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Here’s your £35 million, sincerely Mr Ashley

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Newcastle chairman Mike AshleyRight, here comes the wanted “explanation” for the £35 million from the sale of Andy Carroll. Before I start, I want you to keep a few things in mind. These are the numbers from 2008/09 and 2009/10. Meaning we won’t see the finances for 2010/11 until May/June next year (2012). However, this sets up the earlier years, including pre-relegation and the year we were in the Championship. It should provide the foundations for calculating at least our current wage structure as far as we can guess. Guess being the important word here, as NUFC doesn’t release statements on individual fees received, or given from player transfers or wages. All we have is speculation from the press. This took me quite a while to gather information from, but I see it as vital, that before we start pointing fingers at Ashley, we should at least have a foundation based on facts. And here they are.

In summary what Shepherd left was a club that was losing over £30m a year, had debts of £70m, had no assets they could borrow more money against, and had a set of players on long, lucrative contracts. Ashley can get rid of the debt but the £30m annual losses with over paid players will take longer to sort out.

This has proven to be the case.

Upon his takeover, Ashley inherited a mortgage on the stadium: meaning they didn’t actually fully own their own stadium, and had a further cost of £4.5 million a year in mortgage payments. Once the club changed hands however, the mortgage providers got cold feet and demanded the remaining 8-9 years of payments in a single payment that Ashley had to cough up for. This was the first in a series of bills that landed at Ashley’s feet that he had to cover to keep the club afloat.

The wages have gone up from £63.4m to roughly £70m. If the first team squad is made up of say 25 players then they would all be getting closer to £3m each rather than just £2m each. A frightening figure, considering the on-field performances.

The Sky money has gone up dramatically, but the gate receipts and merchandise numbers are going the other way. The 2008 gate receipts were lower than those in 2007 despite the average league attendance going up. The 2009 gate receipts would likely be down 10% on 2008. The club shop sales would also be down due to fan boycotts.

Naturally, with a backdrop of shaky revenues we of course have massive wage growth. Wages managed to grow by over 40% over the period 04-05 to 08-09, with the club relegated with a wage bill of £71million, one of the highest in the Premier League. That is only bested by high and increasing amortization: a result of significant transfer spending and the most recent amortization figure of just under £20 million is higher than most sides, though lower than the top four average and the big spenders such as City and Spurs.

All this adds up to turnover declining compared to its 04-05 figure, after a drop of around 15% between 07-08 and 08-09. Operating losses of £9m, £11m, £24m and £25m from 04-05 to 07-08 point to fundamental concerns at the heart of the NUFC business model.  Ashley has had to dip into his own pocket on numerous occasions to pay off creditors to avoid administration proceedings and such a situation cannot go on forever.

Despite the new TV deal boosting revenues in the middle of the period,  declining league finishes have meant that Newcastle’s TV money hasn’t grown as much over the period as would be expected. This was because a lower league position only warrants a smaller percentage of the money over the period, but if the deal itself increases (as it did), Newcastle’s TV money will still increase.

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45 comments

  • FrankLeeBrian says:

    This is spin – 1.3 million for Chris Mort? Wise’s salary (which we are still paying) probably 1 million – 0.5 million/year for Pardew, 10 million to Allardyce and Keegan, there’s 15 million before you start. We all know Shepherd and Hall were taking at least 1million a year from salaries (and associated family members another 0.5 million) – over 12 million in salaries alone. Lambias? At least the same as Mort. One million people through the turnstiles and only 15 million revenue? They’re taking the piss – £15 per game? When was that? 1992?

    I remember the days when I used to get squeezed through the turnstile with me uncle, the turnstile operator pocketing the 6 old pence my uncle handed over, and the under-reported crowd figures under Pirate Westwood – nothing’s changed.

    Same old Shysters, just more sophisticated accounting methods.

  • lenny says:

    every single club allardice has been at and sacked from has been relegated ashley sacked him because hes shite wise and keegan was his mistake slowly but surely he is learnig you dont get to be where hes at unless you have good business acumen kinnear was a d.wise move wise didnt last long ashley will get it right better days will come sound financial footing will bring success

  • John says:

    Sir,
    I had already read the guardian report into football finance which said roughly the same thing about our finances, but this filled in many gaps with the year-by-year comparatives.
    Overall, a very good article.
    The anti-Ashley brigade will, of course, disagree with it but I am sure they subscribe to General Melchett’s view that “if nothing else works, a total pig-headed unwillingness to look facts in the face will see us through.”
    Shepherd put £6m of his money into the club and took millions out (before he sold it) yet to some he is a demi-God. He would have turned us into the new Leeds.

    • Kroe9 says:

      I think you’re confusing dislike of Ashley for love of Shepherd. Shepherd was an old crook, only after the gravy train and the status of Nufc.
      Ashley is a new crook. Two bellends don’t make a right!

  • Gorskino10 says:

    Well i have to say on finance he is doing a sensible job, you cannot allow wages to be over what you make.

    For that you can applaud Ashley.

    But for many other points you cannot, like for example Hiring Wise and Buying Xisco, Selling Milner over KK’s head etc.. etc…

    While Ashley is in charge we will NEVER GO FORWARD as a team, when any player is for Sale, with our habit of selling our BEST Players (Milner/NZogbia/Jose Enrique/Carroll etc..)

    Sometimes you cannot always find a bargain like Tiote and relying on Cheap/Free Agents to fill quality places is only bad for the club, take the fact 2 BIG players gone (Jose and Andy) havent been replaced, and when they have (Pieters & ??) they will not be BETTER but WORSE.

