to stop him getting the first sum back before he sells the club? This why we havent been sold yet, he wants his money he bought the club with back plus the loans he put in to keep the club going, so the price goes from £130m to £250m+, as the debt to him goes down we have more chance to be bought, as it stands no one is going to buy the club for twice what its worth. tbf: Mike Ashley did not give the club that debt, he only bought it. Which he probably would not have done if he knew the situation the club was in. I am not saying he is a great owner, but he did save the club from big trouble. You can say that someone else would have done it if he didnt, but we will never know. Link to post Share on other sites More sharing options...
Taylor Swift Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? That is half right. He also paid 140m in CASH to Shepherd and the Halls for the club, so even if his initial loan is paid back through profits that the club makes, there is still the initial capital cost of 140m. I think his total investment in the club is around 280m. If he makes a 40m profit for the past year and uses that to reduce the debt, then his net investment in the club will still be north of 200m, which means that if he sells for anything less than that, he'll have made a loss. And for what it's worth, when you invest almost 300m in anything, you expect returns every year. He's obviously not had any return on his investment over the past 4 years, so there is an opportunity cost to factor into it. A rough estimate of his investment so far is probably around 350m (without taking into account last year's profits). Ashley borrow 140m ---> SJH pay 140m ----> Shepherd club owe 140m ---> SJH owe 140m-----> Ashley i think that's the case in the above scenario, i had no idea at all why you have the amount of 280m Umm, no. Ashley is St James' Holdings, so I'll just use it as Ashley. Ashley pays 140m to Shepherd and Hall to buy the club. The club has debt, which means the actual cost of the club was debt + 140m. The debt was around 60 or 70m, which means the cost to Ashley for buying the club was around 200m. The first couple of years, the club continues to lose money. Ashley has to invest his own money to cover this. The sum of this investment is 60m+. However, the debt that the club had originally had to be repaid instantly, so Ashley covered this as well. So Ashley lent 60m + 60m more to cover the debt, ergo the 130-140m that the club now owes Ashley. Add that to the 140m that Ashley paid Shepherd and Hall and you get 280m. Roughly, anyway. Link to post Share on other sites More sharing options...
midds Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? That is half right. He also paid 140m in CASH to Shepherd and the Halls for the club, so even if his initial loan is paid back through profits that the club makes, there is still the initial capital cost of 140m. I think his total investment in the club is around 280m. If he makes a 40m profit for the past year and uses that to reduce the debt, then his net investment in the club will still be north of 200m, which means that if he sells for anything less than that, he'll have made a loss. And for what it's worth, when you invest almost 300m in anything, you expect returns every year. He's obviously not had any return on his investment over the past 4 years, so there is an opportunity cost to factor into it. A rough estimate of his investment so far is probably around 350m (without taking into account last year's profits). Does he have to disclose any of this? Is it possible to join the dots from the published accounts and find out exactly how the club was bought and who is owed the money? Sorry for sounding like an idiot I just want to understand where the club is financially. Yeah, you'll be able to see everything from the yearly accounts published. When he repays a bit of the debt back this year, it'll show up in the accounts as a smaller gross debt (which is what I expect to see). Our cashflow is probably not good yet because we're paying out transfers up front and selling in installments, but from a financial perspective, things are improving and the medium term future looks good (low wages, high revenue = profits). Maybe the cash-flow situation will actually look good because we got all the Carroll money up front. If that's the case then our overdraft will be significantly lower than the 36m that it was in the last set of accounts. The trouble is maintaining lower wages which is impossible to do for good players, so you either have to sell them and replace them with players whose wages are lower, or pay them more which will reduce the profit. I'm just giving you an objective look on the finances, by the way. It's obviously no fun as a fan to see negative net spending every window and us having to suffer through watching shite like Ameobi and Lovenkrands when we should realistically be watching the likes of Gameiro and Ruiz. Cheers. Last one - do we know when are the next set of accounts due to be released? Link to post Share on other sites More sharing options...
Guest bimpy474 Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? That is half right. He also paid 140m in CASH to Shepherd and the Halls for the club, so even if his initial loan is paid back through profits that the club makes, there is still the initial capital cost of 140m. I think his total investment in the club is around 280m. If he makes a 40m profit for the past year and uses that to reduce the debt, then his net investment in the club will still be north of 200m, which means that if he sells for anything less than that, he'll have made a loss. And for what it's worth, when you invest almost 300m in anything, you expect returns every year. He's obviously not had any return on his investment over the past 4 years, so there is an opportunity cost to factor into it. A rough estimate of his investment so far is probably around 350m (without taking into account last year's profits). Ashley borrow 140m ---> SJH pay 140m ----> Shepherd club owe 140m ---> SJH owe 140m-----> Ashley i think that's the case in the above scenario, i had no idea at all why you have the amount of 280m Because he then had the actual debts to contend with, the club was valued at £140m which was paid through SJH as you state, he gets his mits on the club and sees we are £140 in debt as well, he paid that off so we do not occur interest charges that we were getting charged by the banks. The debts he would have known about if he had done due diligence, thats why he gets called thick as pig s*** for buying the club without properly studying things first. Link to post Share on other sites More sharing options...
