Half year financial results for 2007

[Mick]

Yes but like I said no injury and no Martins so we would be £10m better off and wouldn't have his wages to pay which would bring the 12% down again.

 

No Owen injury, no Martins isn't quite right.  Michael Owen was injured at the World Cup in June 2006, here's a quote from Roeder dated May 17th 2006.

 

 

 

http://icnewcastle.icnetwork.co.uk/newcastleunited/news/tm_method=full%26objectid=17089831%26siteid=50081-name_page.html

 

"We will find a striker good enough, confident enough and special enough to wear the number nine shirt.

 

 

"He won't be another Alan Shearer because we won't find one.

 

 

"But we have to find a player who can average 20 goals a season in the Premiership, one who will be happy to wear the number nine and handle the pressure that goes with it."

 

 

 

[NE5]

The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs. This means that they would have normally had to say that their costs were up from £40.3m to £45.1m, but instead made it look more acceptable at £41.8m

 

What a load of sh*te man.

 

Where's the reasoning that "but had Owen been fit, we might have scored an extra 15-20 goals this season, been 4 places (or £2m higher), and still in cup competition.

 

 

aye, without even looking, I KNOW that macbeth will portray the club in the worst light possible, and not consider the playing side of it.

 

So why bother.

 

Just think where we would be if we hadn't bought Woodgate, Dyer, Bellamy, Robert, Parker, Butt, Martins, Owen etc etc over the past years, instead buying players for 500 grand or something to keep the books right.

 

 

 

Aye, and just think where we'd be if we hadn't bought Marcelino, Maric, Viana, Cort, Luque, Bassedas and Boumsong.

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

Are you still dishing the dirt on the club you say you support to lundun scumbag journos who hate Newcastle ?

 

[macbeth]

aye, without even looking, I KNOW that macbeth will portray the club in the worst light possible, and not consider the playing side of it.

 

So why bother.

 

Just think where we would be if we hadn't bought Woodgate, Dyer, Bellamy, Robert, Parker, Butt, Martins, Owen etc etc over the past years, instead buying players for 500 grand or something to keep the books right.

 

 

 

Not this time !!! This time I've gone out of my way to make them look good. I have searched and searched through their accounts and listed everything they have said that can be in anyway construed as positive.

 

Incluudes

"The sale of Faye raised £2m and of Boumsong £3.3m."

"13th place in the FA Premier League at the end of December 2006, having lost over 250 senior player appearances".

"The return of Kieron Dyer to the first team has been akin to a new signing"

"There is no dividend"

"The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs."

"The increase in running costs came from having to put on more games."

"Average home league crowd 2006 = 52,115. Average league crowd 2007 = 49,725"

"There are 8 league games left for the 2007 season. With extra cup games, and some bigger games the total for the season should be about £31.9m. This is up from the £30.9m last season. "

 

I make some guestimates for the whole financial year

"The revenue for the full 2006-07 season would look to be ~£82.9m" - this is up from the previous year

"The operating costs for the year would look to be ~£83.7m"

Other costs look to be £24m.

Expected loss for the full year is £25m

 

To balance out all these positive comments, and guestimates, I have also included the negative ones they mention. So wages up, assets of  £7m down from £56m in 1998.

 

I am not sure what you would like me to do? For lots of people who aren't in the know like you clearly are there is a concern that the club could make losses of £37m in two years, while the team descends down the table. As you say they seem to know there is something wrong, but the detail is hidden in accounting speak. I try and explain it.

 

To help I try and put things i graphs as people have a feel for that. I'm not doing this for you, just for those others that you feel may not understand, and may still be hoping for the spend of previous years. The 07 figures are for 6 months.

 

http://www.nufc-finances.org.uk/200715.gif

 

http://www.nufc-finances.org.uk/200716.gif

 

http://www.nufc-finances.org.uk/200717.gif

 

http://www.nufc-finances.org.uk/200718.gif

 

As I always say, to you and to anyone else, if there is an error in these numbers or graphs please let me know and I will correct it.

[OzzieMandias]

The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs. This means that they would have normally had to say that their costs were up from £40.3m to £45.1m, but instead made it look more acceptable at £41.8m

 

What a load of sh*te man.

