Our Accounts

I think on good thing to come from this is hes trying to stop these paying transfers in installments Carroll deal weve already got £30m. While apparently Sunderland are getting Stokes money they paid for Jones, £2m a year (heard on legends tho)

 

It will take several more years before his financial plans turn us into a profit making club according to his plan.

And yes you are right we will lose a few players this summer. But some will be highly paid players who no longer merit their high salaries like Smith, some will be surplus to requirements like Perch or R Taylor and others will be players who we cannot agree new contracts with because they want more than our salary cap will allow. It is only the later that will give us any concern, on the basis that we may lose Barton and/or Enrique (although Enrique may actually leave to further his ambitions). But in my view the wage cap will ultimately help us get into a stronger position long term through financial stability and if any player has to be sold for this reason then it is something that we have to do no matter how good they are.

 

I don't think that player sales should be held against Ashley (though I wouldn't be surprised if there are more 'forced out' rumours this summer). At the end of the day, we have a number of players who' careers and our regeneration may not work together simultaneously.

Enrique is 25, he has yet to play at International level and has to do 10x the work of 'top 4' players in order to get the plaudits he is only just starting to receive. He needs to be playing in Europe in the next 2 seasons, and there's no guarantee that he will be with us BUT in order to stay with us, he'd need to sign a new contract. He will need to take his time and consider whether this will be the best move for his career. Sadly I think someone else will come in for him and his mind will be made up for him!

 

Part in bold: The reason the wage cap doesn't worry me, while we will lose a few players whom are wanting more than 50k per week, paying up to 50k per week is enough to keep a team stable and challenging for Europe. We have been paying over the odds for years, so it isn't a step backwards, it's a step back to where everyone we want to challenge with already are. Maybe even still higher.

But when we are consolidated and challenging consistently, say we break into Europe for a few years, we will be getting more money (from competition and league placing, and TV rights and merchandise, and ticket sales) and so will be able to raise the wage cap in order to 'take the next step'.

 

We were bound to make a loss with relegation, but when we see the accounts for this year we'll be in a much better position due to greater revenues and less paid out on wages

 

Absolutely! Couldn't agree more

 

Simon, your thinking coincides with mine re promotion under Hughton, and the transfers out because of the level of wages for a few AND the fact that cashley will look to maximise income, despite what the fans think!! On ES I've written on our own board that I want to hear more detail from him. He seems to have become a real SAFC nut, but his business rep is one of a ruthless asset manager - just want to hear it from the horses mouth so to speak.

The moneygoround of transfers and add-ons is crazy!???* Football as a business makes no current sense in England, and i for one would like to see all transfers made with money up front. The scousers were desperate and the business was outstandingly good imo (£35m for Carol is/was crazy) and when you are in a strong position you take advantage. Trouble with accounts is that the only thing you can place reliance on (for any club) is cash in bank as at **** date - the rest is interpretation.

Unless all clubs change, individual clubs football finances are unsustainable to varying degrees.

 

Ashley hater queued and ready: Err wasn't the sales of Milner, Given and N'Zogbia, as well as the untenable working situation that forced KK to leave actually responsible for us going down?

In other words Ashley's gambling with player weakening, and general rank stupidity in running our football club caused our relegation.

 

Ashley and co are not favourites of mine and having watched SSN a Sports Business Consulatant has called these figures an edited version.

I'm not a finance wizard so could someone explain to me what he might mean ?

 

Since we got relegated, pre-relegation i am trying to think as a different man. In the last 2 years, he has been very good. Plus, Milner and N'Zog are in the camp of offer's you couldn't refuse. Especially for the moody little French git!

 

Given asked to leave and NZogbia said that he would never play for the club again after the "insomnia" comment by JFK

No-one is disputing that Ashley was responsible for our relegation.

 

I don't think you will find many fans on here who don't agree with you that Ashley made monumental mistakes early on that led to our relegation.

But it can also be argued that he has managed to make more correct decisions than wrong since then and in the area of finances has made alot of good decisions to the benefit of our club. I think most of us are still very suspicious of him and await his next cock up with geniune fear. But it looks like he is our owner for the forseeable future so we may as well judge his current actions based upon the current facts and not his dismal past and the latest financials appear to be good news and a job well done. So I for one am going to give credit where it is due.

 

ANY set of accounts is prepared and has to adhere to a set of legal and statutory rules. These "rules" are more akin to a framework of things it's deemed "best" to work to - governed by a complex set of concepts, principles and best practice, in many ways a set of accounts is just one view of a business' operations by an individual/group over a certain period. There are also differing interpretations that can be applied to cost/income, e.g. amortisation and realisation of income. Having just read this paragraph back, it sounds like bollocks to anybody outside of finance, so all I'll say is that a set of accounts is hardly worth the paper they're printed on, they just give you a vague idea of how a business is doing.

Haven't seen (can't be bothered really) to look at the full set, but increasing losses on reduced turnover is not sustainable. Cashley's turned that corner with the PL TV money for this season and the Carol sale to probs break even (debt has to be serviced) this financial year, question is when will NUFC, or most clubs come to that, start to make consistent profits? The future's not bright, just that he can pay the 'leccy bill to keep the lights on for you for a while.

