Happy Face Posted March 25, 2015 Share Posted March 25, 2015 Never called it enormous but keep putting words in my mouth. If Sports Direct was losing £30m a year, Ashley would not whack in £400m of his personal fortune to spruce up the shops and get it profitable again. He's not going to do that at nufc to push for the champions league either. He's not in football for the same reasons as Abramovic or Mansour. From 2007 to 2009 AVFC had a total loss of £57m and NUFC had a toal loss of £70m. Since then Villa have lost a further £161m (total compined loss almost a quarter Billion) chasing success while NUFC have turned it into a £27m profit getting relegated and promoted then maintaining a place in the league. For 2 owners not looking to invest like the big boys, Lerner's left AVFC in a far worse position, even having written off debt, not just interest on it. Link to post Share on other sites More sharing options...
Beren Posted March 25, 2015 Share Posted March 25, 2015 There's a significant proportion of our support who will be completely mugged this summer when we spend a decent amount (which we will, to survive). Prepare yourself for months of "finally Mike has realised" sentiments, as if buying a few players can put right the decimation of the entire competitive culture of the club since he arrived. Happy Face has fallen for it before we've even spent a penny. I've fallen for nothing man. It's exactly what they said was the approach 4 years ago. Club Finances Our aim is to make Newcastle United self-financing. We cannot continue to acquire debt year after year and rely on additional financial support from the owner. In 2008/09 we reported an operating loss before player trading of £37.7m. In 2009/10 that loss was £33.5m. Once audited, our accounts for 2010/11 are expected to show an operating loss of just £4.7m and this year we hope we will be close to breaking even. Over the coming year we will continue to build the Club sustainably - on and off the field. We have a realistic view of what we can achieve at Newcastle and the time-frame required to achieve it. We have a strict spending policy and will not take a reckless approach which permits spending beyond our means. It is a sensible long-term plan for success and we have absolute confidence that this is the right model for Newcastle United. I hated it then and I hate it now, but at least it's reaching the point where we can buy without selling. The only people fooled will be the likes of Lovenkrands and Ryder in the chronicle today saying "Ashley needs to spend more", as if Ashley has an epiphany and decides to get more adventurous. That would be bollocks. It's been interminably slow growth and will continue at a similarly incremental way. He's not put a penny in for 5 years and nor will he ever again. It's not any kind of silver lining though, because the silver lining is underpinned by a complete lack of ambition. It's completely meaningless. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 Going over old ground, but I fail to see why you keep looking at operational profit/loss as some indicator as to what Ashley might do on the transfer market, whilst ignoring what actually happens in terms of transfer fees incoming and outgoing? Operating profit/loss is intrinsic to what the club can afford to do. If the club is hemorrhaging £30m a year before player trading, then players have to be sold to plug that leak. If the club is just about breaking even then players have to be sold before we can buy. If the club is earning £30m, then we can spend that on players before we sell anyone. I understand that. It's just from 2011 onwards we have seen very manageable operational losses (which shouldn't have even been posted if SD paid a market fee for its advertising btw) and significant profit after player trading. We have not see significant investment in the playing squad in that time, and even worse, we don't even seem willing to pay the going rate for an actual manager who could transform the club's fortunes. I just don't see the significance of going from a very small red to black for operational profit you attribute to it. Do you really think Ashley will start throwing the cash (generated by the club itself mind you) around now, when he could have reinvested profits for the past four years and chose not to? Just because the losses were minimised by 2011 it didn't mean the debt accrued in the 4 years prior was going to be written off. That's why I did the pics of Ashley's tenure. Operationally at the end of 2013 we remained over £100m down and after player trading £10m down. I don't think he'll throw the cash around at all. He'll keep a good working kitty to invest in January in case we're in trouble. Before spending on players he'll use millions on building the training complex and a better coach and staff. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 They'll spend exactly the amount that they think they need to in order to survive in the division, same as they always do. The amount they spend won't get us a better team, just like it didn't last summer despite the ENORMOUS spending that you bizarrely keep citing. Well, there's that too. We have made some absolutely horrendous sales lately. Ben Arfa released for free. Yanga-Mbiwa for 5m was it? Santon sold for 2.8m? We will have to spend big just to not go backwards. Ashley will see those as good sales, apart from Ben Arfa, all profitable otherwise Link to post Share on other sites More sharing options...