 

Where's the reasoning that "but had Owen been fit, we might have scored an extra 15-20 goals this season, been 4 places (or £2m higher), and still in cup competition.

 

 

aye, without even looking, I KNOW that macbeth will portray the club in the worst light possible, and not consider the playing side of it.

 

So why bother.

 

Just think where we would be if we hadn't bought Woodgate, Dyer, Bellamy, Robert, Parker, Butt, Martins, Owen etc etc over the past years, instead buying players for 500 grand or something to keep the books right.

 

 

 

Aye, and just think where we'd be if we hadn't bought Marcelino, Maric, Viana, Cort, Luque, Bassedas and Boumsong.

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

Are you still dishing the dirt on the club you say you support to lundun scumbag journos who hate Newcastle ?

 

 

Are you still confusing me with Freddie Shepherd and Douglas Hall?

[NE5]

The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs. This means that they would have normally had to say that their costs were up from £40.3m to £45.1m, but instead made it look more acceptable at £41.8m

 

What a load of sh*te man.

 

Where's the reasoning that "but had Owen been fit, we might have scored an extra 15-20 goals this season, been 4 places (or £2m higher), and still in cup competition.

 

 

aye, without even looking, I KNOW that macbeth will portray the club in the worst light possible, and not consider the playing side of it.

 

So why bother.

 

Just think where we would be if we hadn't bought Woodgate, Dyer, Bellamy, Robert, Parker, Butt, Martins, Owen etc etc over the past years, instead buying players for 500 grand or something to keep the books right.

 

 

 

Aye, and just think where we'd be if we hadn't bought Marcelino, Maric, Viana, Cort, Luque, Bassedas and Boumsong.

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

Are you still dishing the dirt on the club you say you support to lundun scumbag journos who hate Newcastle ?

 

 

Are you still confusing me with Freddie Shepherd and Douglas Hall?

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

[OzzieMandias]

The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs. This means that they would have normally had to say that their costs were up from £40.3m to £45.1m, but instead made it look more acceptable at £41.8m

 

What a load of sh*te man.

 

Where's the reasoning that "but had Owen been fit, we might have scored an extra 15-20 goals this season, been 4 places (or £2m higher), and still in cup competition.

 

 

aye, without even looking, I KNOW that macbeth will portray the club in the worst light possible, and not consider the playing side of it.

 

So why bother.

 

Just think where we would be if we hadn't bought Woodgate, Dyer, Bellamy, Robert, Parker, Butt, Martins, Owen etc etc over the past years, instead buying players for 500 grand or something to keep the books right.

 

 

 

Aye, and just think where we'd be if we hadn't bought Marcelino, Maric, Viana, Cort, Luque, Bassedas and Boumsong.

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

Are you still dishing the dirt on the club you say you support to lundun scumbag journos who hate Newcastle ?

 

 

Are you still confusing me with Freddie Shepherd and Douglas Hall?

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

 

18 goals in 50 appearances (1:2.8 ). Better than, say, Wyn Davies (1:4.1) but not quite as good as Pop Robson (1:2.5).

 

And yeah, I do know what year it is. You're the one who seems to have difficulty understanding that a lot more has changed in the last 20-30 years than just the composition of the board.

[Northern Monkey]

The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs. This means that they would have normally had to say that their costs were up from £40.3m to £45.1m, but instead made it look more acceptable at £41.8m

 

What a load of sh*te man.

 

Where's the reasoning that "but had Owen been fit, we might have scored an extra 15-20 goals this season, been 4 places (or £2m higher), and still in cup competition.

 

 

aye, without even looking, I KNOW that macbeth will portray the club in the worst light possible, and not consider the playing side of it.

 

So why bother.

 

Just think where we would be if we hadn't bought Woodgate, Dyer, Bellamy, Robert, Parker, Butt, Martins, Owen etc etc over the past years, instead buying players for 500 grand or something to keep the books right.

 

 

 

Aye, and just think where we'd be if we hadn't bought Marcelino, Maric, Viana, Cort, Luque, Bassedas and Boumsong.

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

Are you still dishing the dirt on the club you say you support to lundun scumbag journos who hate Newcastle ?

 

 

Are you still confusing me with Freddie Shepherd and Douglas Hall?

