Should wages be coming out of the £35?

I like to think I'm reasonablebut I do nonetheless think there is a valid issue here.

Presumably the club wuld have survived if Carroll had not been sold. The necessary funds to pay wages etc would have been there. From the publicly available numbers, the club should be have income to cover its operating costs.

If an additional £35 million was received, and if Carroll's wages were saved, then there is a legitimate question as to what is being done with them. If the answer is that they are largely being used to fund operating costs (I do appreicate that some millions have been spent in agents' fees etc), then the question arises as to what is being done with the income that would have been used to pay these wages had Carroll not been sold.

None of this is knuckle dragging Ashley bashing. These are real questions.

If the answer were (and none of us knowsif it is) that the Carroll money is being used to fund operating costs and other income which would have been used to fund operating costs is being used to, say, reduce the club's debt, then the pronouncements that the funds are remaining in the club are the flimsiest sort of word play.

You can argue that the club should pay its debt, even though it is to Mr Ashley and his companies. It is owing, after all. To say (if it were the case, which none of us knows) that the Carroll money is remainign in the clubwhen it is in fact being used to free up other revenue so that loans can be repaid that otherwise would not be, is nothing short of dishonest. If Mr Ashley wants to use the proceeds of the sale of a club assett to pay a club debt, that is defensible. Lying about it is not.

 

I like to think I'm reasonablebut I do nonetheless think there is a valid issue here.

Presumably the club would have survived if Carroll had not been sold. The necessary funds to pay wages etc would have been there. From the publicly available numbers, the club should be have income to cover its operating costs.

If an additional £35 million were received, and if Carroll's wages were saved, then there is a legitimate question as to what is being done with them. If the answer is that they are largely being used to fund operating costs (I do appreciate that some millions have been spent in agents' fees etc), then the question arises as to what is being done with the income that would have been used to pay these wages had Carroll not been sold.

None of this is knuckle dragging Ashley bashing. These are real questions.

If the answer were (and none of us knows if it is) that the Carroll money is being used to fund operating costs and other income which would have been used to fund operating costs is being used to, say, reduce the club's debt, then the pronouncements that the funds are remaining in the club are the flimsiest sort of word play.

You can argue that the club should pay its debt, even though it is to Mr Ashley and his companies. It is owing, after all. To say (if it were the case, which none of us knows) that the Carroll money is remainign in the club when it is in fact being used to free up other revenue so that loans can be repaid that otherwise would not be, is nothing short of dishonest. If Mr Ashley wants to use the proceeds of the sale of a club asset to pay a club debt, that is defensible. Lying about it is not.

 

oops, soemhow posted twice. sorry

 

again the point i was making earlier is that as a club they're trying to reduce the wage bill not just sustain it. we still have one of the highest wage turnovers in the league last time i read the reports. i think its sensible that we're trying to bring this bill down to a suitable level. just because that money is now not being spent on wages doesn't mean that it should be in my opinion. we don't know what state the books are in up there but we know for sure that theres a lot of debt. with the financial fair play rules coming into effect maybe the extra cash is going to be used to bring us into line?

its one thing saying the club would have survived without the carroll money but its quite another to say we'd be in a position to reinvest in team building and infrastructure to keep us competitve without the money in the coffers to cover ourselves whilst still meeting fair play targets/servicing debts without ashley having to dip into his own pockets again. i know he's the owner but he can't be expected to risk his own fortune and businesses splurging money on the club as sad a fact as that might be. we're not his number one priority but he's still pumped a fortune into us and he's got to be given a bit of credit for it as it looked like we were a few seasons away from toal financial meltdown portsmouth style had shepard still been running the show.

 

Pipe4Life:

The amount of information that is not being provided is noteworthy.

The club's debt is, almost entirely, to Mr Ashley. I fuly agree that he is under no obligation to loan further funds to the club. All I'm saying is that if the club is repaying Mr Ashley as a result of Carroll being sold, then the statement that the funds are remaining in the club are not in any real way true.