Unbelievable Posted March 25, 2015 Share Posted March 25, 2015 They'll spend exactly the amount that they think they need to in order to survive in the division, same as they always do. The amount they spend won't get us a better team, just like it didn't last summer despite the ENORMOUS spending that you bizarrely keep citing. Well, there's that too. We have made some absolutely horrendous sales lately. Ben Arfa released for free. Yanga-Mbiwa for 5m was it? Santon sold for 2.8m? We will have to spend big just to not go backwards. Ashley will see those as good sales, apart from Ben Arfa, all profitable otherwise And therein lies the problem. Ashley sees a profit instead of realising that he's weakened the squad significantly by letting three of our better players go for peanuts. Link to post Share on other sites More sharing options...
NG32 Posted March 25, 2015 Share Posted March 25, 2015 Then replacing with unknowns (in the prem league) in the hope they are like for like or better, then hope to sell for profit again. Then repeat. There is no team building or a strategy to actually achieve anything other than standing still in mid table and flipping players for profit. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 Yeah, THAT is the problem, not the amounts being spent. In the words of Keegan “Mike Ashley doesn't know anything about football" All he knows is business, and turning an overall profit on 3 players without an appearance between them in 14/15 is the sort of thing he'll continue to jump at. My hope is that a better manager would actually be playing those players though. Link to post Share on other sites More sharing options...
AyeDubbleYoo Posted March 25, 2015 Share Posted March 25, 2015 I'm not au fait with the financial terms, so is "amortisation", the decrease of a players value based on the contract payments? Or is it just an arbitrary figure? Reducing the value of an asset over time. I guess with players it reflects the fact that they are worth less as their contracts run down and they age. Also has a tax benefit because the amount lost each year reduces profit apparently: http://lexicon.ft.com/Term?term=amortisation 'Depreciation' was the term I thought of and learned at school. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 I'm not au fait with the financial terms, so is "amortisation", the decrease of a players value based on the contract payments? Or is it just an arbitrary figure? Reducing the value of an asset over time. I guess with players it reflects the fact that they are worth less as their contracts run down and they age. Also has a tax benefit because the amount lost reduces profit apparently: http://lexicon.ft.com/Term?term=amortisation cheers. If that's the case though, how is that calculated, especially considering you'd expect young players like Santon/MYM's value to increase over time, not decrease. Sissoko isn't getting less valuable the linger we have him. He is, because if his contract expires he walks away for nothing. Link to post Share on other sites More sharing options...
AyeDubbleYoo Posted March 25, 2015 Share Posted March 25, 2015 I guess you can account for an asset (like a player) based on purchase price and contract length. Accountancy probably doesn't allow for potential future increases in value. Business is notoriously sceptical about future things like growth in value of assets. Hence why people on Dragon's Den get hammered for valuing their company too highly when they haven't made any money yet. Remember we're just talking about accounting, it's an approximation of the real world for tax purposes. Link to post Share on other sites More sharing options...
AyeDubbleYoo Posted March 25, 2015 Share Posted March 25, 2015 I think the main thing is that accounting can't account for football things like signing a player cheap and them becoming better. It can only account for the book value of assets over time. One of the reasons why purely accounting decisions don't seem to make sense to fans. Link to post Share on other sites More sharing options...
UV Posted March 25, 2015 Share Posted March 25, 2015 Going over old ground, but I fail to see why you keep looking at operational profit/loss as some indicator as to what Ashley might do on the transfer market, whilst ignoring what actually happens in terms of transfer fees incoming and outgoing? Operating profit/loss is intrinsic to what the club can afford to do. If the club is hemorrhaging £30m a year before player trading, then players have to be sold to plug that leak. If the club is just about breaking even then players have to be sold before we can buy. If the club is earning £30m, then we can spend that on players before we sell anyone. That's not true like, not at all. Amortisation which hits that profit isn't cash hemorrhaging out of the club (especially as these days the transfer fee is usually paid up front). You don't have to desperately sell players to cover the amortisation loses to stop the debt growing. If the club is breaking even after amortisation, then it will almost certainly have a decent positive cashflow (ie money which could be used to pay off debt, buy players without selling, or sit in the bank). This operating profit/loss before player trading is a false position to use when you're talking about how much the club has to spend. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 Going over old ground, but I fail to see why you keep looking at operational profit/loss as some indicator as to what Ashley might do on the transfer market, whilst ignoring what actually happens in terms of transfer fees incoming and outgoing? Operating profit/loss is intrinsic to what the club can afford to do. If the club is hemorrhaging £30m a year before player trading, then players have to be sold to plug that leak. If the club is just about breaking even then players have to be sold before we can buy. If the club is earning £30m, then we can spend that on players before we sell anyone. That's not true like, not at all. Amortisation which hits that profit isn't cash hemorrhaging out of the club (especially as these days the transfer fee is usually paid up front). You don't have to desperately sell players to cover the amortisation loses to stop the debt growing. If the club is breaking even after amortisation, then it will almost certainly have a decent positive cashflow (ie money which could be used to pay off debt, buy players without selling, or sit in the bank). This operating profit/loss before player trading is a false position to use when you're talking about how much the club has to spend. But then you're getting into complex accounting practices most people aren't interested in, and I struggle with myself. But I can follow that through to some degree.... In 13/14 we sold Cabaye for £19m and bought no-one, most would call that a £19m profit, but it wasn't, amortisation came into play as in my previous pic and the player trading for the year actually showed a profit on £16.9m. A couple of million less than people would assume. In 14/15 keeping it simple we spent £37.4m but recouped £18.3m, which means we spent £19.1m. However accounting for amortisation, the actual accounting profits on those sold were... Debuchy +£6.36 Mbiwa +£1.24 Santon +£1.74 Ben Arfa -£0.73 Giving a total of just £8.62m recouped, ten million less than the laymans view. That means our net spend in 14/15 was more like £29m. £10m more than most assume. Link to post Share on other sites More sharing options...
