Spend big now or clear the debt first?

[Parky]

As many are aware the club are currently £80m in debt overall and without going into the nitty gritty and technicalities it is in our long term interest to clear this as soon as possible or at least get it down.

There is a feeling doing the rounds that Mr Mort is all for tackling this head on now and maybe holding back on the bigger transfers.

If we go into this season with a workmanlike def ie another CD and one or two reasonable full backs would people consider it a failure?

 

[thomas]

Look I'm not saying it was the gov't, I'm not saying it wasn't, but buildings just don't fall LIKE THAT.

[Skeletor]

If we go into this season with a workmanlike def ie another CD and one or two reasonable full backs would people consider it a failure?

 

 

Yes.

[Crumpy Gunt]

Isn't the debt now Mike Ashleys by virtue of him being the outright owner?

[Colos Short and Curlies]

People go on about our lack of investment in the defence, but it is the one area of the pitch where you can make do with workmanlike players.

 

We got into the champions league with a back four of Hughes, O'Brien, Dabizas and Bernard. We failed when you add £7m Woodgate and £5m Bramble.

 

If we were to go into the season with Carr, Taylor, Roz, Babayaro and Ramage i'd be worried, if we add at least one experienced and strong centre back, a competent left back and another who could cover right back and centre back I'd be happy that this would be strong enough (injuries allowing) to allow us to progress towards top 6 where hopefully in Jan or next summer we can atttract a better calibre of defender to the club.

 

What is important however is that we adequaely replace Dyer and anyone else who may leave, and I would still like to see another defensive midfielder to be bought.

 

As for the debt, its far better to get this to a manageable level as soon as possible

[Rebellious]

I thought the debt was the mortgage on the stadium ?

[BottledDog]

People go on about our lack of investment in the defence, but it is the one area of the pitch where you can make do with workmanlike players.

 

We got into the champions league with a back four of Hughes, O'Brien, Dabizas and Bernard. We failed when you add £7m Woodgate and £5m Bramble.

 

If we were to go into the season with Carr, Taylor, Roz, Babayaro and Ramage i'd be worried, if we add at least one experienced and strong centre back, a competent left back and another who could cover right back and centre back I'd be happy that this would be strong enough (injuries allowing) to allow us to progress towards top 6 where hopefully in Jan or next summer we can atttract a better calibre of defender to the club.

 

What is important however is that we adequaely replace Dyer and anyone else who may leave, and I would still like to see another defensive midfielder to be bought.

 

As for the debt, its far better to get this to a manageable level as soon as possible

 

And what, for Ashley, is this 'manageable level' exactly?

 

I'm finding it difficult to believe that servicing Ashleys debt is concerning anybody more than the club investing in our absurdly small squad which, to make matters worse, is seemingly inherently prone to injuries. Or am I right in thinking that this thread is ultimately just trying to find yet another excuse for the boards misjudged lack of backing for their manager.

[Colos Short and Curlies]

People go on about our lack of investment in the defence, but it is the one area of the pitch where you can make do with workmanlike players.

 

We got into the champions league with a back four of Hughes, O'Brien, Dabizas and Bernard. We failed when you add £7m Woodgate and £5m Bramble.

 

If we were to go into the season with Carr, Taylor, Roz, Babayaro and Ramage i'd be worried, if we add at least one experienced and strong centre back, a competent left back and another who could cover right back and centre back I'd be happy that this would be strong enough (injuries allowing) to allow us to progress towards top 6 where hopefully in Jan or next summer we can atttract a better calibre of defender to the club.

 

What is important however is that we adequaely replace Dyer and anyone else who may leave, and I would still like to see another defensive midfielder to be bought.

 

As for the debt, its far better to get this to a manageable level as soon as possible

 

And what, for Ashley, is this 'manageable level' exactly?

 

I'm finding it difficult to believe that servicing Ashleys debt is concerning anybody more than the club investing in our absurdly small squad which, to make matters worse, is seemingly inherently prone to injuries. Or am I right in thinking that this thread is ultimately just trying to find yet another excuse for the boards misjudged lack of backing for their manager.

It doesn't matter who you are and how much you own, paying debt interest is dead money, particularly if you are not paying the best possible rate.

