Right, 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.
Why promise the fans on February 1st 2011, that all of the 35M would be invested in improving the squad?
“Andy’s legacy to the team”.
This is where the problem is.
They rarely communicate with their customers and when they do it’s a pack of lies.
I haven’t bought a shirt or the club’s website tv which I used to subscribe to since the Keegan debacle.
Nothing’s going to change that until they cut out the spin and outright deception.
Btw Danny, having to pay off a mortgage doesn’t mean you don’t own the property in full, which you do if you’ve bought full title…it usually (but not always) means that the mortgagee (the bank) has the right of possession at the moment you sign the papers, but they don’t own it. Ownership can pass to the bank if you miss a payment(s) though. You’re clearly too young to know that though.
crap article…..we were 70 million in debt when ashley took over…considering that 40 million was on a stadium upgrade loan that dont leave much actual unaccounted debt at all….30 million by your own account. Then Ashely has made over 50 million in sold to bought since he came in… none of your figures add up and they never will.. why… cos Ashley has an army of accountants that both need and want to give the effect that we make no money… total rubbish. For every arguement for there is one equally right one against.. that is the way dekka and cashley have it set up.. its impossible to get to the bottom… just take your pick and run with it. Seems very funny that for a man that makes a fortune out of business, self made, knows his stuff etc etc… why is he hanging onto the club with an iron tight grasp when you woould think that he would be gagging to sell…. smoke screens about not being able to sell.. again rubbish… every other team in prem sells quick and we have 4th highest attendance in whole of UK but he says no buyers…We are a cash cow and he has never truly wanted to sell.
All I can say is I’m glad you’re not running the club!
Excellent article and very informed read, i can also appriciate the amount of time you have gone to to get these figures for us.
Thank you very much for you time
very extensive indeed
Given that Ashley owns the club, why is the money he puts into it a loan?, if he sells at a profit is h going to give it back?
I think the city council own the football ground but the club owe the money for the redevelopment of the stands manure have debts of £700million but still go out and buy top class players as the old saying goes you have speculate to accumulate the better the team the increase in revenues
I totally agree with you poolietoon. You’ve got to spend money to make money. I little bit of debt is ok if it leads to higher income….like Europa/Champions league.
Yep, you’ve got to speculate to accumulate
Im sure the speulate to accumulate argument was used by David O’Leary when Leeds were flying high. They had one missed season of champions league football and the whole pack of cards fell apart.
Lets have a season where Ashley doesnt have to put his hand in his pocket to keep the lights on then start pushing for a percentage to be reinvested in players.
Leeds obviously took that to the extreme. You can spend money without being reckless.
nufc leaking money all over when ashley took over it is definately no cash cow only a moron would think that hall and shepherd lumbered club with huge debts get real ashley can and will turn club around days of signings of owens greed are well over
Spot on Lenny
Good article, thanks a lot!!!
But I’m not sure if Ashley is an angel or devil for the club in long term….
Wish there won’t be any more sellings this year… ><
MMMM,Statistic can say what ever you like,
loss of revenue- relegation Solely down to MIKE
NUFC biggest dept is to Chris Houghton
Look what happened to him, Sorry hate the FCB with A passion
@lenny, the club was in a bad state and we know blood suckers like Owen were part of the problem. Since CAshley has noticed the problem he’s been dealing with it and good on him BUT he should be able to calculate the club’s projected earnings and be able to use the projected income now (when we need it most) to take us to the level he originally said he’d take us…Europe. In other words, use some (not all) of the future money now as we won’t need to spend it later, as we’ll already have the players in.
EXACTLY! He should invest some of the projected income on a quality striker and a couple of defenders ASAP and let the team grow together. Then we can pay off all outstanding debts in the coming years.
Of course non of these figures include any of the land he has taken out of the club, which has considerable value.
Has anyone actually asked how much sports direct sponsors newcastle for? There are hundreds of banners, signs etc around the ground, which is ofc now called sportsdirect@ whatever bollocks it is now. Of course man city just did a deal worth 400M for their sponsorship, at a club with smaller gates than newcastle, yet as far as i can tell sports direct pay nothing, despite making massive profits themselves.
It’s simple they have been loading dept onto the club, while using it to backup his other companies for free.
If Sportdirect paid a reasonable amount for sponsorship then that would go a long way to increasing turnover and reduce the dept, but that’s not going to happen.
