From the publically available numbers, the £50 million would be surplus operating requirements. Operating invome will pay the wages, so the £50m is therefore effectively there. £4.3 for Cabaye, maybe £5 m on agents fees/signing on bonues for the frees, that leaves £42 million (or £32 million if we leave Jose out of it, as we haven't seen that money yet). As it shouldn't be needed for operating expenses and isn't being spent on capital acquisitions, it is either being kept as a cash reserve (i.e. kept in the bank) or would be used to repay debt. Now, if Ashley were to say that he loanedthe club money that he didn't expect to have to lend and that he would like those funds to be repaid when funds were available, it would be hard to argue: he lent us the money, he can ask for it back. We should thank him for not charging interest. Why, then, does he have to lie about it ?
This is my only complaint. I'm not bothered about the money, the firesale is happening like it or not. Just be straight about it, and as a result stop causing unrest among squad members. This arse about tit way of reducing debt, lying to the fans and players when we can all see for ourselves whats going on, is just unsettling the club and detracting from our real objective. Maintaining PL status.
A few comments I'd like to make; 1) According to early reports from NUFC the club may have broke even last year before player sales (i'e small operating profit) added to which the club will have received £35m re Carroll. But the club will then have had to pay tax on that money, so you can kiss goodbye to approximately £7m of that to the taxman. 2) Assuming a profit made again this year you can kiss goodbye to £3m out of the other £15m, meaning you now actually have about £40m and not £50m. 3) If as some have suggested you spend the £40m on players you will have to amortise the player contracts over the length of the contracts. Say 3 players (ST, RW, LB) 40/5 = £8m added expense to your profit and loss. (note: based on five year contracts) In addition under the fairplay regs we will have to build in an interest charge on our loans from MA for the break even calculation. This interest rate has to be at fair market value. Before MA paid off our loans to outside parties replacing them with an interest free loan (still a debt to the club) NUFC had to pay in the region of £6.4m per annum in interest. As the loan to MA currently stands at about £141m that would mean a pro rata charge of approx £8.1m per annum. Meaning the club would have an additional expense of £16.1m that it would have to somehow find additional income for in order to meet the regs for european qualification. As it stands the first period criteria allows a loss of EUR45m over a three year period (EUR15m per year). Add on the wages as well £7.8m per annum if the players are payed £50k each per week (which sounds reasonable as we just spent £40m on them so they must be good) and it is quickly apparent that the club does not have the resources to spend all this money. 4) The only way to lose the loan interest expense is for the loan to be repaid so there is a need to do this, otherwise it will be like an albatross round the club's neck that will forever deny us £8m per year to put towards player purchases and/or wages. It will also be necessary if we ever want to see the back of MA. 5) Ashley is a good businessman whatever his other faults. He and his accountants will have done these calculations too and with the exact numbers at their disposal so their results will be more accurate than mine. MA has stated that the plan is to buy cheap foreign talent, mixed with home grown and an occasional cost effective purchased pro in order to try and climb the league towards europe. The numbers back up the fact that this is the only way the club can achieve that ambition. What is the point spending loads of money on players in order to get into europe if the cost of buying them means you won't be allowed by fifa to enter anyway? To close; my belief and advice is that the club is following the correct course of action and we just have to be patient and keep supporting the team. Sorry for the long response!
So how do you suppose we buy these young foreign players you speak of? And how have we managed to spend any money at all before the Andy Carroll transfer money? And what would we have done in regards to transfers if we never had sold the boy (and Nolan)? Most of the above is probably true, and yes player amortisation is a total bitch on a balance sheet. But I dont think you really appreciate how much money £35million is for one player, and the fact that as we speak not one penny has been spent on a transfer fee. (we all know about agent fees and all that bollocks) We arent gonna be getting £50million every season to pay back Fat Ash......so where is the financial plan to pay him back?
I think most of us believe they are following the correct course of action in terms of reducing debt and not spending wildy. We're just non plussed in the way it is being done. i.e. through lies and mistreatment of fans and players. Its creating unrest and threatening to derail us from survival which is our main aim every year. Essentially for all their business knowledge, their football knowledge and how you marry it with your business knowledge is sadly falling way short of the mark at present.