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

 

18 goals in 50 appearances (1:2.8) . Better than, say, Wyn Davies (1:4.1) but not quite as good as Pop Robson (1:2.5).

 

And yeah, I do know what year it is. You're the one who seems to have difficulty understanding that a lot more has changed in the last 20-30 years than just the composition of the board.

 

nearer 1:3 than one in 2, in fairness, according to your figures.

 

Although, in REALITY, he got 9 in 48 league games.  Which is 1:5.3

 

You're welcome.

 

 

[OzzieMandias]

The club have received £3.3m in compensation for the injury to Michael Owen. The club have used this amount to reduce their costs. This means that they would have normally had to say that their costs were up from £40.3m to £45.1m, but instead made it look more acceptable at £41.8m

 

What a load of sh*te man.

 

Where's the reasoning that "but had Owen been fit, we might have scored an extra 15-20 goals this season, been 4 places (or £2m higher), and still in cup competition.

 

 

aye, without even looking, I KNOW that macbeth will portray the club in the worst light possible, and not consider the playing side of it.

 

So why bother.

 

Just think where we would be if we hadn't bought Woodgate, Dyer, Bellamy, Robert, Parker, Butt, Martins, Owen etc etc over the past years, instead buying players for 500 grand or something to keep the books right.

 

 

 

Aye, and just think where we'd be if we hadn't bought Marcelino, Maric, Viana, Cort, Luque, Bassedas and Boumsong.

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

Are you still dishing the dirt on the club you say you support to lundun scumbag journos who hate Newcastle ?

 

 

Are you still confusing me with Freddie Shepherd and Douglas Hall?

 

45m quid the lot.

 

Aye, all the shite boards back their managers with that sort of money, just like their predecessors always bought international footballers instead of selling them all. As a long term - cough cough - fan you know this though don't you.

 

BTW - you forgot your hero Arsprilla, who scored 2 goals in his last season, and played well in about 1 game in 10 before that anyway.

 

 

18 goals in 50 appearances (1:2.8) . Better than, say, Wyn Davies (1:4.1) but not quite as good as Pop Robson (1:2.5).

 

And yeah, I do know what year it is. You're the one who seems to have difficulty understanding that a lot more has changed in the last 20-30 years than just the composition of the board.

 

nearer 1:3 than one in 2, in fairness, according to your figures.

 

 

 

Wrong. I used a calculator. It was actually 2.77777777. I rounded up all three goal ratios to the nearest single decimal point.

[Dave]

I think the cool smiley is doing you an injustice.

[OzzieMandias]

I think the cool smiley is doing you an injustice.

 

Oh, I see. That was accidental – 8 followed by a bracket? I thought I'd got rid of it.

 

8)

[OzzieMandias]

Yeah, 8 followed by a bracket.

[Northern Monkey]

Yeah, 8 followed by a bracket.

 

Ah, i see that now. Stupid smilies.

 

It was still 9 in 48, mind, in the league - the only genuine comparitor domestically.

[macbeth]

In 2006 the Shepherd apologists blamed Souness for all the problems, like the £12m loss made that year.

 

I guess the £25m loss to be made this year will be Roeder's fault ?

 

 

[Northern Monkey]

In 2006 the Shepherd apologists blamed Souness for all the problems, like the £12m loss made that year.

 

I guess the £25m loss to be made this year will be Roeder's fault ?

 

 

 

Nah. He wasted a chunk of it, but its not his fault. NEXT SEASONS losses will be partly down to him, as its his fault we're shit.

[OzzieMandias]

Yeah, 8 followed by a bracket.

 

Ah, i see that now. Stupid smilies.

 

It was still 9 in 48, mind, in the league - the only genuine comparitor domestically.

 

Fixed it now in my original post.

 

And actually it was 9 in 36, in the league.

 

Then another 9 in 11, in Europe.

[Northern Monkey]

plus his 12 sub appearances, mind. For exactness. Or Teacher might mark us down.

[OzzieMandias]

OK, I surrender. You win the Nobel Pedantry Prize.

[Northern Monkey]

OK, I surrender. You win the Nobel Pedantry Prize.

 

I Thank You. <bows>

 

Its a gift, to be honest.

