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Mike Ashley


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We're making £50m profit a year at the moment.  Investing £50m a year into the first team would make a massive difference and that's without sending the club into debt, without borrowing, without stupid installments.  Simply investing our profits would see us competing at the right end of the table (including a proper salary for a real manager).

 

We haven't reported a profit before player trading yet.  Operating profit for the last 7 years has been...

 

-29.0m

-24.7m

-37.7m

-33.5m

-3.9m

-5.1m

-0.6m

 

I'd expect us to spend in Summer.

 

That's a very misleading set of numbers IYAM.

 

Those numbers are £(turnover - op ex - player amortisation), but ignoring transfers. You're including the downside of player trading (amortisation) but not the upside (sale profit/loss).

 

The important thing to point out if you use that as a base is that when you include transfers it's pretty much all profit. Correct me if I'm wrong, but players brought in for however much don't affect the profit at all in that year except for any amortisation which you have included (they are assets at the value of the transfer fee). However players sold will add £(sale price - book value) to the final profit margin. For example Cabaye - Bought for £4.3m on a 5 year contract. Sold half way through contract so book value=£2.15m. Sale price=£19m. Profit=£16.8m to be added onto whatever that value is for 13-14

 

When transfers are included, the final profit/loss numbers are:

 

07-08: -£20.3m

08-09: -£15.2m

09-10: -£17.1m

10-11:  £32.6m

11-12:  £1.4m

12-13:  £9.9m

 

 

In that context it seems a very strange conclusion to draw that the amount we have available to spend on player purchases is related to profit before trading. Would you not be better just looking at the cashflow?

 

That's not right. Players being brought in affect the profits of that year because they are an expenditure. Let's say we spent £12m on Cabella. It's an expenditure in this year. Our profits will decrease by £12m. At the same time, he also becomes an 'asset' valued at £12m. This asset depreciates according to the number of years on his contract. You're wrong in saying that when you buy a player, it doesn't affect the accounts in that year because it's an acquisition of an asset. It has a cost and it also depreciates.

 

The best way of looking at clubs is to look at whether they can make an operating profit or not because those are the underlying financial data that will predictable from year to year. Your fixed costs of wages and salary to non-playing staff and employees are included in this, as is sponsorship income. So operating profit/loss is a good way of saying whether the model of the club is sustainable or not, or whether it depends on sales. Players trading (buying or selling) is extremely unpredictable, that's why looking at operating profit (loss) is better.

 

Sorry but that's wrong, let's make it easy and say we buy a player (cash up front) for 10m on a 5 year deal. Profit is reduced by 2m a year. There is no other expense apart from their wages.

 

Cash flow will show 10m going out but that's different to the impact on profit

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Players being brought in affect the profits of that year because they are an expenditure. Let's say we spent £12m on Cabella. It's an expenditure in this year. Our profits will decrease by £12m. At the same time, he also becomes an 'asset' valued at £12m. This asset depreciates according to the number of years on his contract. You're wrong in saying that when you buy a player, it doesn't affect the accounts in that year because it's an acquisition of an asset. It has a cost and it also depreciates.

 

Pretty sure that's wrong. The way you describe it a £12m player would reduce profits by £24m over the full term of his initial contract.

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Yep UV, It's absolutely wrong, Colo has it right. Buying a player is not an expense, because you change one asset (cash) for another (player registration) of the same value.

 

From that day on, the depreciation of the player in a non-cash expense which impacts the P&L, usually applied on a straight-line basis over the contract life- the profile can be re-based if the player gets a new deal.

 

I also don't think you can divorce operations and transfer activity, unless you can confidently state that a club can consistently produce youth players or find free transfers which will produce results sufficient to maintain revenue streams (ie stay in the PL). If a club has an operating profit of £5m a year but has to spend £10m each year on players to stay in the PL, that I don't think you can label that as sustainable.

