Mike Ashley

[Wallace]

The media now seem to now be picking up on the free advertising and other loss of commercial revenue for the benefit of Sports Direct.

 

"Newcastle moan that they can never attract the sponsorship revenues of bigger clubs. But their case is undermined by the dozens of Sports Direct adverts that plaster the stadium and pitch surrounds.

 

No sum is specified in the accounts as to what this global advertising is worth to Sports Direct, but industry analysts say it could be worth millions. Sports Direct get it for free.

 

The club's retail operation appears to be morphing from an division that used to provide revenue, to one being taken over by Sports Direct. More money going out of the club?"

 

http://www.mirror.co.uk/sport/football/transfer-news/newcastle-transfer-window-report-joe-2247216?

 

 

[AyeDubbleYoo]

I'm not sure how strong that line of argument really is. I mean, we are giving some free advertising to SD for sure, but is the impact on our performance really that dramatic, and does it make a difference between spending and not spending?

[Guest icemanblue]

I'm not sure how strong that line of argument really is. I mean, we are giving some free advertising to SD for sure, but is the impact on our performance really that dramatic, and does it make a difference between spending and not spending?

 

It's a negative contribution, whichever way you look at it. It's space that could be put to better financial use.

[AyeDubbleYoo]

I'm not sure how strong that line of argument really is. I mean, we are giving some free advertising to SD for sure, but is the impact on our performance really that dramatic, and does it make a difference between spending and not spending?

 

It's a negative contribution, whichever way you look at it. It's space that could be put to better financial use.

 

Sure, yep.

[NG32]

I'm not sure how strong that line of argument really is. I mean, we are giving some free advertising to SD for sure, but is the impact on our performance really that dramatic, and does it make a difference between spending and not spending?

 

Do you think any other clubs in the prem are stupid enough to give away advertising space for free in the richest and most viewed league in the world...its fuckin mental.

[Disco]

When club officials regularly state we can't compete but at the same time aren't interesting in maximising revenue streams I'd say it's an important example of a wider problem.

[Wallace]

The club say they cannot compete financially with other clubs but they are obviously partially responsible for this themselves because of how far our commercial revenue has fallen since Ashley bought the club.  It is very poor compared to supposedly lesser clubs.

 

Other than the TV money, we seem to be dependent upon cost-cutting and player sales to create revenue.  Cost-cutting can only go on for so long.  At the very least, there seems to be a severe lack of nous within the club at how to generate revenue through other means.

 

 

 

 

 

[AyeDubbleYoo]

I'm not sure how strong that line of argument really is. I mean, we are giving some free advertising to SD for sure, but is the impact on our performance really that dramatic, and does it make a difference between spending and not spending?

 

Do you think any other clubs in the prem are stupid enough to give away advertising space for free in the richest and most viewed league in the world...its fuckin mental.

 

No, probably not, we should be making more of it.

[AyeDubbleYoo]

The club say they cannot compete financially with other clubs but they are obviously partially responsible for this themselves because of how far our commercial revenue has fallen since Ashley bought the club.  It is very poor compared to supposedly lesser clubs.

 

Other than the TV money, we seem to be dependent upon cost-cutting and player sales to create revenue.  Cost-cutting can only go on for so long.  At the very least, there seems to be a severe lack of nous within the club at how to generate revenue through other means.

 

 

Hopefully the new TV money will help a lot.

[AyeDubbleYoo]

When club officials regularly state we can't compete but at the same time aren't interesting in maximising revenue streams I'd say it's an important example of a wider problem.

 

Fair point, I do wonder why we aren't pushing our brand more in general. Our promotion and PR etc is a shambles.

[NG32]

Its a fckin mess...no one in their right mind would give away advertising for free....unless...this fat fuck has totally fucked nufc over...we are now a department within SportsDirect

[NG32]

The club say they cannot compete financially with other clubs but they are obviously partially responsible for this themselves because of how far our commercial revenue has fallen since Ashley bought the club.  It is very poor compared to supposedly lesser clubs.

 

Other than the TV money, we seem to be dependent upon cost-cutting and player sales to create revenue.  Cost-cutting can only go on for so long.  At the very least, there seems to be a severe lack of nous within the club at how to generate revenue through other means.

 

 

Hopefully the new TV money will help a lot.

 

I dont think nufc will see much of it.

[TRon]

When club officials regularly state we can't compete but at the same time aren't interesting in maximising revenue streams I'd say it's an important example of a wider problem.

