NUFC finances for 2010/11 announced

[Anderson]

Newcastle United Limited today filed its annual accounts for the year end 30 June 2011.

2010/11 was a landmark year for the Club financially, achieving close to break-even for the first time in its recent history, whilst at the same time retaining and building a strong squad which is currently sitting sixth in the Premier League.

The overall operational loss for the year after amortisation was just £3.9m, compared to a loss of £33.5 million in 2009/10 and £37.7 million in 2008/9.

Promotion to the Premier League resulted in a 69 per cent increase in turnover, from £52.4 million in 2009/10 to £88.4 million in 2010/11, principally the result of a three-fold increase in TV revenue.

 

Ticket sales revenue rose 16 per cent, from £20.9 million in 2009/10 to £24.3 in 2010/11, largely the result of an increase in corporate hospitality income associated with the Club's return to the Premier League. Just under a million fans visited the stadium in 2010/11, the third highest attendance in the country.

The Club has worked to bring its wages-to-turnover ratio down to a long-term sustainable level. In 2008/9 wages accounted for 82.7 per cent of turnover, rising to 90.5 per cent in the Championship season 2009/10. For the year 2010/11, wages accounted for 60.6 per cent of turnover.

The net cash spend on player transfers to June 2011 was a receipt of £5.4 million, which includes the fee for the sale of Andy Carroll to Liverpool FC in January 2011. The Club has since spent a further £25 million in cash on players and wages.

The Club has a strict policy in respect of player transfers, with the emphasis on paying and receiving full transfer fees up front rather than accepting dated payments over a number of years. When Mike Ashley acquired the Club in the summer of 2007, he inherited outstanding deferred transfer payments totalling £36 million for players past and present. Under the new policy, the Club is now owed £5 million.

Thanks to the financial support of the owner Mike Ashley, the Club has now cleared all of its third party debts, which stood at £76 million in 2006/7 and incurred finance costs of £6.5 million. The debt to Mike Ashley remains £140 million, which continues to be provided interest-free by the owner.

The Club secured a new two-year shirt sponsorship deal with Virgin Money in January 2012 and announced plans to sell full naming rights to the stadium in order to maximise potential revenue streams.

Newcastle United's Managing Director Derek Llambias said: "The Club's financial results for the year end June 2011 are extremely strong. We can now count ourselves amongst very few clubs across the UK and Europe who are operating at close to break-even.

"What is particularly pleasing is that we have achieved this whilst also ensuring we have a strong squad sitting firmly in the top third of the table and currently pushing for a European place.

"Some of the key financial principles we set in place when Mike bought to the Club back in 2007 are now beginning to reap rewards. Most notably, our adherence to a strict transfer policy which avoids, or limits wherever possible, the acceptance of dated payments for players bought or sold. We believe it is a far healthier financial model to settle full transfer fees for players up front, not dated over a period of years.

"We have dealt wisely in the transfer market and reinvested the income received from player sales into improving the squad. Our net cash spend on player transfers to June 2011, which includes the sale of Andy Carroll, was a receipt of £5.4 million, with a further £25 million in cash spent on transfers and players' wages since June 2011.

"We have also worked hard to address an inherited wages-to-turnover ratio which was unsustainable. Wages now account for just over 60 per cent of turnover and we feel this is a healthy and affordable level.

"A further significant achievement has been to clear all of the Club's interest-bearing debt, which in 2006/7 was costing £6.5 million a year just to finance the debt. Mike Ashley continues to provide loans totalling £140 million interest-free, for which we are extraordinarily fortunate. Once again, Mike has not taken any money out of the Club."

The full annual accounts, including the financial statements of the Group and the Independent Auditors' Report for the year have been submitted to Companies House today.

 

http://www.nufc.co.uk/articles/20120308/newcastle-united-accounts_2281670_2640896

[Fenham Mag]

The Club has a strict policy in respect of player transfers, with the emphasis on paying and receiving full transfer fees up front rather than accepting dated payments over a number of years. When Mike Ashley acquired the Club in the summer of 2007, he inherited outstanding deferred transfer payments totalling £36 million for players past and present. Under the new policy, the Club is now owed £5 million.

 

Interesting.

 

Possibly means that it puts clubs off buying our players.

[Anderson]

I know it'll have be done before, but can someone describe what amortisation is, and also how it effects these accounts.

[jdckelly]

Net spend on transfers only 5.4m in including carroll cash?

[J7]

Not sure why wages on new players are counted, but the wages of old players leaving arn't.

 

Results are promising however, but the overall turnover doesn't seem that great considering what it was when Ashley arrived. Lower than Villa's.

[Memphis]

I know it'll have be done before, but can someone describe what amortisation is, and also how it effects these accounts.

 

As I understand it, it's the practice of accounting for an asset over the life of its contract - a 10m fee for a player on a 4 year deal would be amortized at 2.5m per year, for example.  More knowledgeable people than myself will be able to provide better details.

[Anderson]

Also is the £3.9m loss before or after player trading. I was under the impression player trading wasn't taking into account for these results, but this seems to suggest otherwise:

 

The net cash spend on player transfers to June 2011 was a receipt of £5.4 million, which includes the fee for the sale of Andy Carroll to Liverpool FC in January 2011. The Club has since spent a further £25 million in cash on players and wages.

 

In which case, how have we managed to spend £30m+ in this period on transfers?

 

[Guest Haris Vuckic]

 

So have we broken even without the Carroll cash or simply because of it?

[Fenham Mag]

Figures also revealed that the value of playing staff dropped by £17.2m in the period, but this is a standard accountancy tool.