There is a legitimate suspicion that this is what is occuring. It is also looking increasngly likely that the proceeds from the sale of a capital asset are by andlarge not being re-invested in other capital assets. These are proper points for debate and concern

 

I'm pretty certain that his exact words were that he'd been assured that all of the £35m would be re-invested in the club not the team. Basically saying Ashleys wasn't pocketing it. This is when the media went off in a spiral saying we had £35m to spend on transfers, which now everyone seems to believe what Pardew said, which it wasn't.

The facts still remain that more than £35m will/has be/been spent on the club since the sale of Carroll. New contracts for Tiote, Shane Ferguson, Michael Richardson, Ryan Donaldson, Potential new contracts for Enrique and Simpson. New signing of Cabaye, Marveuax, Demba Ba, Abeid including transfer fee for Cabaye, signings on fees, legal fees, agents fees and admin fees that are paid to the FA. There's the training ground and stadium upgrades.

I bet all of that has come close or exceeded £35m worth of spending and we are still in the market for what were Pardew's words again "a striker and an offensive midfielder" aswell as the documented transfer of Neil Taylor.

I could go on about where money goes but we will probably spend/have spent more than £50m on the club since Carrolls sale not including wages either. The only thing people are complaining about is the fact we haven't spent big yet and most probably won't. As long as we spend wisely, which we have been, and get quality players in, which we have been. Then why are fans complaining!! There's still just under 7 weeks of the transfer window to go, it would foolish to complete all our business early incase a better deal comes up later in the window. Pardew said that some players realise after the season starts, when the window is still open, that they aren't going to get the amount football they want and request a move. We'd feel stupid if we completed our business and then couldn't go in for that type of player.

 

In fairness I've learned a lot from this thread which has been both factual and opinionated.

 

surely you've must've had an argument with your mrs or similar knowing you've done something wrong but you've tried to soften the blow? pardew was trying to allay fears at the time. the whole argument that we've been lied to might hold water with some of us but I don't see it that way. i think by keeping the money and saying its gonna be pumped into the team is a loose explaination that ashley won't be swelling his wallet with the cash. and that statement wasn't poured over by the likes of pardew to anywhere near the extent of a bunch of pissed off fans and journos who love nothing better than to discect every detail of our clubs press to rinse us whenever possible.

if the money is used by the club as an asset and its not just gonna be a juicy dividend to mike then i'm happy enough. we lived beyond our means for too long and the books must be balanced. if some of it comes out of the carroll money then its fine by me as long as we stay competitive.

If you feel you're being lied to then by all means complain about it, but its not the first time a chairman or manager has lied to its fans and it won't be the last. I don't share your view although i respect your arguments.

 

Really good debate so far...good work guys

 

It makes a refreshing change to have a bit of proper debate rather than a slanging match between juveniles. if we all agreed on everything there'd be no point in even being on this forum.

 

There are a number of points here that I want to chip in on.

Wages - Pipe4Life is right our wage bill was far too high and has to be reduced to enable us to meet the fairplay regs. That is a well established fact and one facing almost every club (Man U) probably being the only exception. So Carroll's wages will just be taken as one of a number of wage reduction savings that are necessary.

£35m Carroll Sale Income - Like I said in an earlier post, spending all of this on capital outlay (player contracts are treated as intangible assets) would mean an increased depreciation cost spread over the years of the contract length. Supposing we spent all £35m on a number of players all on five year deals, that would mean a £7m additional depreciation cost per year for the next five years. Add on wages and agent fees as well and we have increased our expenses significantly on an annual basis. I will also repeat the requirement to build in interest on MA's loans to the club as well (on the break even calculation only).

Then also take into account that we have historically been running at a financial loss each year I think there are very strong reasons to believe that the club cannot afford to spend all of this money on players (capital assets) and will have no option but to utilise some of the income on the general running of the club.

I also recall that Ashley was quite quick to comment that wages and agent fees would be taken from the £35m so I don't really see the problem with what they are doing and also telling us. Have they gone back on their word? Because i'm not seeing it that way.

