NUFC - A leveraged buyout?

[Guest ovesbar]

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?

 

To have fun with sports?

 

Or you can make a profit, if you sell for more than you paid.

[colinmk]

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?

 

He had a different view of it at the time, he thought it was all going to be great fun and games before we all found out just how shit at running a football club he is and he lost loads more money.

[Dell Boi]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

[Guest bimpy474]

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?

 

I dont think he bought us to make a profit, imo he bought us as he wanted to own a football club, with the fans we have we must have looked a fantastic thing to buy, he buys us and realises unlike the businessess he runs, football is nothing like those, players earning amounts of money for doing practically nothing compared to the average working man.

 

Debts that if the pillock had done due diligence he wouldn't have touched, not buying us basically, now he runs us trying make little debt to him as possible, or profit if he can to pay him back his loan, ie selling Carroll.

 

I still dont think he gets that football is different to any other business, after this long he never ever will.

[Guest johnson293]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been gotten from Northern Rock and used in one hit for Owen, hence no future sponsorship money (which would normally be paid to the club annually) was left in the pot.

[Guest bimpy474]

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?

 

He had a different view of it at the time, he thought it was all going to be great fun and games before we all found out just how s*** at running a football club he is and he lost loads more money.

 

Exactly.

[Guest bimpy474]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Remember that as well.

[binnsy]

do we still own the training ground & academy now, when we were relegated and we needed our overdraft extended i'm sure i read somewhere that we signed over those assets(training ground/academy) to Barclays.  May have just been used as a guarantee or something.

[Dell Boi]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

[Dave]

Why do people persist with the notion that the club owes Ashley for the money he spent to acquire it?

[binnsy]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

 

pretty sure the Northern Rock deal was just recently renewed, not sure how long the deal is for though.

[Guest bimpy474]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

 

Already renewed mate, along the lines of £10m over 5 years i think, something that made the papers as NR is owned by us basically now, it caused a bit of trouble as sponsoring us wasn't really a good idea when the bank had such debts and bailed out by taxpayers..

[quayside]

There was no leveraged buyout of Newcastle.

 

Ashley set up a company called St James Holdings and has put his own money into it to fund what he has done at Newcastle. The only way it would be a leveraged buyout is if he had borrowed the money to put into St James Holdings, he hasn't done that as he's used his own cash.

 

Based on the latest information Ashley has put about £278 million into St James Holdings. £138 million of that was used to buy the club and the remaining £140 million or so has been used to fund this loan that everyone has heard of. So the club owes Ashley £140 million, it does not owe Ashley £278 million. However purely from an accounting viewpoint St James Holdings is showing that it owes Ashley the full £278 million, but I stress that does not mean the club does. If the club was sold tomorrow Ashley has no legal right to receive anything other than the £140 million loan. Of course he won't sell under those terms and will be looking to get a value that clears the purchase price and the debt .i.e. more than £278 million at the last count.

 

That's a fairly simple view of the situation as it was the last time we had sight of any finances. However there are a number of other factors to take into account. Since that information was published the debt the club owes to Ashley may well have decreased with some of the Carroll money being used for that purpose. I'm not going to say it definitely has because I genuinely don't know if it has, but it's certainly a distinct possibility. Secondly there is a point that has been raised on here about Ashley at some point in the future being in a position where he owns the club but the debt has been paid off. The sums involved are as I said above. To clear the debt he needed total repayment of £140 million as at June 2010, if he wanted to also recover the purchase price of the club then he would need to find a way of taking money out to a value of a further £138 million. This would have to be done by charging interest on the loan, paying dividends, renting an asset to the club or taking a salary - he hasn't done any of those so far. I have to say if he's looking to get £278 million out of the club's cash flow to cover the loan and the purchase price then it might take some time...

 

     

[NG32]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

 

Already renewed mate, along the lines of £10m over 5 years i think, something that made the papers as NR is owned by us basically now, it caused a bit of trouble as sponsoring us wasn't really a good idea when the bank had such debts and bailed out by taxpayers..

 

IS it, i thought it was a 4 mil sponsorship if we stayed in the prem. 

 

Where has the 10 mil come from?

[Guest johnson293]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

 

Already renewed mate, along the lines of £10m over 5 years i think, something that made the papers as NR is owned by us basically now, it caused a bit of trouble as sponsoring us wasn't really a good idea when the bank had such debts and bailed out by taxpayers..

 

http://news.bbc.co.uk/1/hi/business/8465058.stm

 

Newcastle United renews partnership with Northern Rock

Monday, 18 January 2010

 

Northern Rock has sponsored Newcastle since 2004.

 

Newcastle United has signed a new four-year sponsorship deal with Northern Rock worth up to £10m.

 

The deal will see the nationalised bank remain as Newcastle's main sponsor from season 2010/11 to 2014.

 

Northern Rock's chief executive Gary Hoffman said the agreement represented a good deal for taxpayers.

 

The bank, which is based in Newcastle, was taken into public ownership in 2008. It has been the club's shirt sponsor since 2004.

 

The total value of the contract would vary, Northern Rock said, and will be worth between £1.5m and £10m.

 

The maximum value of the contract would only be realised if Newcastle - currently a Championship side - play in the Premier League for the whole of the four-year period.

 

Mr Hoffman said the deal represented "an important community link" and defended the decision to renew the sponsorship deal despite being owned by the government.

 

"Brand awareness and promotion are important elements in the continuing development of the company," he said.

 

"We remain mindful of our responsibilities under Government ownership and only consider those advertising and promotion channels that deliver a high return on investment and good strategic fit. "

 

The bank was split in two at the beginning of 2010 as part of large-scale restructuring.

