Various: Mike Ashley in talks with Sheikh Khaled bin Zayed Al Nehayan

[HawK]

This is what everyone is saying though, no way will Ashley put anything in writing like that. Remember this is a guy who uses post it notes and verbal agreements in most things which came out in the that appearance in front of MPs.

[TRon]

(paraphrase) Rafa will continue to get every penny the club generates.

 

 

 

If we go by economic profit that's basically nothing, - so just player sales then.

But I guess most of you had figured that out already.

 

https://www.chroniclelive.co.uk/sport/after-amanda-staveley-ended-talks-14767143

 

If that was true, he'd have sold the club by now.

[Mr Logic]

(paraphrase) Rafa will continue to get every penny the club generates.

 

 

 

If we go by economic profit that's basically nothing, - so just player sales then.

But I guess most of you had figured that out already.

 

https://www.chroniclelive.co.uk/sport/after-amanda-staveley-ended-talks-14767143

 

If that was true, he'd have sold the club by now.

 

I think you might have to read the whole article to see what those figures actually mean.

 

Here's some more from the piece...

 

So how much is Newcastle really worth?

 

Finally, we come to the club’s valuation - £350-400m is the reported range. If the owner’s perception has been shaped by the use of earnings-based measures such as Pre-Tax Profit or EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation), it is not a surprise to us that there are no takers given that such measures tend to “flatter” the true performance of the business.

 

We have come up with three values and associated assumptions based on an estimation of the economic performance for 2017-18 and a projection going forward 10 years (with an applied discount of 9% to incorporate the cost of equity capital) in order to calculate an enterprise value/potential purchase price.

 

1. £241.3m. This assumes an economic profit of £3.3m for 2017-18, with a 2% growth rate for 10 years going forward, based on a current invested capital value of £194.1m

 

2. £295.1m. Instead of calculating an economic profit for 2017-18, we have used an average from the period 2011-16 which is £7.0m and then used the same growth values and invested capital value as in option 1.

 

3. In order to get to the owner’s alleged minimum value of £350m, the club would have to achieve an economic profit of £11.5m in 2018 and then see a 2% growth rate for 10 years going forward.

 

(In all of the above we have calculated a conservative “terminal value” to take account of value creation beyond the 10-year horizon.)

 

Options 1 and 2 are not impossible although our data shows that there has been a one-in-three chance of a club achieving an economic profit in the Premier League over the last 9 years. Consistent and successive instances of economic profit are harder to come by which makes the club’s own performance in the Premier League all the more laudable – providing the club can maintain its top tier status.

 

Option 3 is, in our view, a real stretch particularly given flat domestic TV revenues over the next 5 years. The valuation rests on an initial economic profit of £11.5m - some 64% higher than the average achieved between 2011 and 2016. We think this is, to put it mildly, ‘ambitious’. The club will either need to start knocking on the door of the top 6 with a number of forays into Europe on a regular basis or conduct some very clever dealings in the transfer market to achieve this number.

[TRon]

He just doesn't want to sell then, obviously it's worth more to him as a vehicle for Sports Direct. I'm not an accountant, but seems the business side of it is ticking along nicely, and if he can wheel and deal in the transfer market, there's a few perks along the way ( for him) as long as we stay up.

[Darth Crooks]

This is going to be a real anti climax after the World Cup.

[Teasy]

(paraphrase) Rafa will continue to get every penny the club generates.

 

 

 

If we go by economic profit that's basically nothing, - so just player sales then.

But I guess most of you had figured that out already.

 

https://www.chroniclelive.co.uk/sport/after-amanda-staveley-ended-talks-14767143

 

Doesn't that economic profit figure include the impact of player purchases? (I assume its final profit loss everything included).  While in the Premier League over the course of those 7 seasons shown we've spent about £250m on players and sold about £170m and still ended up with a profit of £24m.

 

Its really the idiot getting us relegated twice that's meant we've had to sell more players to reduce the losses caused by the drop in TV/commercial money (we obviously brought in far more from players than we spent in the two Championship seasons).

 

This current season our revenue should be between £160m and £170m.  Thats £30-£40m higher than its ever been before and twice what it was in most of the seasons included in that chart.  I think as long as we're in the Premier League he has no excuse not to provide cash to Benitez on top of player sales.

[Mr Logic]

(paraphrase) Rafa will continue to get every penny the club generates.

 

 

 

If we go by economic profit that's basically nothing, - so just player sales then.

But I guess most of you had figured that out already.