 

I agree and like I said in an earlier post. Pardew said on his first appearance on BBC Radio Newcastle that "Mike has assured me that the £35m will be re-invested in the club". Then like DT has said we were also quick after this radio appearance to make it clear that the money would be used for wages and all other fees attached to transfers. This also doesn't mean that £35m was the extent of our spending power, just the fact that all this £35m would be used to re-invest rather than Ashley to pocket. The problem seems to boil down to the hatred of Ashley, if we were paying off our loans to the bank I bet there wouldn't be this sort of reaction to how and were the money was being spent or going.

Only the media have said that we have £35m to spend on transfers that has never been said by the club itself.

 

Definitely a very good debate.

 

exactly the point of been making all afternoon. if we weren't so precious about our club and generally loathing of our owners we wouldn't have to over analyse every single word uttered trying to find some sort of discrepancy. i know its because we want whats best and we've been hurt and lied to in the past but all i ask is that we have a little perspective. (not implying that any of those debating don't have any...) just that we need to not get so hung up on whats being said and see the bigger picture as a result of the clubs actions.

 

Llambias said that the funds would stay in the club. Pardew said they would be re-invested in the team. I noticed the difference at the time.

And frankly saying that wages would be paid out of the £35 million is not comparing apples with apples. Add wages to both sides ofthe equation or leave them out of both sides of the equation. Either approach is valid. Inserting them on one side of the equation while leaving them off the other, though, is fiddling the books.

With respect to the question of wages, and balancing the books, if you want the full run down on this as it existed a few months back, look up the swiss ramblers blog on finances in black and white. it takes about 20 minutes to sift through but it makes good reading, from which 2 points emerge:

a. Ashley pumped a lot of money into the club and it would have been in a very bad way if he hadn't;

b. The club should be comfortably breaking even by now, maybe even generating a minor operating profit.

It's the last point that raises the issue of honesty. If the club was at break even as far as operating costs and if it gets and extra £35 million which it doesn't spend on capital acquisitions, what becomes of it ?

There may be a perfectly good answer to that question, but if so the club certainly seems reluctant to provide us with any details

 

I'm sorry but this has never been said

LINK to Pardew QUOTES on BBC Radio Newcastle via NUFCblog :- http://www.nufcblog.com/2011/03/28/alan-pardew-100-sure-carroll-cash-will-be-reinvested/

Like others have said, we were quick to add after this radio appearance that the money would be used to pay wages and all other fees involved within a transfer of a player!

 

well nobodies saying that investment in the playing staff won't be forthcoming in every transfer window from now on and that cash doesn't necessarily need to be spent on players this window. its the press that go on about a £35m war chest and when numbers start getting bandied around the less educated in our ranks believe we should be throwing cash around like confetti just because we have some. i think its right that we should play hardball on transfer fees and not pay over the odds. if we went out and blew £15m on our first signing it would inevitbaly set the tone and we'd find it very difficult to pick up the bargains from lesser lights as they'd know we had no trouble finding the cash so they'd add themself a little slice extra on the top complicating matters when trying to negotiate a cheap deal for someone who should in fact be cheap.

another point i would make is that i think mike ashley has loaned a lot of money to the club but it'd be niaive to think that he hasn't also SPENT his money on it to too on things he doesn't expect to be paid back for. he's a business man and he isn't doing this out of charity. like every investor he's entitled to a slice of profit at some point. whether he's taken any so far i couldn't say but i certainly would argue if he was if we manage to stay competitve and progress as a club.

 

"The one thing I said to Mike yesterday was: 'Look, if this boy is going to go, this money has to be reinvested in the team, all of it', and he has assured me of that. For the Newcastle fan, that is the most important message I can give today, that all that money will be used."

As reported in The Guardian 1 February 2011

 

Exactly, why should he be throwing endless amounts of money at Newcastle just for the enjoyment of others...If I was owner of Newcastle I'd expect at least a little somethiing out of it!

 

Yes accepted but how do we know that Pardew actually said this? ... This is a report from a paper and writers turn and twist words to suit their articles argument, even quotes!!

I'm sorry but the only reliable source is Pardew's voice itself which we all heard on BBC Newcastle