    Much like our team at Arsenal, if that was with Andy and Jose etc.. we could of done better Arsenal were there for the taking. We didnt attack and look beyond pathetic at making chances all we could do is defend which we did.

    Talking about defending, sometimes you need to spend good on quality, Tiote was a Bargain but others aint gunna be as lucky, I believe Colocini is worth EVERY penny we spent on him and say for Cheap you dont find quality like that not even with Willo etc..

    Future with Ashley means,

    * we will be sound finacally
    * having a YES-MAN as the manager
    * sell our best players for cheaper (Worse) replacements

    With the chopping/and changing with selling our better players, like which will happen NEXT season, we will never be a force and will be forever lurking around mid-table or maybe lower.

    All i’ll add is its hard to say this seasons team is better, ATM they aint, i preferred the team we had when we got promoted, which says alot.

  • Geordie_in_WYorks says:

    Thank you for the time, effort and figures. It all makes fantastic reading and whole lot of sense.

    I am a true newcastle fan and by saying that I know everyone that is one and reads this, suddenly takes a moment and thinks what that means to themselves.

    It is our life!!! Owners will come and go!! It is what they leave that we need to criticise them for ( like shepherd !!). Our current owner, that everyone is quick to slag off!! To be honest dragged us out of a pot full if *#}^ Yeah football wise we have done nothing but MA has brought us to the very top of the division of clubs that are finacially stable and in this day and age that is the foundations of a successful club.

    Why do we always look for the negative rather than the positive?? Surely as a toon fan we need to be positive rather than looking to blame someone!!

  • Sharpy17 says:

    A very impressive article, alot of facts I think we over look as fans, who just want to see big name/big money players come in and don’t care or consider where the money comes from. I as a Newcastle fan care more for the survival of the club in the top flight than a name on shirt. Look at man city for example…tevez cost a fortune n earns a fortune and there’s still no loyalty to the club, city or fans

  • David Dutch says:

    Quite a divergence of opinion as normal. The trouble is with the majority of Newcastle fans is that they read the red top rags every day and believe what they read especially if it is anti-Ashley. They just want to see big ticket players sign for the club regardless of the real cost to the club and the chance that we will slip back into the Shepard gravy train pit. Shepherd and his cohorts bled this club dry and knew exactly how to pander to the majority of fans bring in big ticket players on high wages. One player does not make a team. We have seen this over and over yet the crowd still bay for more, like a frenzied mob whose appetite can only be satiated by taking every credit card and maxing them out with no thought of repayment. You watch Man City have a major problem because their players are on the top wages – who will take them on when Man City do not want them, the players refuse to take pay cuts while under contract they would rather sit it out on the bench than drop their wage demands and play the game they are supposed to love (see Alan Smith comments when offered an opportunity to leave the Park but with a cut in wages – ‘I would rather SIT OUT my contract’) Tevez very few clubs can now afford him. Our own experiences of players on high wages they are very difficult to move on if the do not work out. Give me a team of sensible players who are proud to wear the shirt and are able to be blended together into a playing unit that wins more games than it loses. We will not win the league this season so stop acting as if we will, we will make steady progress based on a firm financial footing and in a few years have a team that is continually in the top sections insteda of a Keegan like attempt. Keegan is a GOD to some because he managed with a cheque book in hand just like David O’Leary, I never want to see my club back in that mould. I do want to see Newcastle play for as many years as the good lord gives me to spend on this earth and unlike most of you I have far more behind me than ahead of me. I keep saying all you can do as an honest real supporter is make yourself heard every saturday encouraging the team not wasting your breath insulting Ashley and Lambias they have their faults, we may never really understand them but guess what you have your faults also.

  • DAN says:

    ashleys lack of communications is what riles me the most but all this about trophy signing and we can’t afford them any more is rubbish!! if we sign a striker (which is what these trophy signings are) for 20 million and is on 80,000 a week and he scores 20 goals a season over a 3 year contract and those goals get US into a top 6 finish then that is good value for money. if the same striker flops and scores 9 goals a season then its a waste of money, so how about we Pay the money and get a proven goal scorer to spearhead or new season???? ……just saying like.

  • Sharpy17 says:

    Dan,that striker you speak of does not exsist,strikers who score 20 goals a season get bought by the bigger clubs, and as for Newcastle finishing in the top 6 that’s years away mate, look at money man u, Liverpool, man city, Chelsea, spurs and others have spent in recent years, then there are other clubs with better squads than ours, one 20m striker will not get us there I’m afraid. Dutch Dave is right, we need afew secure years finishing top half and above Sunderland, there are only afew trophies to be won, stoke won one last season with a squad that cost very little but with a good spirit and with their fans behind them, Dutch Dave is right, let’s get behind the players we do have rather than twisting about the players we don’t.

  • Sharpy17 says:

    I’ll amend my last comment, I meamy to say that stoke made Europe with their squad of player, Birmingham won a trophy and look what happened to them, look all I’m saying is let’s get behind our players who ever they may be

  • Hi,this is an excellent article,I found it on yahoo and I love it very much,I agree with you, it help me a lot in decision,but I am not follw well with the last part,can you explain it for me ?I need your answer,and I will keep on watching your blog

  • You can definitely see your expertise within the paintings you write. The arena hopes for even more passionate writers such as you who are not afraid to mention how they believe. Always go after your heart.

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