 

The key is that Newcastle United is no longer a plc, therefore they aren't required to release their annual accounts as all publicly owned businesses (and therefore most football clubs) will. As rokerlad says there's a possibility its a load of bollocks, but it all looks fairly sensible to me, falling TV revenue, less season tickets sold but more matchday, lowered wages, these are all facts that are obvious to anyone who saw our crowds and squad last year. I'm not looking at the figures now, but was it about a £20m lower TV revenue figure? With that back on I believe that means we're working to a profit before we even consider the Carroll money which if frankly ace.

I know there'll be those who'll say that all the Carroll money, and any profit we make should be thrown at transfers but I personally have no issue with Ashley looking to start paying off his loans. It may be the accountant in me (albeit part qualified...) but the concept of being self sufficient really appeals to me, and leaves us in a great position if UEFA properly apply the spending rules, the Premier League decide to apply some control, or Sky explodes in a hail of overinflated media and player ego's...

 

Colly - What I meant to say was that ANY accounts are near bollocks - not just the limited bits of a private company

If you part qualified, you'll know only too well the debates over Going Concerns that have been raging for the past years. Business' HAVE to make sustained profits. Football clubs have ignored this for too many years. If/when UEFA put strictures on clubs and WHEN the TV money dries up (it will boys and girls) then watch the avalanche of winding up orders!!

 

I know, my maths are better than my English and meant to split that up! Admittedly I've been in a non finance job for the last two years so the last bit of my CIMA has taken a backseat for a while, but yep you're absolutely right, and if this years (those published are up to June 2010 so NUFCs accountants will have a pretty good idea where we'll be this June) are as projected I'm very happy with how we're doing. Long may it continue, and if we can improve on the performances we've had on pitch this season (consistency needed, great results or naff results at home), with my brilliantly frozen priced season ticket I'm a very happy toon fan.

 

As a FCA I am supposed to know balance sheets, but I am not sure EPL clubs ever qualify as 'going concerns' Ellis Short puts money into the club and converts it into shares so when someone else wants to 'buy' Sunderland he may well get what he paid into to. We do have a salary cap hence Judas Bent left (hopefully to be relegated at, Villa how will that improve his play Capello). Ashley went he bought Newcastle seemed not to have done his 'due diligence' about the financial position and seems to hved been pissed off since, weird decisions abut managers, buys, sells and strips. He is I think leaving the money he puts in as loans (even paying off overdrafts etc.) so if and when he sells he may write off about 100mill or not. He does not seem to have the best interest of the club at heart and probably does not think much of the fans. However his cash has kept Newcastle going, after Shepherd and co nearly drove it into the ground. SO yes he is part saviour and part villain. He does not have as much money as Short so as the jargon goes, would like to wash his face' with Newcastle i.e. get out clean. I cannot tell how much that would mean from the accounts just released but probably North of £200mill.
Yes the cashflow fro the 40,000 plus fans must be important, but the only real money is from Sky and if you get in Champions League, the Europa is not worth that much. So clubs will continue to be toys for the very very rich, Ashley however is only very rich and an EPL is too expensive for him?

 

I think you're basing a lot of your opinion on the Mike Ashley of two years ago Sunderpitt. From recent comments and the way he's gone about longterm contracts for players and Pardew, and the longterm season ticket deal it doesn't appear that he's looking to wash his face (inclined to think you meant hands!) of Newcastle any longer, certainly not if he finds he's made a profit come June 2011. Its difficult to manage a football club as a going concern, though not impossible and is exactly what Arsenal are aiming for once the stadium is paid off (the main cause of their current debt level), and if our scouting network can continue to unearth gems like Tiote we'll be okay.

Admittedly I'm far too optimistic for my own good, and this will all collapse if we get dragged into the relegation zone, but thats just me!

 

Colly, can I ask you to step back from the club and look at this from the financial perspective? cashley was not a NUFC fan when he bought the club. His reasons for doing so certainly included the idea of making money - NO?

Admittedly the outpourings of love from you lot over the past couple of years may have changed his wicked money making ideas, but somehow I (and 99.9% of NUFC fans) doubt this. IF, he could get out of NUFC clean now, he'd take the offer. One years profit only goes to reduce his losses. How many years of say....£20m a year would it take to wash his face?

Tip for above exam question; Remember to compound interest (and at least 50% of the marks awarded will be given to lost Opportunity Cost)

 

Given that I'm already terrified about kicking back into exam season in November I'll skip that bit, other than to say that yes, if he were offered a deal now worth more than his investment he'd probably take it, but if not and we're making profit why not wait? Barring an absolute collapse of Sky and football on TV in general he's a good chance of guaranteed profit every year as long as we aren't relegated again due to the number of fans attending, merchandise sales etc, how many other business opportunities offer that?

Of course he's in it for the money, and we all acknowledge that (its more outpouring of acceptance of that fact rather than love!), but I don't think running a successful business and running a successful football club on the pitch are mutually exclusive. If we're in the Premier League we earn more, both happy. If we get to Europe we earn yet more, both even happier. Heaven forbid we reach the Champions League, fans happy, Ashley ecstatic, I finally qualify...

It could happen!