 

https://www.chroniclelive.co.uk/sport/after-amanda-staveley-ended-talks-14767143

 

Doesn't that economic profit figure include the impact of player purchases? (I assume its final profit loss everything included).  While in the Premier League over the course of those 7 seasons shown we've spent about £250 and sold about £170m.  Its really the idiot getting us relegated twice that's meant we've had to sell more players to cover loss of TV money (we obviously sold far more than we spent in the two Championship seasons).  This current season our revenue should be between £160m and £170m.  Thats £30-£40m higher than its ever been before and twice what it was in most of the seasons included in that chart.  I think as long as we're in the Premier League he has no excuse not to provide cash to Benitez on top of player sales.

 

I really don't know if it does or not. I'm just posting the info really - with a filter applied.

I'm commenting on what I think I understand from the figures whilst filtering out everything I don't.

 

The most obvious thing is that Ashley's team have presented these figure in a very positive light for the masses.

The real accountants, and anyone doing due dilligence that understand the football accounts business, will see a very different picture I fear.

Ergo we're not getting sold anytime soon.

[Pixelphish]

I hate this despicable fat cunt.

[Teasy]

(paraphrase) Rafa will continue to get every penny the club generates.

 

 

 

If we go by economic profit that's basically nothing, - so just player sales then.

But I guess most of you had figured that out already.

 

https://www.chroniclelive.co.uk/sport/after-amanda-staveley-ended-talks-14767143

 

Doesn't that economic profit figure include the impact of player purchases? (I assume its final profit loss everything included).  While in the Premier League over the course of those 7 seasons shown we've spent about £250 and sold about £170m.  Its really the idiot getting us relegated twice that's meant we've had to sell more players to cover loss of TV money (we obviously sold far more than we spent in the two Championship seasons).  This current season our revenue should be between £160m and £170m.  Thats £30-£40m higher than its ever been before and twice what it was in most of the seasons included in that chart.  I think as long as we're in the Premier League he has no excuse not to provide cash to Benitez on top of player sales.

 

I really don't know if it does or not. I'm just posting the info really - with a filter applied.

I'm commenting on what I think I understand from the figures whilst filtering out everything I don't.

 

The most obvious thing is that Ashley's team have presented these figure in a very positive light for the masses.

The real accountants, and anyone doing due dilligence that understand the football accounts business, will see a very different picture I fear.

Ergo we're not getting sold anytime soon.

 

You can certainly make individual accounts look better or worse than they really are regarding profit/loss but over that number of years (on that chart) its going to even out and show the real picture no matter how you manipulate it.  Also while some accounts probably have been made to look better than they really are some have clearly been made to look worse.  One obvious example is our last set of accounts.  True losses for that season in the Championship were around £30m, but some costs were brought forward from this year which made it look like we lost over £60m.

[Sean]

(paraphrase) Rafa will continue to get every penny the club generates.

 

 

 

If we go by economic profit that's basically nothing, - so just player sales then.

But I guess most of you had figured that out already.

 

https://www.chroniclelive.co.uk/sport/after-amanda-staveley-ended-talks-14767143

 

Doesn't that economic profit figure include the impact of player purchases? (I assume its final profit loss everything included).  While in the Premier League over the course of those 7 seasons shown we've spent about £250 and sold about £170m.  Its really the idiot getting us relegated twice that's meant we've had to sell more players to cover loss of TV money (we obviously sold far more than we spent in the two Championship seasons).  This current season our revenue should be between £160m and £170m.  Thats £30-£40m higher than its ever been before and twice what it was in most of the seasons included in that chart.  I think as long as we're in the Premier League he has no excuse not to provide cash to Benitez on top of player sales.

 

I really don't know if it does or not. I'm just posting the info really - with a filter applied.

I'm commenting on what I think I understand from the figures whilst filtering out everything I don't.

 

The most obvious thing is that Ashley's team have presented these figure in a very positive light for the masses.

The real accountants, and anyone doing due dilligence that understand the football accounts business, will see a very different picture I fear.

Ergo we're not getting sold anytime soon.

 

You can certainly make individual accounts look better or worse than they really are regarding profit/loss but over that number of years (on that chart) its going to even out and show the real picture no matter how you manipulate it.  Also while some accounts probably have been made to look better than they really are some have clearly been made to look worse.  One obvious example is our last set of accounts.  True losses for that season in the Championship were around £30m, but some costs were brought forward from this year which made it look like we lost over £60m.

 

But you can also take most of the profit out of a company through things such as outsourcing, as well as giving away free advertising worth millions etc etc. End of the day we should be bringing in much more money but clearly our owner doesn't want that.

[Matt]

 

But you can also take most of the profit out of a company through things such as outsourcing, as well as giving away free advertising worth millions etc etc. End of the day we should be bringing in much more money but clearly our owner doesn't want that.