So how do you suppose we buy these young foreign players you speak of? - There is room with the finances to buy players just not at the large cost we probably all want. If the club spent £20m that would be £4m amortisation plus wages. Also taking into account the interest expense I would suspect we might still be able to run at just within the EUR15m loss figure. We would need the real figures to be exact, but the point I am making is that there is still room for some expense on players. And how have we managed to spend any money at all before the Andy Carroll transfer money? As the club has not, until last year broke even player purchases have been funded by Ashley and the figure added to the loan, or it has been financed under our bank overdraft. Obviously long term this creates the problem of increasing the loan and therefore the fifa loan interest expense so it is not something we want to continue doing. And what would we have done in regards to transfers if we never had sold the boy (and Nolan)? Same answer as above really, bank overdraft or MA loan. Most of the above is probably true, and yes player amortisation is a total bitch on a balance sheet. But I dont think you really appreciate how much money £35million is for one player, and the fact that as we speak not one penny has been spent on a transfer fee. (we all know about agent fees and all that bollocks) Actually amortisation shows on the balance sheet in order to reduce the value of the player contract (asset) and as an expense on the profit and loss (sorry for being a pedant). I agree it is frustrating that nothing has been spent, but I still think we will buy some players, probably spending no more than about £12m to £15m. As a point of interest the player signing on fees and agent fees can also be capitalised and amortised so these costs will also have been spread over the years of the contract rather than taken as a full cost this year. We arent gonna be getting £50million every season to pay back Fat Ash......so where is the financial plan to pay him back - This is the rub for anyone who wants MA out of the club. The club can only pay his loans back with profits made, but we can only spend the money once. So do we buy players or pay off the loans? It is unlikely that anyone will buy the club at the moment because MA will want his loan money back and added to the other assets that overprices the club. My sorry conclusion is that we may well have MA for some time and will have to get used to not signing many expensive players
To be fair I think his financial repayment is pretty clear. Buy low, sell high. I think he is preparing the club for sale. This could be tomorrow but it is more likely to be when there is upturn in the economy, and also when we become a more desirable asset. i.e. not a club riddled with debt. It doesn't matter who you aportion the blame to in terms of how we have got into this scenario, both Mike and the previous regime are to blame in my book. The end result is we are where we are and he will want to walk away at least breaking even. That is a stiff task at present.
Most NUFC are fairly sensible people, who understand about cash flow (or the lack of it) and the like. That's not a problem. What really boils my piss is constantly being lied to, and fed spin, by the good Dr De Pardieu. I'm not an idiot, so don't treat me like one, thanks very much!
DT: Detailed and well thought out. I might quibble that if we are to deduct a tax bill on the basis that there is an operating profit, we should add back the amount of that profit, but this isn't an accounting forum. My main point is, if this is the club's rationale, why don't we hear something like this from the club ? Why do we have to deduce it from the scraps of information available to us ? And why say things which they had to know would be generally interpretted as meaning that there would be 30'ish million punds spent on trasnfer fees ? Sometimes it seems that Ashley must either have the worst PR advisors known to man or that he actually wants to be hated and for the supporters, players and everyone else whocares about the club's well being to be unhappy.
Looks good. Although I would try to get in a CM, as Barton is going to leave, otherwise we will have no cover other than Guthrie and youngsters. I'd probably also forget Long and Barnetta (and possibly only 12 for Dann) and spend 13/15mill on Adam Johnson.
Unfortunately Munster, I don't see the transparency/lying/respect of fans and players issues ever being resolved. They just seem too beligerent to acknowledge their own faults. They did it once but didn't stick to it. Indeed Lambyarse has continued to go back on that statement a number of times looking to blame Keegan, Shearer, the fans and many other for theirown problems in understanding football. The Shearer one took the biscuit for me even if it was the Keegan one that exposed them. "we want Alan back" then a few months later "he was the one who got us relegated" Real classy.
Its Llambiarse, not Pardew, who is lying to us. Pardew is telling us the truth/bollox that comes out of his fat mouth.
I agree. I think the club would be surprised to find that alot of fans would respond positively to being told the truth about the finances and that by the same token resent being misled or kept in the dark. BTW not sure from your response whether you thought I was being patronsising with my comments. If so it wasn't my intention!