 

Fair point, I do wonder why we aren't pushing our brand more in general. Our promotion and PR etc is a shambles.

 

Because the brand needs constant investment to compete at the top level I guess, otherwise it loses value. Something Ashley is not prepared to entertain, whether it's his money or borrowed.

[Disco]

When club officials regularly state we can't compete but at the same time aren't interesting in maximising revenue streams I'd say it's an important example of a wider problem.

 

Fair point, I do wonder why we aren't pushing our brand more in general. Our promotion and PR etc is a shambles.

 

I assume because it's seen as an 'unnecessary/luxury spend'.

 

Would explain how shit the website/social media/etc. is and fit in with a few of those previously involved with such things being binned off and not replaced.

 

If you're hellbent on cutting costs stuff like that is usually the first to go.

[alexf]

The Chronicle aren't going to hear shit all back with questions like that.

[Wallace]

The Chronicle aren't going to hear s*** all back with questions like that.

 

They will know that already but I guess it is about getting those points of view across and maybe (unlikely I know), some of the stuff will start to register with the board.

 

[merlin]

Not looking to sell according to The Journal

 

They claim they can't get any contact with him, then say he's not looking to sell - how do they know, in that case..??

Ashley is NEVER going to say he is 'looking to sell'...why would he, it only reduces the bids he would get from interested buyers.

[UV]

 

It's not that hard to quantify. The club is bringing in £13m a year less in sponsorship than it was when he took over, the only club in the league whose commercial revenue has decreased.

 

That advertising has been replaced by his company, which the club pays to provide. He has actively reduced the club's income only to then plead poverty.

 

Where are you getting this from? Or are you wrongly lumping all commercial income together as being advertising?

£29million to about £14million a year. Doesn't exactly take a brain surgeon. To think our turnover was higher than Spurs in 2007 too.

 

Clearly it does as commercial income is not just sponsorship which is the point i was making, genuinely dont know what your post has to do with mine.

Erm, considering sponsorship takes up a big chunk of commercial revenue, I think it's pretty obvious.

 

Considering the biggest reduction in commercial income was not related to sponsorship then it doesnt sound too obvious. Still no point in taking people like The Swiss Ramble's word when you know everything about it from looking at the basic numbers

 

Let's put this into context then.

 

The last accounts which split up the commercial figures were the 2006 ones (which were for an 11 month period). The revenue was split as follows:

Total: £25.7m

Sponsorship: £11.2m (44%)

Catering: £6.7m (26%)

Branded products: £7.8m (30%)

 

The commercial revenue in 2007 was £27.6m so we can estimate the catering part of that revenue was around £7.2m.

The commercial revenue in 2012 was £13.8m, precisely half what it was 5 years earlier.

 

I'm no catering expert, but I'd guess with the high end corporate market and competition-free matchday sales, the catering at the club should have a very high profit margin, probably over 50%. Even if you assume we now only get £1m from the outsourcing company (Sodexo), that still leaves around £7.6m of lost revenue from sponsorship and merchandising.

 

You should also factor in that the sponsorship part of the commercial revenue is practically all profit, so pound for pound a reduction in the sponsorship revenue has a much greater effect on the club's cash-flow than reductions in catering or merchandising revenue (which would have associated reductions in costs).

 

 

PS When taking blogs from supporters of other teams like the Swiss Ramble as gospel, remember that they don't necessarily do due diligence on the facts they use:

 

Other clubs have also been keen to get in on the act with Newcastle’s £10 million Virgin Money deal being £7.5 million higher than Northern Rock and Sunderland’s barely credible £20 million Invest in Africa deal being just the £19 million more than the previous Tombola deal.

 

[Guest Roger Kint]

Good to see some actual figures. Obviously its still a bit subjective given theres a few seasons missing between those and the period in question. Like i was saying to assume all commercial is sponsors like he was doing was clearly stupid, roughly half that drop being catering(before taking into account the knock on cost saving too)

 

Wonder what figures we got from NR/Virgin during the tits up period at the start of Ashleys reign? Undoubtedly that was a sizable drop from the deal we originally had under FFS

[Guest Roger Kint]

FWIW no need to take anyones word as gospel in the case of commercial income being a mixture of revenue streams as you have clearly proven my point on the subject

[UV]

It should be fairly easy to get facts about how much debt to Mike Ashley we have.

 

It is - but only up to 30th June 2012.

 

Well that's all we can go on really, what is in the accounts. If he pockets all the new TV money than that's a different matter.