Andymc1 Posted March 25, 2015 Share Posted March 25, 2015 Going over old ground, but I fail to see why you keep looking at operational profit/loss as some indicator as to what Ashley might do on the transfer market, whilst ignoring what actually happens in terms of transfer fees incoming and outgoing? Operating profit/loss is intrinsic to what the club can afford to do. If the club is hemorrhaging £30m a year before player trading, then players have to be sold to plug that leak. If the club is just about breaking even then players have to be sold before we can buy. If the club is earning £30m, then we can spend that on players before we sell anyone. That's not true like, not at all. Amortisation which hits that profit isn't cash hemorrhaging out of the club (especially as these days the transfer fee is usually paid up front). You don't have to desperately sell players to cover the amortisation loses to stop the debt growing. If the club is breaking even after amortisation, then it will almost certainly have a decent positive cashflow (ie money which could be used to pay off debt, buy players without selling, or sit in the bank). This operating profit/loss before player trading is a false position to use when you're talking about how much the club has to spend. But then you're getting into complex accounting practices most people aren't interested in, and I struggle with myself. But I can follow that through to some degree.... In 13/14 we sold Cabaye for £19m and bought no-one, most would call that a £19m profit, but it wasn't, amortisation came into play as in my previous pic and the player trading for the year actually showed a profit on £16.9m. A couple of million less than people would assume. In 14/15 keeping it simple we spent £37m but recouped £18.3m, which means we spent £19.1m. However accounting for amortisation, the actual accounting profits on those sold were... Debuchy +£6.36 Mbiwa +£1.24 Santon +£1.74 Ben Arfa -£0.73 Giving a total of just £8.62m recouped, ten million less than the laymans view. That means our net spend in 14/15 was more like £29m. £10m more than most assume. We received money for Pardew as well. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 Going over old ground, but I fail to see why you keep looking at operational profit/loss as some indicator as to what Ashley might do on the transfer market, whilst ignoring what actually happens in terms of transfer fees incoming and outgoing? Operating profit/loss is intrinsic to what the club can afford to do. If the club is hemorrhaging £30m a year before player trading, then players have to be sold to plug that leak. If the club is just about breaking even then players have to be sold before we can buy. If the club is earning £30m, then we can spend that on players before we sell anyone. That's not true like, not at all. Amortisation which hits that profit isn't cash hemorrhaging out of the club (especially as these days the transfer fee is usually paid up front). You don't have to desperately sell players to cover the amortisation loses to stop the debt growing. If the club is breaking even after amortisation, then it will almost certainly have a decent positive cashflow (ie money which could be used to pay off debt, buy players without selling, or sit in the bank). This operating profit/loss before player trading is a false position to use when you're talking about how much the club has to spend. But then you're getting into complex accounting practices most people aren't interested in, and I struggle with myself. But I can follow that through to some degree.... In 13/14 we sold Cabaye for £19m and bought no-one, most would call that a £19m profit, but it wasn't, amortisation came into play as in my previous pic and the player trading for the year actually showed a profit on £16.9m. A couple of million less than people would assume. In 14/15 keeping it simple we spent £37m but recouped £18.3m, which means we spent £19.1m. However accounting for amortisation, the actual accounting profits on those sold were... Debuchy +£6.36 Mbiwa +£1.24 Santon +£1.74 Ben Arfa -£0.73 Giving a total of just £8.62m recouped, ten million less than the laymans view. That means our net spend in 14/15 was more like £29m. £10m more than most assume. We received money for Pardew as well. Spot on. And I'll never be able to get even the transfer fees right as none are disclosed, let alone calculating the amortisation exactly. It's all educated guesswork. But comparing the operating profit to total profit before tax gives an accurate picture of how the club has mitigated losses (or reinvested profits once we get a set of accounts that shows an operating profit). Link to post Share on other sites More sharing options...