 

Read More http://www.chroniclelive.co.uk/north-east-news/evening-chronicle-news/2012/03/08/newcastle-united-reveal-annual-accounts-for-2010-11-72703-30490016/#ixzz1oXKsIkDt

 

Not sure what this means

[Toonpack]

I know it'll have be done before, but can someone describe what amortisation is, and also how it effects these accounts.

 

A player bought for £10 million on a 5 year deal, gets charged to the accounts as a cost of £2Mill per year (cost/length of contract). The £10 mill comes out of ready cash.

 

If that player is sold for £8Mill in his 4th year it would equal a profit of player trading of £6 Mill in that year (as his "book" value would be £2 Mill going into the final year of his contract) That's why to make a profit on a player you do not have to sell him for more than you originally paid.

[S.S.R.]

To be fair, a club that pulls in 40k+ fans a home game regardless of form and having the power to decide how much you spend on your major expense  - wages - it's hardly achieving alchemy to make money out of it.

 

 

[wormy]

Your avatar, SSR. :lol:

[Matt]

Also is the £3.9m loss before or after player trading. I was under the impression player trading wasn't taking into account for these results, but this seems to suggest otherwise:

 

The net cash spend on player transfers to June 2011 was a receipt of £5.4 million, which includes the fee for the sale of Andy Carroll to Liverpool FC in January 2011. The Club has since spent a further £25 million in cash on players and wages.

 

In which case, how have we managed to spend £30m+ in this period on transfers?

 

 

The £3.9m is a P&L number, the transfer spend is a cash figure. As almost all of the Caroll money will have been profit on disposal (very low book value), but the majority of the incoming transfer spend will be amortised over future years, the P&L impact of player trading will be a much higher profit, probably in the region of £20m. The club will be keen not to underline that to the supporters- as it's not a cash figure and would otherwise give the impression that the club has a larger war chest to spend in the summer.

[Dave]

Figures also revealed that the value of playing staff dropped by £17.2m in the period, but this is a standard accountancy tool.

 

Read More http://www.chroniclelive.co.uk/north-east-news/evening-chronicle-news/2012/03/08/newcastle-united-reveal-annual-accounts-for-2010-11-72703-30490016/#ixzz1oXKsIkDt

 

Not sure what this means

 

Means Tiote is currently 'worth' about £2m.

[Dave]

The £5m we are owed for players is presumably from Liverpool for Carroll?

[AyeDubbleYoo]

To be fair, a club that pulls in 40k+ fans a home game regardless of form and having the power to decide how much you spend on your major expense  - wages - it's hardly achieving alchemy to make money out of it.

 

True, but it's more than most other clubs manage.

[Fenham Mag]

The £5m we are owed for players is presumably from Liverpool for Carroll?

 

Possibly Bassong , knowing 'Arry.

[Village Idiot]

Figures also revealed that the value of playing staff dropped by £17.2m in the period, but this is a standard accountancy tool.

 

Read More http://www.chroniclelive.co.uk/north-east-news/evening-chronicle-news/2012/03/08/newcastle-united-reveal-annual-accounts-for-2010-11-72703-30490016/#ixzz1oXKsIkDt

 

Not sure what this means

 

Means Tiote is currently 'worth' about £2m.

 

Aye, it doesn't represent market value. Messi is marked as being worth 0 in our accounts

 

IIRC it's derived from the transfer fee paid, games played, years remaining of contract and possible clauses in the contract (loyalty fees, etc...)

[Guest ObiChrisKenobi]

The £5m we are owed for players is presumably from Liverpool for Carroll?

 

Could be some from West Ham pending on Promotion. Some from Swansea for Routledge. Think we're still owed some Bassong money too.

Pretty sure there was something about all the Carroll money being upfront as part of his deal.

[arnonel]

brilliant set of results. nice platform to start building something really special

[Taylor Swift]

The £5m we are owed for players is presumably from Liverpool for Carroll?

 

Could be some from West Ham pending on Promotion. Some from Swansea for Routledge. Think we're still owed some Bassong money too.

Pretty sure there was something about all the Carroll money being upfront as part of his deal.

 

Conditional clauses like promotion won't be included in the accounts.

 

It's probably just a few clubs which are paying us in installments. Might be a couple of million for Nolan, a couple more for Enrique etc.

[wormy]

The £5m we are owed for players is presumably from Liverpool for Carroll?

 

Could be some from West Ham pending on Promotion. Some from Swansea for Routledge. Think we're still owed some Bassong money too.

Pretty sure there was something about all the Carroll money being upfront as part of his deal.

 

Thought it was something like £30m upfront £5m later?

[Ash]

The £5m we are owed for players is presumably from Liverpool for Carroll?

 

Could be some from West Ham pending on Promotion. Some from Swansea for Routledge. Think we're still owed some Bassong money too.

Pretty sure there was something about all the Carroll money being upfront as part of his deal.

 

Thought it was something like £30m upfront £5m later?

 

[Dave]

The £5m we are owed for players is presumably from Liverpool for Carroll?

 

Could be some from West Ham pending on Promotion. Some from Swansea for Routledge. Think we're still owed some Bassong money too.

Pretty sure there was something about all the Carroll money being upfront as part of his deal.

 

Conditional clauses like promotion won't be included in the accounts.

 

It's probably just a few clubs which are paying us in installments. Might be a couple of million for Nolan, a couple more for Enrique etc.

 

Eh, they specifically say they don't do this.

[AyeDubbleYoo]

Interesting this transfer money policy. Presumably it actually means players are a lot less likely to be sold at all? If the buyer has to find the money upfront.