 

In the accounts there is £111 million of loan that is long term - i.e due after more than one year.  That has now been there for several years. As at June 2012 he had loaned the club an additional £29 million during 2011 and 2012 to buy players and meet short term cash commitments. This additional amount was short term, repayable within one year.. The accounts show he had already received £11 million back, and we can probably assume he's had the remaining £18 million back by now. He's not going to get his loan back anytime soon if that pattern continues 

 

The additional £29m from Ashley came in the 09-10 Championship season and was required because the bank wouldn't allow the club to continue to have a £36m overdraft outside the Prem. Player sales on relegation (and income from previous player sales) covered the revenue fall in the Championship season so there was practically no increase in the net debt, it merely transferred from the bank to Ashley. He certainly didn't put in any money during 2011 and 2012 to buy players.

 

The entire debt to Ashley is in the accounts (and was pre-relegation too) as payable within one year. Whether Ashley regards the £29m as special and will stop using profits to pay off the loan once this is recouped is speculation.

 

Unfortunately for Ashley, I think the unanticipated, forced January spend will have put paid to any plans to pay off any significant amount of the loan last year. You're certainly right though that the way he is running the club, he is going to be unable to pay off much debt anytime soon unless very little of the additional TV revenue gets spent on fees & wages for the foreseeable future, or we pull quite a few more Milners & Carrolls out of the hat. I'm not sure that qualifies for a smiley though.

 

For reference:

 

	2006	2007	2008	2009	2010	2011	2012
Ashley Loan	0	0	100000	111000	139800	140000	129000
Overdraft	5528	10863	987	35781	10389	0	343
Stadium Loan	47441	45089	0	0	0	0	0
Other Loans	17248	23036	6067	3236	196	0	0
Cash at bank and in hand	9309	9309	0	0	0	9515	0
Net debt	60908	69679	107054	150017	150385	130485	129343
Debt increase/decrease		8771	37375	42963	368	-19900	-1142

 

	2006	2007	2008	2009	2010	2011	2012
Overdraft	5528	10863	987	35781	10389	0	343
Repayable within one year or on demand	10867	61675	2939	114056	123496	140000	18000
Repayable in the first to second years	7753	3127	103052	196	16500	0	111000*
Repayable in the second to fifth years	17410	3323	196	0	0	0	0
Repayable after five years	28659	0	0	0	0	0	0

 

* The period in which this is to be repaid is not stated in the 2012 accounts, only that is is no longer due within 1 year.

 

BTW Some people have said that finding out the loans were repayable on change of ownership meant Ashley had to rethink his plans and changed how he was going to run the club. Only the Stadium loan was repayable on change of ownership, which was around £45m. Ashley chose to repay the other loans, and he also chose to move to a system of paying up front for players brought in while receiving payments in instalments for players we sold (part of the reason the net debt rocketed in the first couple of years). He had the money to take on the debt, and it benefited both him and the club. It's pretty obvious he would have paid off the stadium loan regardless of any clause.

[Incognito]

It should be fairly easy to get facts about how much debt to Mike Ashley we have.

 

It is - but only up to 30th June 2012.

 

Well that's all we can go on really, what is in the accounts. If he pockets all the new TV money than that's a different matter.

 

In the accounts there is £111 million of loan that is long term - i.e due after more than one year.  That has now been there for several years. As at June 2012 he had loaned the club an additional £29 million during 2011 and 2012 to buy players and meet short term cash commitments. This additional amount was short term, repayable within one year.. The accounts show he had already received £11 million back, and we can probably assume he's had the remaining £18 million back by now. He's not going to get his loan back anytime soon if that pattern continues 

 

The additional £29m from Ashley came in the 09-10 Championship season and was required because the bank wouldn't allow the club to continue to have a £36m overdraft outside the Prem. Player sales on relegation (and income from previous player sales) covered the revenue fall in the Championship season so there was practically no increase in the net debt, it merely transferred from the bank to Ashley. He certainly didn't put in any money during 2011 and 2012 to buy players.

 

The entire debt to Ashley is in the accounts (and was pre-relegation too) as payable within one year. Whether Ashley regards the £29m as special and will stop using profits to pay off the loan once this is recouped is speculation.

 

Unfortunately for Ashley, I think the unanticipated, forced January spend will have put paid to any plans to pay off any significant amount of the loan last year. You're certainly right though that the way he is running the club, he is going to be unable to pay off much debt anytime soon unless very little of the additional TV revenue gets spent on fees & wages for the foreseeable future, or we pull quite a few more Milners & Carrolls out of the hat. I'm not sure that qualifies for a smiley though.