Andymc1 Posted March 25, 2015 Share Posted March 25, 2015 No businesses accounts are the truth anyway so it's all complete guesswork. Link to post Share on other sites More sharing options...
UV Posted March 25, 2015 Share Posted March 25, 2015 Going over old ground, but I fail to see why you keep looking at operational profit/loss as some indicator as to what Ashley might do on the transfer market, whilst ignoring what actually happens in terms of transfer fees incoming and outgoing? Operating profit/loss is intrinsic to what the club can afford to do. If the club is hemorrhaging £30m a year before player trading, then players have to be sold to plug that leak. If the club is just about breaking even then players have to be sold before we can buy. If the club is earning £30m, then we can spend that on players before we sell anyone. That's not true like, not at all. Amortisation which hits that profit isn't cash hemorrhaging out of the club (especially as these days the transfer fee is usually paid up front). You don't have to desperately sell players to cover the amortisation loses to stop the debt growing. If the club is breaking even after amortisation, then it will almost certainly have a decent positive cashflow (ie money which could be used to pay off debt, buy players without selling, or sit in the bank). This operating profit/loss before player trading is a false position to use when you're talking about how much the club has to spend. But then you're getting into complex accounting practices most people aren't interested in, and I struggle with myself. But I can follow that through to some degree.... In 13/14 we sold Cabaye for £19m and bought no-one, most would call that a £19m profit, but it wasn't, amortisation came into play as in my previous pic and the player trading for the year actually showed a profit on £16.9m. A couple of million less than people would assume. In 14/15 keeping it simple we spent £37.4m but recouped £18.3m, which means we spent £19.1m. However accounting for amortisation, the actual accounting profits on those sold were... Debuchy +£6.36 Mbiwa +£1.24 Santon +£1.74 Ben Arfa -£0.73 Giving a total of just £8.62m recouped, ten million less than the laymans view. That means our net spend in 14/15 was more like £29m. £10m more than most assume. So why do you insist on using profit before player trading as your metric? Why not just use cashflow? It's far simpler, and much closer to what us non-accountants understand as profit/loss. Link to post Share on other sites More sharing options...
binnsy Posted March 25, 2015 Share Posted March 25, 2015 I take it Ashley lied again when he said he would put £20m a year into the club? Link to post Share on other sites More sharing options...
BottledDog Posted March 25, 2015 Share Posted March 25, 2015 I take it Ashley lied again when he said he would put £20m a year into the club? I think the intention was there, things clearly changed during Keegangate. Link to post Share on other sites More sharing options...
AyeDubbleYoo Posted March 25, 2015 Share Posted March 25, 2015 Surely the most important figure is overall profit or loss? Link to post Share on other sites More sharing options...
binnsy Posted March 25, 2015 Share Posted March 25, 2015 I take it Ashley lied again when he said he would put £20m a year into the club? I think the intention was there, things clearly changed during Keegangate. i am sure that "promise" was repeated a couple of years ago though, after the KK stuff. I could be wrong though. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 Surely the most important figure is overall profit or loss? Yes, and the total losses under Ashley are still £8.7m. Accounts coming soon will take nufc into overall profit for the first time since Ashley arrived. Link to post Share on other sites More sharing options...
Happy Face Posted March 25, 2015 Share Posted March 25, 2015 So why do you insist on using profit before player trading as your metric? Why not just use cashflow? It's far simpler, and much closer to what us non-accountants understand as profit/loss. I don't insist on using anything, I provided before player trading AND before Tax. Happy to be corrected with any metric. Link to post Share on other sites More sharing options...
sempuki Posted March 25, 2015 Share Posted March 25, 2015 Get your balance sheet out for the lads. Link to post Share on other sites More sharing options...
AyeDubbleYoo Posted March 25, 2015 Share Posted March 25, 2015 Get your balance sheet out for the lads. Profit and loss account for me like. Link to post Share on other sites More sharing options...
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