[Guest devlin_adl]

Macbeth

 

Using your figures:

 

If you strip out the player trading (on the grounds that it's money that's already been spend - as reflected by the balance sheet - and is not related to ongoin underlying costs), add back the depreciation (which I assume is a pure book-keeping exercise relating to St James Park) and take into account the £1m in compensation that FIFA have offered, the loss is £4m a year.

 

Not good, but the extra £15m a year in TV revenue will save the board.

[macbeth]

Macbeth

 

Using your figures:

 

If you strip out the player trading (on the grounds that it's money that's already been spend - as reflected by the balance sheet - and is not related to ongoin underlying costs), add back the depreciation (which I assume is a pure book-keeping exercise relating to St James Park) and take into account the £1m in compensation that FIFA have offered, the loss is £4m a year.

 

Not good, but the extra £15m a year in TV revenue will save the board.

 

The depreciation for the ground, and other fixed assets is fairly steady at £3m per year. The club had the option to either have a one off hit of £52m or to spread the cost over the useful life of the ground. The depreciation is the way this is done. (Sorry if I am telling my granny how to suck eggs !)

 

The player amortisation costs are treated the same. Owen costs £16m (say) and is on a 4 year contract, then the cost isn't taken as a £16m hit in 2005 it is spread out as a £4m hit each year. As he could leave on a free after the end of his contract then this is the 'worst case' the club has to always have in mind.

 

This last 6 months the amortisation costs were £7.5m. This cannot be ignored, the onkly other way to do it is to have the one-off hit which would mean going back and taking great chunks out at the time of the transfers rather than spreading the load.

 

For each player bought the club can see how much book value there is left. So this led to the famous Sir Bobby quote about making a profit on Carl Cort when he bought him for ~£7m and sold him three and a half years later for ~£2m. On the books Cort had "amortised" by 3.5 of his 4 years contract. On the books he was down as being worth ~£1m to the club. To sell him for £2m was therefore profitable. Or so the story went

 

The loss/profit on player registrations is the difference between what is left of the player worth as described for Cort, against what the club get for the player. So in Cort's instance the profit was ~£1m. When we sold Boumsong for £3.3m he was on the book as being worth ~£6.3m, so we lost money. For Faye we made money, somehow. This bit of accoutning is necessary as the club does it's amortisation. It seems ridiculously complicated but it evens things out, and means that the club cannot be sen to boost its profits by just selling a player.

 

What you have done is what the club (all clubs) do. They give their revenue, their operating costs (putting on games, paying wages etc) and say this is operating profit. They separate out player transfer costs, and separate out financial costs, so loan payments. I feel the club has to have players so ignoring the costs of them is a bit of a cheat. It would be like Stagecoach not counting the costs of buying buses. The finance costs would be like Stagecoach borrowing mooney to buy the buses, and looking to ignore those costs too.

 

I'm uncomfortable that the club isolate these player and loan costs but find it okay to include the exceptional insurance costs.

 

For the 2007 year as a whole, I estimate that the income will be £82.9m (plus or minus £500k per place above or below 11th), with costs being £83.7m (if the insurance is £3.3m). The player costs will be £17.9m, the loans will be £6.4m. Totals in £82.9m, total outs £108m. Overall loss will be ~£25m. Compared with £12m last year.

 

 

[Guest shaun11177]

i agree with the turnover/costs although i think we might be 5m better off.

The players costs cant be correct as it says the net cost is 8.69.

The loss is actually 2.926-basically the difference between cash on 31 jan 06 and 31 jan 07.

[Guest devlin_adl]

Macbeth, I don't agree with you but, since this is a matter of interpretation, I'll try to explain why.

 

What I am most concerned with is the cash position of the plc, because it is cash that determines whether the club can pay its debts, buy new players etc. It's all very well for a company to make a profit but if the cash isn't there, it'll still go bust. The opposite is equally true: a company can make losses indefinitely so long as it continues to generate cash.

 

The bankers look at a company's ability to pay debts, the key financial concern is "EBITDA" - Earnings Before Interest Tax Depreciation and Amortisation. Effectively, this is a cashflow proxy.

 

Earnings are obvious.

 

It's before interest because from the bank's perspective, you're using the earning to pay the interest.

 

It's before tax becuase companies pay interest before they pay tax.

 

It's before depreciation and amortisation because these are purely non-cash items.