 

Newcastle United's managing director Derek Llambias said the deal would help the club achieve its goal of a return to the Premiership next season.

[Guest bimpy474]

Why do people persist with the notion that the club owes Ashley for the money he spent to acquire it?

 

I think thats only because its noted in the accounts as a loan, like you say it was his own fault, but if that so called loan, and its reduction leads to him selling up then at least its something to hope for.

[Guest bimpy474]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

 

Already renewed mate, along the lines of £10m over 5 years i think, something that made the papers as NR is owned by us basically now, it caused a bit of trouble as sponsoring us wasn't really a good idea when the bank had such debts and bailed out by taxpayers..

 

http://news.bbc.co.uk/1/hi/business/8465058.stm

 

Newcastle United renews partnership with Northern Rock

Monday, 18 January 2010

 

Northern Rock has sponsored Newcastle since 2004.

 

Newcastle United has signed a new four-year sponsorship deal with Northern Rock worth up to £10m.

 

The deal will see the nationalised bank remain as Newcastle's main sponsor from season 2010/11 to 2014.

 

Northern Rock's chief executive Gary Hoffman said the agreement represented a good deal for taxpayers.

 

The bank, which is based in Newcastle, was taken into public ownership in 2008. It has been the club's shirt sponsor since 2004.

 

The total value of the contract would vary, Northern Rock said, and will be worth between £1.5m and £10m.

 

The maximum value of the contract would only be realised if Newcastle - currently a Championship side - play in the Premier League for the whole of the four-year period.

 

Mr Hoffman said the deal represented "an important community link" and defended the decision to renew the sponsorship deal despite being owned by the government.

 

"Brand awareness and promotion are important elements in the continuing development of the company," he said.

 

"We remain mindful of our responsibilities under Government ownership and only consider those advertising and promotion channels that deliver a high return on investment and good strategic fit. "

 

The bank was split in two at the beginning of 2010 as part of large-scale restructuring.

 

Newcastle United's managing director Derek Llambias said the deal would help the club achieve its goal of a return to the Premiership next season.

 

Cheers mate 

[Guest bimpy474]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

 

Already renewed mate, along the lines of £10m over 5 years i think, something that made the papers as NR is owned by us basically now, it caused a bit of trouble as sponsoring us wasn't really a good idea when the bank had such debts and bailed out by taxpayers..

 

IS it, i thought it was a 4 mil sponsorship if we stayed in the prem. 

 

Where has the 10 mil come from?

 

I was guestimating mate, but as Johnson so kindly provided, i wasn't far off

[Dave]

Did the £138m include the club's debt at that time? Because if not I can't see he's 'owed' that either. I wouldn't buy a car then try and hold the previous owner accountable for the work it needed to pass an MOT.

[Guest johnson293]

Here is the Chronicle article, not long after the takeover detailing some of the alleged figures involved...

 

http://www.chroniclelive.co.uk/north-east-news/evening-chronicle-news/2007/09/25/without-takeover-united-could-well-have-folded-72703-19844203/

 

However, on Owen....

 

“What we also found was that the club had spent sponsorship money before it actually came in. For example' date=' all the cash from Northern Rock, which should have been paid annually, has already gone (said to be used to help buy Michael Owen at £17m). Money was also borrowed against a deal with adidas.[/quote']

[bealios]

Back to the original question, the answer is no it is not.

 

A leveraged buy out is when someone uses third party debt from a bank for example to buy something (i.e. a football club), and then places the debt into that thing (i.e. into the football club) so that the football club is responsible for paying the interest, rather than the person who bought it. These interest costs are high, and they reduce the club from a profit making thing to a loss making thing, which for football clubs who rely on profits to invest on players etc. Instead they are being spent on interest payments, and that is why they are considered a bad thing.

 

If the club is owned by a shareholder with no debt, there is no interest payments, so no reduction in profits available to spend.

 

The Ashley purchase was simply structured so that he made the original purchase by acquiring all of the shares for £130m or so, and then loaned another £110m, but interest free. So the problems generally associated with a leveraged buy out don't apply. That lack of an interest charge like it or not was a good thing for the club, it meant we were not paying the £7m - £8m a year to Northern Rock.

 

 

 

[UV]

I thought Owen was bought with the Northern Rock sponsorship money, the full wack of it.

 

Have I made that up?

 

No, I'm pretty sure Chris Mort said as much once they bought the club and saw the books - Club sponsorship money had been used in one hit for Owen, hence no future sponsorship money in the pot.

 

Cheers mate, thought it was right.

 

When does Northern Rock expire? He'll walk into another 20m+ when the next shirt sponsor comes along, wonder how much of that will be reinvested.

 

pretty sure the Northern Rock deal was just recently renewed, not sure how long the deal is for though.

 

We went from £5m/year for 5 years unconditional to £2.5m/year for 4 years conditional on staying in the Prem.

 

It's called turning round the finances.

[Guest bimpy474]

Did the £138m include the club's debt at that time? Because if not I can't see he's 'owed' that either. I wouldn't buy a car then try and hold the previous owner accountable for the work it needed to pass an MOT.

 

Not the debt it was on top of it, something he didn't find out as he didn't do due diligence, if he had he would have found out the true nature of our finances, its a bit like buying a house and not having a survey, then you find out you have subsidence or your new house is on a flood plain,  just on a much bigger a scale, not quite as simple but closeish.

[NG32]

How much is our current shirt deal worth?

[Guest bimpy474]

How much is our current shirt deal worth?

 

Dont know that but it ends this season, it was a 2 year deal for sure.