 

I'm sure MacBeth could tell us how much the club paid in interest over the past 4 years, and from what I remember its quite significant.

 

I wouldn't advocate using an entire years transfer budget to reduce the debt, but if it cost £5m to restructure so we paid £1m less per year over the next 15 years then its a price worth paying in the short run

[Guest alex]

I think it's just to provoke debate tbh Derg. My opinion is that some sort of middle ground needs to be found as the club probably couldn't continue the way it has been but at the same time extra bodies (especially at the back) are essential.

[Guest Pie]

Isn't the debt now Mike Ashleys by virtue of him being the outright owner?

Not really. It is still a limited company. The liability for it stays with that business for now. The owner and the business are legally separated.

[jong24]

Surely "Ashers" (to his mates) knew all about the debt before he bought the place. Bit of a knob-end thing to do if he didn't.

[Mick]

I thought the debt was the mortgage on the stadium ?

 

Some of the debt is down to the stadium but we've also got an overdraft of more than £20 million.  I also remember somethig being said that if the club was sold then the stadium loan would have to be repaid, I don't know if that was true but somebody did mention it on here recently.

[Guest sittingontheball]

It's all very well clearing the debt, but expectations on the field will have to be seriously lowered.

 

The real danger is that Allardyce doesn't get enough players to secure his position, we struggle, the heat gets turned up on him, and then he gets turfed out or understandly walks away.

 

If Allardyce is not given a decent go of it, we'll never get a decent manager or decent players on non-astronomical wages.  The Toon job is already seen as a bit of a poisoned chalice. Its in our best interest to stabilize the ship.

 

If everyone will be patient, a defender or two should do the trick for the time being.

[BottledDog]

I think it's just to provoke debate tbh Derg. My opinion is that some sort of middle ground needs to be found as the club probably couldn't continue the way it has been but at the same time extra bodies (especially at the back) are essential.

 

Fair call, and I would have said the same had we still had Shepherd and the Halls in charge. But I don't think it is to much to ask (After Abramovic immediately wiped out Chelsea's debts, or when we see West Ham and Man City significantly boost their squads despite (certainly Man City) having significant debt issues) to not have supporters still feel the need to worry for the clubs financial health rather than the squad on the pitch post takeover.

 

Jaysus, Man U have spent big again and they have 3 times our debt, but they can service the interest on that debt comfortably, primarily due to it not amounting to any more than they had previously payed out in dividends and corporation tax as a publicly quoted company.

 

That is surely something we should also be benifiting from.

[Colos Short and Curlies]

I think it's just to provoke debate tbh Derg. My opinion is that some sort of middle ground needs to be found as the club probably couldn't continue the way it has been but at the same time extra bodies (especially at the back) are essential.

 

Fair call, and I would have said the same had we still had Shepherd and the Halls in charge. But I don't think it is to much to ask (After Abramovic immediately wiped out Chelsea's debts, or when we see West Ham and Man City significantly boost their squads despite (certainly Man City) having significant debt issues) to not have supporters still feel the need to worry for the clubs financial health rather than the squad on the pitch post takeover.

 

Jaysus, Man U have spent big again and they have 3 times our debt, but they can service the interest on that debt comfortably, primarily due to it not amounting to any more than they had previously payed out in dividends and corporation tax as a publicly quoted company.

 

That is surely something we should also be benifiting from.

 

Being a perdantic accountant here but you pay the same corporation tax regardless of you being a plc or limited company.

 

Also ManU may have 3 x our debt, they also have at least 3 times our imcome!

[ChezGiven]

The debt belongs to SJHL not Mike Ashley ffs. Its no longer a PLC either.

 

Not sure this is that pertinent a question Parky, the debt has various components, spilt between Northern Rock overdrafts for Owen and Martins and the stadium expansion debt.

 

Mort, courtesy of macbeth, will have known every single detail and £ of debt prior to taking on the position and the takeover. There could not have been any surprises for Mort since we have been told about this debt repeatedly and i presume they took the time to read the company annual reports from which it can be deduced the exact levels of expenditure on obscure warehousing deals and their value to the overall business. If we have this information, then i cant see what they were missing.