 

From a Newcastle United plc perspective, we should probably add back the interest. Why? Because we're not the banks, we're not interested in the club's ability to pay but rather its financial position once it has paid. Ignore the tax. Why? Because the club doesn't generate profits in order for it to pay tax. But continue to strip out depreciation and amortisation, because they remain non-cash.

 

 

The depreciation for the ground, and other fixed assets is fairly steady at £3m per year. The club had the option to either have a one off hit of £52m or to spread the cost over the useful life of the ground. The depreciation is the way this is done. (Sorry if I am telling my granny how to suck eggs !)

 

 

Actually, I don't think thy have a choice. I'm pretty sure that IFRS requires them to depreciate over the estimated economic life of the asset. Certainly for property.

 

My point with depreciation is that it is a totally non-cash item. The money was spent years ago, this is purely an accounting item.

 

Actually, I'm not so much concerned with the depreciation of fixed assets (about £1.5m a year) because these will have to be replaced. However, I think that the £2m+ depreciation charge on land and buildings is misleading. because it rests on the following assumptions: 1. at the end of its estimated economic life (about 40 more years or so), St James Park will have no value; 2. the club will therefore have to buy a new stadium (and land); and 3. the club is busy saving up the money to do it right now.

 

1. and 2. are patently false and no club in the world operates according to 3.

 

(Incidentally, Liverpool will experience massive depreciation charges over the next few years, as they need to write off all the value of Anfield in preparation to move to their new stadium. Doesn't matter; it's purely an accounting exercise.)

 

 

The player amortisation costs are treated the same. Owen costs £16m (say) and is on a 4 year contract, then the cost isn't taken as a £16m hit in 2005 it is spread out as a £4m hit each year. As he could leave on a free after the end of his contract then this is the 'worst case' the club has to always have in mind.

 

 

Yes, but the club already spent the money way back in 2005. If you look at the cash balance, it doesn't change every time you amortise a couple of million off the Owen transfer fee, because the money has already been spent and he's been paid for (well, I say this, but you should probably pay attention to trade creditors, both long term and short term, to try and work out if transfer fees have been deferred).

 

My point is that all transfers are discretionary - the club doesn't have to sign anybody, and certainly shouldn't do so if it were about to go bust. They are also extremely irregular in size. As a result of this, they should be treated as exceptional items.

 

 

This last 6 months the amortisation costs were £7.5m. This cannot be ignored, the onkly other way to do it is to have the one-off hit which would mean going back and taking great chunks out at the time of the transfers rather than spreading the load.

 

 

I'm not ignoring it, I'm saying that the money has already been spent way back in 2005.

 

 

For each player bought the club can see how much book value there is left. So this led to the famous Sir Bobby quote about making a profit on Carl Cort when he bought him for ~£7m and sold him three and a half years later for ~£2m. On the books Cort had "amortised" by 3.5 of his 4 years contract. On the books he was down as being worth ~£1m to the club. To sell him for £2m was therefore profitable. Or so the story went

 

 

Which just goes to show you how silly all these book values really are. John Terry currently has a book value of zero. Doesn't mean Chelsea will let him go on a free. Equally, Zoggy probably now has a book value of maybe £300k.

 

 

The loss/profit on player registrations is the difference between what is left of the player worth as described for Cort, against what the club get for the player. So in Cort's instance the profit was ~£1m. When we sold Boumsong for £3.3m he was on the book as being worth ~£6.3m, so we lost money. For Faye we made money, somehow. This bit of accoutning is necessary as the club does it's amortisation. It seems ridiculously complicated but it evens things out, and means that the club cannot be sen to boost its profits by just selling a player.

 

 

Yes, but from a cash perspective, it's actually +£3.3m, because the the £8m transfer fee has already been paid.

 

 

What you have done is what the club (all clubs) do. They give their revenue, their operating costs (putting on games, paying wages etc) and say this is operating profit. They separate out player transfer costs, and separate out financial costs, so loan payments. I feel the club has to have players so ignoring the costs of them is a bit of a cheat. It would be like Stagecoach not counting the costs of buying buses. The finance costs would be like Stagecoach borrowing mooney to buy the buses, and looking to ignore those costs too.

 

 

There's a difference betwen football clubs and Stagecoach. Stagecoach has to buy new buses. Football clubs don't have to buy new players.