 

Outsourcing will reduce turnover but should increase profit. So it's hard to compare revenue streams for clubs who outsource catering for example (or in our case retail). In theory SD should be able to fulfil that function much more efficiently than NUFC could on their own and both SD and NUFC should be able to benefit from it.

 

Our big failure is in our commercial revenues- some of this is down to SD getting free coverage but it really down to our inability to build lasting relationships with major brands which in turn is damaged by the fact we've been down twice and are never far from another crisis. Brands want to be able to work with those clubs and players who are being beamed around the world week-in, week-out.

 

I would really love to know how much we're missing out on the ground advertising. I don't think it will be a colossal amount per year, but this will have built over time.

 

Right, now onto that Chronicle article about the value of the club. What the analysis shows is that it's pointless to use a historical set of extremely volatile numbers in an industry where relagation is valuation life-or-death and where we are still waiting the impact of the new TV deals. I'm amazed someone put their company name to it. So many broad assumptions have to be made (given NUFC is private and not that many clubs are listed) that you could end up with any number you like.

 

'Economic profit' is more commonly known as EVA (but it's trademarked, so they changed it) and isn't any use whatsoever in terms of estimating what cash the club has available to spend in the window, so don't read anything into it.

 

[Shelveys Hair]

SD takes the lion share of shirt sales and merchandise as well.

 

And remember when you're are buying from the online club shop it is SD website with a NUFC skin on it.

[Matt]

SD takes the lion share of shirt sales and merchandise as well.

 

And remember when you're are buying from the online club shop it is SD website with a NUFC skin on it.

 

They are also paying 100% of the costs associated with it. For comparison, SD's operating margins are around 9% historically.

[loki679]

SD takes the lion share of shirt sales and merchandise as well.

 

And remember when you're are buying from the online club shop it is SD website with a NUFC skin on it.

 

Typically the kit manufacturer takes about 90% of the revenue from shirt sales.

[Rupert Pupkin]

SD takes the lion share of shirt sales and merchandise as well.

 

And remember when you're are buying from the online club shop it is SD website with a NUFC skin on it.

 

Typically the kit manufacturer takes about 90% of the revenue from shirt sales.

 

When you think about it, it's surprising we haven't got a Lonsdale or Donnay kit! Be thankful for small mercies, I guess.

[geordiesteve710]

SD takes the lion share of shirt sales and merchandise as well.

 

And remember when you're are buying from the online club shop it is SD website with a NUFC skin on it.

 

Typically the kit manufacturer takes about 90% of the revenue from shirt sales.

 

Bloody hell, I didn't know that. I'm surprised Mike hasn't set up some NUFC sweatshop in Thailand to produce kits in-house.

[wyn davies]

SD takes the lion share of shirt sales and merchandise as well.

 

And remember when you're are buying from the online club shop it is SD website with a NUFC skin on it.

 

Typically the kit manufacturer takes about 90% of the revenue from shirt sales.

 

Bloody hell, I didn't know that. I'm surprised Mike hasn't set up some NUFC sweatshop in Thailand to produce kits in-house.

 

There's still time

[Sean]

SD takes the lion share of shirt sales and merchandise as well.

 

And remember when you're are buying from the online club shop it is SD website with a NUFC skin on it.

 

They are also paying 100% of the costs associated with it. For comparison, SD's operating margins are around 9% historically.

 

But they still make profit on things like this. You're going on as if Ashley is doing us a favour with tricks like this ffs.

[Matt]

They are also paying 100% of the costs associated with it. For comparison, SD's operating margins are around 9% historically.

 

But they still make profit on things like this. You're going on as if Ashley is doing us a favour with tricks like this ffs.

 

SD will certainly make a profit on it, otherwise why wouldn't they do it. If A can make something at 5% margin and B can do it at 10% then there is a clearly a deal to be done in which both benefit, that's fundamental. And it's no more a 'trick' than doing the same for our catering. I have no idea if the contract is overly favourable to one party or the other, but it's not some kind of shady practice in its nature.

[Guest Howaythetoon]

It would be interesting and perhaps very revealing if we could see a side by side comparison of how much we made as a club on shirt sales and things like catering, corporate boxes and inside stadium advertising in the decade before Ashley took over and the decade since he’s been owner.

 

We know commercially we are making less now than we were before he took us over, but we sub contract a lot out now.

 

Basically I’d like to know if the reason we contract out catering for example is because it wasn’t bringing in either any money or enough to justify doing it ourselves.

 

Sadly I think with the huge external revenues that make up the majority of a club’s turnover, it’s become almost pointless to bother with other activities due to the small returns in comparison which gives fans a poorer overall product or match day experience.