 

The reason why we havent spent is because we havent found the right player that Allardyce wants who also wants to come here. There is no real choice between debt and expenditure, as balancing the books is no longer a requisite as the company has been de-listed. It can carry loss-making for as long as it wants and it doesnt matter.

 

The only things that matters are the 5 year Net Present Value calculations based on different amounts of investment and how Ashley plans to finance these investments. If he plans to use SJHL (which is in debt) then increased investments mean increased borrowing, which means higher requirements on the rate of return. He may use other companies he has set up to lend money to SJHL at 0% interest. He may look to Sponsor the club alongside Northern Rock and use that (same way we financed Owen). Etc.

[Colos Short and Curlies]

Also, just noticed from the 2006 accounts that we are paying £6m a year in interest.

 

Thats a lot of interest!

[Matt]

Mort, courtesy of macbeth, will have known every single detail and £ of debt prior to taking on the position and the takeover. There could not have been any surprises for Mort since we have been told about this debt repeatedly and i presume they took the time to read the company annual reports from which it can be deduced the exact levels of expenditure on obscure warehousing deals and their value to the overall business. If we have this information, then i cant see what they were missing.

 

This is what has puzzled me with these reports of skeletons in the closet. With nearly a decade of audited plc accounts, there shouldn't be too many big surprises otherwise the lawyers would already have sprung into action.

[Colos Short and Curlies]

Mort, courtesy of macbeth, will have known every single detail and £ of debt prior to taking on the position and the takeover. There could not have been any surprises for Mort since we have been told about this debt repeatedly and i presume they took the time to read the company annual reports from which it can be deduced the exact levels of expenditure on obscure warehousing deals and their value to the overall business. If we have this information, then i cant see what they were missing.

 

This is what has puzzled me with these reports of skeletons in the closet. With nearly a decade of audited plc accounts, there shouldn't be too many big surprises otherwise the lawyers would already have sprung into action.

 

To be fair audit accounts still show the company in the way that the direcotrs want it to be shown!

There's very little analysis on how the interest (for example) is incurred or the length of any less than ideal purchase agreements are for.

 

Thats why we have due dilligence, to get the real story

[Guest Gemmill]

Also, just noticed from the 2006 accounts that we are paying £6m a year in interest.

 

Thats a lot of interest!

 

The interest is costing us more than Michael Owen, and it's never even done a day's training, never mind turned out for the first team.  Fucking disgrace.

[ChezGiven]

Also, just noticed from the 2006 accounts that we are paying £6m a year in interest.

 

Thats a lot of interest!

 

Thats ridiculous.

 

So, investing by increased borrowing from SJHL is probably not that attractive.

 

Mort would have seen that figure too though, a long time ago, so not sure why this 'Debt' issue is relevant to the delay in investment. 

 

They would have known the level of debt and the best way to raise the finance for player acquisitions. The debt is not holding us back, its the availability and willingness of the right players.

[Guest Guinness]

I think it's just to provoke debate tbh Derg. My opinion is that some sort of middle ground needs to be found as the club probably couldn't continue the way it has been but at the same time extra bodies (especially at the back) are essential.

 

This.

[ChezGiven]

Also, just noticed from the 2006 accounts that we are paying £6m a year in interest.

 

Thats a lot of interest!

 

The interest is costing us more than Michael Owen, and it's never even done a day's training, never mind turned out for the first team.  Fucking disgrace.

 

How do you egg an interest rate?

[ChezGiven]

I think it's just to provoke debate tbh Derg. My opinion is that some sort of middle ground needs to be found as the club probably couldn't continue the way it has been but at the same time extra bodies (especially at the back) are essential.

 

This.

 

People should do that to all of alex's posts, he'd love that 

[Matt]

To be fair audit accounts still show the company in the way that the direcotrs want it to be shown!

There's very little analysis on how the interest (for example) is incurred or the length of any less than ideal purchase agreements are for.

 

Thats why we have due dilligence, to get the real story

 

No that's true, but in the grand scheme of things they are fairly minor details. If there are liabilities, they'll be on the balance sheet. Sure auditors won't concern themselves with a few hundred grand here or there on a company like NUFC, but these dubious reports suggest something major which simply can't have been the case if everyone was doing their job.

 

More likely that this lack of spending was always the intention.