 

 

I'm uncomfortable that the club isolate these player and loan costs but find it okay to include the exceptional insurance costs.

 

 

Agreed. This is a complete scam and the auditors should have stamped it out.

 

 

For the 2007 year as a whole, I estimate that the income will be £82.9m (plus or minus £500k per place above or below 11th), with costs being £83.7m (if the insurance is £3.3m). The player costs will be £17.9m, the loans will be £6.4m. Totals in £82.9m, total outs £108m. Overall loss will be ~£25m. Compared with £12m last year.

 

 

Using your figures, and adding back the player trading and £2m for depreciation of St James, that would suggest that the club generates a cash loss of £5m for the year.

 

Added to that is a player trading loss of about £10m (£10m Martins, £5m Duff less £2m Faye £3.3m Boumsong).

 

For 2007-8, there's that £5m cash operating loss plus the extra £15m in new TV revenue, saving the club. Of course, the board will spend it all (and probably more) on new players, but it doesn't have to.

 

Looking back, I'm not sure I've explained myself that well, but I'm not going to rewrite it. Basically, what I'm trying to say is that pre-tax profits (thus including player trading, etc) makes sense if you're looking at the club as an investor. But as a football fan, it's kind of useless.

[macbeth]

Macbeth, I don't agree with you but, since this is a matter of interpretation, I'll try to explain why.

 

 

 

Thank you that was excellent. I'm only trying to understand what is going on, and you have helped hugely.

 

I've never been able to quite get my head arond cash. A few years ago the club was always cash rich, particualrly when the full year results were announced in July. They ouhad all the season ticket dosh in the bank and invariably hadn't spent any on players yet. This time last yearr was the first time they ever had an overdraft (nearly £18m), it is reduced to 5.5m when the season ticket money came in last summer, but is back to ~21m now. There is a good chance that the season ticket money will not cover the overdraft this time.

 

The £15m from Sky won't all be had until the summer of 2008, as that is when the merit (sic) amoutn is calulated.

 

The net cash for the last 6 months was -8.9m. Last year the total figure was +7m, this year it would look to be nil at best. Is this a problem?

[Guest devlin_adl]

The £15m from Sky won't all be had until the summer of 2008, as that is when the merit (sic) amoutn is calulated.

 

The net cash for the last 6 months was -8.9m. Last year the total figure was +7m, this year it would look to be nil at best. Is this a problem?

 

Well, it certainly isn't good. Those figures suggest a cash outflow of £16m in 12 months, presumably including a net transfer spend of £10m. Obviously this isn't sustainable, but the underlying loss would be £6m. In the short term, the plc will simply borrow more money to cover itself until the increased merit payment kicks in (the banks will certainly lend the money because they know the merit payment is coming, but it's possible that they might have conditions, such as a restriction on transfers).

 

What would be interesting to see is a look at the year-on-year cash drain. Aggregate the cash balance from each annual report with the nebt debt position and see how it changes from year to year. To make it more accurate, you can also incorporate the trade creditors and trade debtors attributable to transfer fees (the plc does break these figures out in the interims but I think they do in the annual reports).

 

Of course, I'm not going to do any of this...

[macbeth]

The £15m from Sky won't all be had until the summer of 2008, as that is when the merit (sic) amoutn is calulated.

 

The net cash for the last 6 months was -8.9m. Last year the total figure was +7m, this year it would look to be nil at best. Is this a problem?

 

but you've enticed mte into doing it ...

 

Well, it certainly isn't good. Those figures suggest a cash outflow of £16m in 12 months, presumably including a net transfer spend of £10m. Obviously this isn't sustainable, but the underlying loss would be £6m. In the short term, the plc will simply borrow more money to cover itself until the increased merit payment kicks in (the banks will certainly lend the money because they know the merit payment is coming, but it's possible that they might have conditions, such as a restriction on transfers).

 

What would be interesting to see is a look at the year-on-year cash drain. Aggregate the cash balance from each annual report with the nebt debt position and see how it changes from year to year. To make it more accurate, you can also incorporate the trade creditors and trade debtors attributable to transfer fees (the plc does break these figures out in the interims but I think they do in the annual reports).

 

Of course, I'm not going to do any of this...