Excellent article, unfortunately for some it is like casting pearls amongst swine, the intelligent amongst us understand whats happening with the club and why it is being financially managed the way it is, however I personally would prefer our owner to have a little more passion to match his fiscal prudence. But then again if all he hears and reads about is personal abuse and derogatory name calling from the bed sheet brigade, then I can understand why his passion is lost and why he will no longer push the boat out, a catch 22 situation really. We need to unite and get behind the club from top to bottom.
Fiscal prudence can only get you so far… I know you can never have the best of both worlds but a bit more spending wouldn’t go amiss.
when has he pushed the boat out?
Clearly a divided oppinion on this, but I’d like to add this:
All of the figures you see running through this article comes from numbers published by the club, which they have to do each year.
If there are numbers that don’t add up, it might be due to minor mixups between 08/09 and 09/10 seasons.
However, the last result budget should set it all straight.
Everything else comes from documents released by NUFC.
I have not changed any numbers, only added my views and comments, and made it managble read. Altho it’s a huge wall of text.
@craig chisholm
You are right, MA took over a £70 million debt from Shepard, however, the club was by then loosing £30 million a year. The loss has become less since then, but we’re still losing money. MA is covering that, thereby increasing his loan.
If we stY up this season I can see us in Europe the year after. I can also see arsenal finishing 5th or 6th this year
Good read. Whilst Ashley will never win over the majority of fans with his disasterous public relations, at least we will continue to have a club under his stewardship.
The £35m debate (which is now getting VERY tedious!) is down to poor communication at the time of the sale in an attempt to defuse the anger at Carroll’s sale – I personally am happy with the transfer dealings of the summer so far and fully expect the club to purchase a left back and striker of decent quality before the transfer window closes, however certain sections of the fan base will not be happy until we produce a marquee signing (ala Owen/Shearer of years gone by).
The cold facts of life are that we are no longer either able or willing to attract stars of the quality we used to (both due to financial contraints and the current stature of the club) and now have to focus on buying promising youths or take advantage of free agents, unknown players or other club’s cast-offs.
However this doesn’t mean doom and gloom for the club’s future – we have the fan base to become a big club again in the future, however this will be a gradual process, and if/when we do reach those levels it will be in a sustainable business model which bodes well for the long term future of the club.
I personally dislike Ashley’s communication (or lack of) with the fans and he’s undoubtably made a number of mistakes, however doesn’t deserve the hatred he receives from certain sections of the fans. Pardew is not the world famous manager we all would like to see in charge of the club, but he’s probably about as good as we can realistically expect at the current stage of our development and has done a pretty good job so far. If the club can sort out the PR and some of the fans can get over their hatred and accept the facts of life then I feel Newcastle can continue to improve and we may even enjoy supporting our wonderful club again!
Great article, pity some people are to narrow minded to understand it. and still live in the fantasy land Shepard created.
I’m glad Ashley is building a better financial base for Newcastle. Gone are the days of over inflated signings and players signing just for the wages.
@Rich total agree with you in many of your points, however Shearer was value for money..
I agree Shearer was value for money, certainly, and one of the best pieces of buisiness we’ve done as a club – however he was also a marquee signing (£15m – Brittish record transfer) which we’re highly unlikely to see again (certainly in the near future at least).
Agreed Rich! Just don’t feel that Owen and Shearer should be used in the same sentence haha.. 🙂
Yes gone are the days of big name signings. and having them come on mega wages.
At least now if a player wants to come to Newcastle,they want to come because its a great club.
window shuts august 31st stop whining and see what signings come in to complement a couple of decent signings already made. ashley hasnt ran the club into the ground freddy would have as ive said get a grip as for the clever ones go support man city
Minor, really pedantic point, but we don’t own our grand, we never have, we never will. It is “owned” in trust by the Freeman of the City (not to be confused with people who are granted freedom of the city), and can only be used for sporting purposes.
Whether that is good or bad is a moot point; we have a wonderful city centre stadium and are not at risk of the Glazier type figures who see it as prime real estate.
It’s not all bad!
If Ashley is steering this club in the right direction financially, then answer me this.
Who sacked Alladyce resulting in a £4.6million loss?
Who was proven in a court of law guilty of constructive dismisal of Keegan resulting in a £5.3million bill?
Who paid £1.4million for the sevices of one solicitor, to act as club chairman for barely one year?
Who, as a result of giving old pals such as Lambias, Wise etc meaningless jobs upstairs increased the wage bill?
Who, by employing the aforementioned clowns along with Joe Kinnear, and various other disasterous decisions steered tis club to relagation, resulting in the drastic drop in revenue?
Ashley surely is the knight in shining armour we were all waiting for to end Shepherd and co’s disastourous stewardship!