[tmonkey]

Outsourcing catering makes sense in theory. Pass on the costs and risks associated with having kitchens, ingredient stocks, warehousing, trained kitchen/delivery/counter staff, delivery, etc etc, and let another company that has expertise in all of the associated processes handle it all. If the company does multiple football clubs then they'd be able to offer better quality for cheaper through economies of scale. All NUFC would have to do is hold them to a quality standard for their products and maybe take a slightly reduced profit due to the outsourced catering fees.

 

The issue I'd have here though is the potential for Ashley to make money for himself from this to the detriment of the clubs income. Who did the catering contract go to, and was it competitive? Did it pre-exist Ashley? Was there a tender for the contract (must have been if it's above EU thresholds for advertising in the EU journal), and how was the winner selected? Ultimately I wouldn't be surprised if the caterers are a company Ashley is connected to through some convoluted means (shell companies), or is owned by a pal of Ashley's, or he's getting money as backhanders for awarding the contract. Which in turn leads to all kinds of issues around independence and whether the club is getting a good deal. We might be overpaying in costs to the catering company for example, but because Ashley owns the club there's no mechanism for holding him or the Directors to account for poor value for money deals with conflicts of interest like there would be in the public sector (or even PLCs with proper shareholders and proper Boards who expect good internal controls in procurement).

 

Essentially we know fuck all about the situation. And that's why dodgey business men like Mike Ashley buy football clubs - they're cash cows where anything goes.

[Greg]

Catering? We know Sodexo won the contract, they are a massive multinational company and nowt to do with Mike Ashley and do the catering at a fair few Premier League clubs.

 

It’s the club shop effectively being a sports direct we need to know more about.

[Dokko]

Catering? We know Sodexo won the contract, they are a massive multinational company and nowt to do with Mike Ashley and do the catering at a fair few Premier League clubs.

 

It’s the club shop effectively being a sports direct we need to know more about.

 

 

Catering 

[Guest Howaythetoon]

Outsourcing catering makes sense in theory. Pass on the costs and risks associated with having kitchens, ingredient stocks, warehousing, trained kitchen/delivery/counter staff, delivery, etc etc, and let another company that has expertise in all of the associated processes handle it all. If the company does multiple football clubs then they'd be able to offer better quality for cheaper through economies of scale. All NUFC would have to do is hold them to a quality standard for their products and maybe take a slightly reduced profit due to the outsourced catering fees.

 

The issue I'd have here though is the potential for Ashley to make money for himself from this to the detriment of the clubs income. Who did the catering contract go to, and was it competitive? Did it pre-exist Ashley? Was there a tender for the contract (must have been if it's above EU thresholds for advertising in the EU journal), and how was the winner selected? Ultimately I wouldn't be surprised if the caterers are a company Ashley is connected to through some convoluted means (shell companies), or is owned by a pal of Ashley's, or he's getting money as backhanders for awarding the contract. Which in turn leads to all kinds of issues around independence and whether the club is getting a good deal. We might be overpaying in costs to the catering company for example, but because Ashley owns the club there's no mechanism for holding him or the Directors to account for poor value for money deals with conflicts of interest like there would be in the public sector (or even PLCs with proper shareholders and proper Boards who expect good internal controls in procurement).

 

Essentially we know fuck all about the situation. And that's why dodgey business men like Mike Ashley buy football clubs - they're cash cows where anything goes.

 

Like with most areas of our club, those are questions that should be asked and looked into.

 

My own personal opinion is that the returns from providing the catering ourselves is too small for Ashley to be interested in, but ultimately by doing so it also helps him to keep the business the way he wants it. Which is self sufficient, low cost in terms of expenditure and or maintainence plus employment and to allow his involvement in the day to to day minor operations which are plentiful, to allow him remain absent if you like.

[Matt]

Essentially we know fuck all about the situation. And that's why dodgey business men like Mike Ashley buy football clubs - they're cash cows where anything goes.

 

Cash cows are business which produce stable, predicatable and high-quality cashflows. Football clubs rarely are and NUFC certainly isn't.

 

MA is not beyond sharp practice, there are plenty of stories out there, but if he needs to extract cash from NUFC, he can. He just repays a bit of the shareholder loan. He's not going to set up a convoluted Balti pie scheme for a few grand. With the merchendise, almost certainly SD providing the service will ensure greater profits. The only question is how these are shared.

 

All of these are minor points, the real issue is that the club has utterly failed to exploit its commercial potential and continues to run itself with a skeleton crew operating at the whim of a barely interested control freak.