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Pound for pound we're one the best club in the world because few can post the solid growth profits we can. While elements of our customer base will wrongfully disagree that is what is important in the English Premier League today - stability, you only have to look on at what has happened at Leeds plus recent cup winners Portsmouth and Wigan to see what can go wrong when you chase glory. We inherited a horrendous situation here at Newcastle but thanks to Mike Ashley's investment we have turned things around and whilst there is still a lot to do to recover from this it is what we are building towards.

 

During this time we've also embarked on a number of measures to aid customer experience at the stadium such as the new big screen, fan interaction artwork installation plus we're bringing rugby league to the city and hopefully this will get more customers on board with what we're trying to do here.

 

Will you be requiring a £1 magazine as well?

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Pound for pound we're one the best club in the world because few can post the solid growth profits we can. While elements of our customer base will wrongfully disagree that is what is important in the English Premier League today - stability, you only have to look on at what has happened at Leeds plus recent cup winners Portsmouth and Wigan to see what can go wrong when you chase glory. We inherited a horrendous situation here at Newcastle but thanks to Mike Ashley's investment we have turned things around and whilst there is still a lot to do to recover from this it is what we are building towards.

 

During this time we've also embarked on a number of measures to aid customer experience at the stadium such as the new big screen, fan interaction artwork installation plus we're bringing rugby league to the city and hopefully this will get more customers on board with what we're trying to do here.

 

Will you be requiring a £1 magazine as well?

Why have fans when you can have "customers"

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Yep UV, It's absolutely wrong, Colo has it right. Buying a player is not an expense, because you change one asset (cash) for another (player registration) of the same value.

 

From that day on, the depreciation of the player in a non-cash expense which impacts the P&L, usually applied on a straight-line basis over the contract life- the profile can be re-based if the player gets a new deal.

 

I also don't think you can divorce operations and transfer activity, unless you can confidently state that a club can consistently produce youth players or find free transfers which will produce results sufficient to maintain revenue streams (ie stay in the PL). If a club has an operating profit of £5m a year but has to spend £10m each year on players to stay in the PL, that I don't think you can label that as sustainable.

 

Always straight line, or equal amount each year and it's based on the original contract length, you can't rebase it

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must have the only owner who does not or is not interested in a trip to Wembley to win some silverware and have a team to be proud of ,surely getting Charnley and his minnions to spout the "no interest in cup competitions" is against the rules when you blatantly flaunt it in fans forums and is that not something the F.A should pick up on ? .Our record in the F.A cup should be proof of that with weakened teams in every single 3rd round tie  :undecided:

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Guest Roger Kint

The fan's forum is on Monday, imagine they will be first shown to members then and then released the following day.

 

Unless Villa maul us 4-0 and then they have to put it back another week like they did this week due to City. Need some feel good factor to gloss over the hge profits and excuses. Something like an emotional return for Jonas maybe would help......

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Yep UV, It's absolutely wrong, Colo has it right. Buying a player is not an expense, because you change one asset (cash) for another (player registration) of the same value.

 

From that day on, the depreciation of the player in a non-cash expense which impacts the P&L, usually applied on a straight-line basis over the contract life- the profile can be re-based if the player gets a new deal.

 

I also don't think you can divorce operations and transfer activity, unless you can confidently state that a club can consistently produce youth players or find free transfers which will produce results sufficient to maintain revenue streams (ie stay in the PL). If a club has an operating profit of £5m a year but has to spend £10m each year on players to stay in the PL, that I don't think you can label that as sustainable.

 

Yeah, my mistake. You're right, it's a depreciable asset otherwise you're allowing clubs to deduct taxes twice.

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I'm buzzin off it personally.

 

Don't get me wrong, so am I.

 

I think we're that used to it that some of us are becoming arrogant about it and expect it as a god given right.  I now know how it must have felt when Man U were winning trophies season after season and I think that breeds arrogance, rightly.

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I still think his arse kicking at rangers will somehow have a negative effect on us

 

It's not anywhere near an arse kicking, he still controls all the bits that make money and holds security over the assets, win win for Mikey boy.

Exactly. There's no way he's not coming out of this massively in credit.

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