UV Posted September 1, 2011 Share Posted September 1, 2011 "In spite of this, the club’s previous excesses have resulted in significant debt of £282 million That line is such a load of toss like, and gives an idea of the perspective the article was written with. £134m of that is the money Ashley paid for the club £45m of it is the remainder of the debt for the stadium extension £83m is additional debt from when Ashley bought the club to 2009 None of that is to do with the so called "club’s previous excesses" which account for around £22m of that figure. Far too high a price to pay for 15 years of semi-regular European football obviously. Link to post Share on other sites More sharing options...
Dr Venkman Posted September 1, 2011 Share Posted September 1, 2011 i wonder why the club was even valued at 140m anyway? given that it's supposedly obvious you cant make a profit in football? and if you cant make a profit, how on earth did freddie and SJH get away with taking so much cash out? looks like profit to me Link to post Share on other sites More sharing options...
Novocastrian Posted September 1, 2011 Share Posted September 1, 2011 Can someone explain this to me in layman's terms? Is this right: He loaned a company the money to buy the club. Any/some of the profit the club makes goes towards paying off the loan that he used to buy the club in the first place? That is half right. He also paid 140m in CASH to Shepherd and the Halls for the club, so even if his initial loan is paid back through profits that the club makes, there is still the initial capital cost of 140m. I think his total investment in the club is around 280m. If he makes a 40m profit for the past year and uses that to reduce the debt, then his net investment in the club will still be north of 200m, which means that if he sells for anything less than that, he'll have made a loss. And for what it's worth, when you invest almost 300m in anything, you expect returns every year. He's obviously not had any return on his investment over the past 4 years, so there is an opportunity cost to factor into it. A rough estimate of his investment so far is probably around 350m (without taking into account last year's profits). Does he have to disclose any of this? Is it possible to join the dots from the published accounts and find out exactly how the club was bought and who is owed the money? Sorry for sounding like an idiot I just want to understand where the club is financially. Yeah, you'll be able to see everything from the yearly accounts published. When he repays a bit of the debt back this year, it'll show up in the accounts as a smaller gross debt (which is what I expect to see). Our cashflow is probably not good yet because we're paying out transfers up front and selling in installments, but from a financial perspective, things are improving and the medium term future looks good (low wages, high revenue = profits). Maybe the cash-flow situation will actually look good because we got all the Carroll money up front. If that's the case then our overdraft will be significantly lower than the 36m that it was in the last set of accounts. The trouble is maintaining lower wages which is impossible to do for good players, so you either have to sell them and replace them with players whose wages are lower, or pay them more which will reduce the profit. I'm just giving you an objective look on the finances, by the way. It's obviously no fun as a fan to see negative net spending every window and us having to suffer through watching s**** like Ameobi and Lovenkrands when we should realistically be watching the likes of Gameiro and Ruiz. This is the Ashley blueprint. Link to post Share on other sites More sharing options...
Guest bimpy474 Posted September 1, 2011 Share Posted September 1, 2011 i wonder why the club was even valued at 140m anyway? given that it's supposedly obvious you cant make a profit in football? At the time we had players valued highly, Owen, Duff, Martins, Given, Parker etc, then you had 52,000 gates every home game, chuck in the training ground and various assests. Link to post Share on other sites More sharing options...
Dr Venkman Posted September 1, 2011 Share Posted September 1, 2011 i wonder why the club was even valued at 140m anyway? given that it's supposedly obvious you cant make a profit in football? At the time we had players valued highly, Owen, Duff, Martins, Given, Parker etc, then you had 52,000 gates every home game, chuck in the training ground and various assests. ok, but if you cant make a profit, and you're a business man, whats the point? Link to post Share on other sites More sharing options...
Guest ovesbar Posted September 1, 2011 Share Posted September 1, 2011 "In spite of this, the club’s previous excesses have resulted in significant debt of £282 million That line is such a load of toss like, and gives an idea of the perspective the article was written with. £134m of that is the money Ashley paid for the club £45m of it is the remainder of the debt for the stadium extension £83m is additional debt from when Ashley bought the club to 2009 None of that is to do with the so called "club’s previous excesses" which account for around £22m of that figure. Far too high a price to pay for 15 years of semi-regular European football obviously. You think the stadium expansion was financed by expensive bank loans? Im not an expert but its pretty obvious that the previous owners left the club in a mess. You seriously think players like Owen were paid for in cash? Link to post Share on other sites More sharing options...
Guest bimpy474 Posted September 1, 2011 Share Posted September 1, 2011 "In spite of this, the club’s previous excesses have resulted in significant debt of £282 million That line is such a load of toss like, and gives an idea of the perspective the article was written with. £134m of that is the money Ashley paid for the club £45m of it is the remainder of the debt for the stadium extension £83m is additional debt from when Ashley bought the club to 2009 None of that is to do with the so called "club’s previous excesses" which account for around £22m of that figure. Far too high a price to pay for 15 years of semi-regular European football obviously. I think the "club’s previous excesses" came from the fact we were still paying for players we had bought years previous on staggered payments, and players we had sold where we were still paying part of their wages to get them to move, as i remember it, i think. Link to post Share on other sites More sharing options...
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