 

For reference:

 

	2006	2007	2008	2009	2010	2011	2012
Ashley Loan	0	0	100000	111000	139800	140000	129000
Overdraft	5528	10863	987	35781	10389	0	343
Stadium Loan	47441	45089	0	0	0	0	0
Other Loans	17248	23036	6067	3236	196	0	0
Cash at bank and in hand	9309	9309	0	0	0	9515	0
Net debt	60908	69679	107054	150017	150385	130485	129343
Debt increase/decrease		8771	37375	42963	368	-19900	-1142

 

	2006	2007	2008	2009	2010	2011	2012
Overdraft	5528	10863	987	35781	10389	0	343
Repayable within one year	10867	61675	2939	114056	123496	140000	129000
Repayable in the first to second years	7753	3127	103052	196	16500	0	0
Repayable in the second to fifth years	17410	3323	196	0	0	0	0
Repayable after five years	28659	0	0	0	0	0	0

 

BTW Some people have said that finding out the loans were repayable on change of ownership meant Ashley had to rethink his plans and changed how he was going to run the club. Only the Stadium loan was repayable on change of ownership, which was around £45m. Ashley chose to repay the other loans, and he also chose to move to a system of paying up front for players brought in while receiving payments in instalments for players we sold (part of the reason the net debt rocketed in the first couple of years). He had the money to take on the debt, and it benefited both him and the club. It's pretty obvious he would have paid off the stadium loan regardless of any clause.

 

Wasn't most of what we spent in January offset by the Ba fee?

[Wullie]

The club say they cannot compete financially with other clubs but they are obviously partially responsible for this themselves because of how far our commercial revenue has fallen since Ashley bought the club.  It is very poor compared to supposedly lesser clubs.

 

Other than the TV money, we seem to be dependent upon cost-cutting and player sales to create revenue.  Cost-cutting can only go on for so long.  At the very least, there seems to be a severe lack of nous within the club at how to generate revenue through other means.

 

 

Hopefully the new TV money will help a lot.

 

Not really because our competitors are bringing in similar amounts (apart from the Champions League qualifiers). Stuff like commercial and sponsorship are what separates clubs like Liverpool (whose commercial revenue is vast in comparison despite a largely under-performing team for years) from your bottom half tat.

 

Everton and Liverpool bring in similar gate receipts and TV money but Liverpool's commercial and sponsorship deals blow Everton away. We have to maximise every single revenue stream because you can be damn sure everybody else is trying to.

[AyeDubbleYoo]

The club say they cannot compete financially with other clubs but they are obviously partially responsible for this themselves because of how far our commercial revenue has fallen since Ashley bought the club.  It is very poor compared to supposedly lesser clubs.

 

Other than the TV money, we seem to be dependent upon cost-cutting and player sales to create revenue.  Cost-cutting can only go on for so long.  At the very least, there seems to be a severe lack of nous within the club at how to generate revenue through other means.

 

 

Hopefully the new TV money will help a lot.

 

Not really because our competitors are bringing in similar amounts (apart from the Champions League qualifiers). Stuff like commercial and sponsorship are what separates clubs like Liverpool (whose commercial revenue is vast in comparison despite a largely under-performing team for years) from your bottom half tat.

 

Everton and Liverpool bring in similar gate receipts and TV money but Liverpool's commercial and sponsorship deals blow Everton away. We have to maximise every single revenue stream because you can be damn sure everybody else is trying to.

 

Yeah sure, I just mean that it will put some better numbers on the bottom line that might allow us to spend more than we are doing now.

[AyeDubbleYoo]

BTW Some people have said that finding out the loans were repayable on change of ownership meant Ashley had to rethink his plans and changed how he was going to run the club. Only the Stadium loan was repayable on change of ownership, which was around £45m. Ashley chose to repay the other loans, and he also chose to move to a system of paying up front for players brought in while receiving payments in instalments for players we sold (part of the reason the net debt rocketed in the first couple of years). He had the money to take on the debt, and it benefited both him and the club. It's pretty obvious he would have paid off the stadium loan regardless of any clause.

 

Didn't he choose to repay the other loans because they were much more expensive than the terms he would offer himself, and also banks were making noises about wanting repayments in the near future? The credit situation was getting dramatically worse at the time, converting commercial loans to loans to the owner must have been a good move.