Change @ St. James

[ChezGiven 0]

Having a look around this morning it appears that sports direct only has an advertising spend of £4 million. To put this in perspective, when I used to do the advertising for a sofa retailer with 60 stores, I had an advertising budget of £6 million and that soon gets eaten up on TV.

 

This is why we will probably see no big payments from SD to NUFC as their current "advertising budget" simply couldnt justify it.

 

It should however be a great opportunity for a big company with lots to throw at branding and therefore seems surprising that no one has come in for the @ St James package, thus leading to the only logical conclusion that it is indeed, not for sale.

The point i was making about tax is that the £4m is tax free as its a business cost. If SD get e.g. £2m advertising services out of us and dont pay for it, that £2m is now part of their profit (and not costs) and is subject to tax at corporation rate. Therefore, giving it to us for free costs SD the corporate tax rate of £2m i.e. its not free.

 

 

Tried reading that 3 times now and my head hurts. My old MD used to throw rulers at the our accountant when he spoke like that.

 

Your MD must've had trouble with basic accounting.

 

As I've said before, I don't think SD shareholders or the board would accept throwing silly money on advertising with us as an acceptable way of reducing their corporation tax liability.

 

The marketing department will only care about the ROI on the spend not the amount. If they get the ad space at just below market rate, they will all be happy if there is a clear uplift on the SD sales line.

[trophyshy 7084]

What if NUFC were giving below market rate, e.g. free, advertising space to SD?

 

SD and it's shareholders would be happy with this, NUFC owner would be happy with this, but what about the tax man and company accounts for both - how could/would this be justified/justifiable?

Edited July 27, 2011 by trophyshy

[ChezGiven 0]

From the 2009 accounts:

During the current and prior year, advertising and promotional services were provided to companies associated with Mr MJW Ashley, the ultimate shareholder of the company's parent company, St James' Holdings limited. No consideration was paid or payable for these services and the cost associated with the services in the prior year was £42,250.

The club received no money from SD in 2008 & 2009, in fact we paid the costs for the privilege.

If that wasn't happening to us it would be comical.

I think you've both misunderstood the statement (I'm also pretty sure that SD branding at SJP arrived in 2010?). Anyway, that fee is for services promoting Newcastle, not SD. A statement on SD's promotions isnt relevant to our accounts. Its basically saying that we got assistance in selecting e.g. promotional channels and refining brand messages for NUFC from the enormously powerful and successful marketing department at SD.

 

It does NOT mean we paid SD £42k to advertised SD at SJP.

 

Genuinely what makes you say that? Is there something other than this slightly ambiguous statement that goes into further detail? The way I read it as a piece of evidence unto its own it says that services were provided [by the club] to other companies associated with Mike Ashley. These services involved no payment [to the club from other companies] and no payment was made [by the club to the other companies] for theses services. The cost to the club of rpvoding these services was £42,250.

It refers to the sharing of group expertise. There are two intepretations of the limited statement 1. Derek Llambias advised the marketing department of Britain's most successful sports retailer. 2 Britain's most successful sports retailer advised Derek Llambias.

 

Take your pick. I'm voting 2.

[ewerk 31221]

The marketing department will only care about the ROI on the spend not the amount. If they get the ad space at just below market rate, they will all be happy if there is a clear uplift on the SD sales line.

 

Right, I thought you were talking about spending over the odds on advertising at SJP in order to reduce their overall profit/tax liability.

 

Given that SD's advertising budget already appears to be limited, I doubt they'd be over the moon at paying for a service that they're already likely to be getting for free.

[OTF 7496]

But what about the statement speaks that the services were advice and/or direction?

 

Again, this is my personal interpretation of the statement, but isn't it much more likely that the services were the hosting and hoisting of the Sports Direct signage at St James' Park?

[ewerk 31221]

Having a look around this morning it appears that sports direct only has an advertising spend of £4 million. To put this in perspective, when I used to do the advertising for a sofa retailer with 60 stores, I had an advertising budget of £6 million and that soon gets eaten up on TV.

 

This is why we will probably see no big payments from SD to NUFC as their current "advertising budget" simply couldnt justify it.

 

It should however be a great opportunity for a big company with lots to throw at branding and therefore seems surprising that no one has come in for the @ St James package, thus leading to the only logical conclusion that it is indeed, not for sale.

The point i was making about tax is that the £4m is tax free as its a business cost. If SD get e.g. £2m advertising services out of us and dont pay for it, that £2m is now part of their profit (and not costs) and is subject to tax at corporation rate. Therefore, giving it to us for free costs SD the corporate tax rate of £2m i.e. its not free.

 

 

Tried reading that 3 times now and my head hurts. My old MD used to throw rulers at the our accountant when he spoke like that.

Sorry.

 

If a business has revenue of £10m and costs of £4m, then it makes £6m profit, of which e.g. 33% is taxed, giving £2m tax bill and post-tax profits of £4m.

 

If that company gets £2m worth of services, the profit becomes £4m and the tax bill is £1m. The £2m worth of services benefits both companies in the long term and they pay £1m less tax. Since SD is a PLC the reduced profits are translated into giving smaller dividends to shareholders.

 

Am not saying this is what he has done but there is a clear rationale for paying NUFC. It may be he prefers to keep all the money in SD because he is fighting to get every penny of profit on SD and doesnt give a shit about NUFC but i find that argument faintly ridiculous given his investments so far.

 

The flaw there is that the other shareholders and the board of SD simply wouldn't put up with their dividend/share value being eroded in such a way.

[Christmas Tree 4847]

Having a look around this morning it appears that sports direct only has an advertising spend of £4 million. To put this in perspective, when I used to do the advertising for a sofa retailer with 60 stores, I had an advertising budget of £6 million and that soon gets eaten up on TV.

 

This is why we will probably see no big payments from SD to NUFC as their current "advertising budget" simply couldnt justify it.

 

It should however be a great opportunity for a big company with lots to throw at branding and therefore seems surprising that no one has come in for the @ St James package, thus leading to the only logical conclusion that it is indeed, not for sale.

The point i was making about tax is that the £4m is tax free as its a business cost. If SD get e.g. £2m advertising services out of us and dont pay for it, that £2m is now part of their profit (and not costs) and is subject to tax at corporation rate. Therefore, giving it to us for free costs SD the corporate tax rate of £2m i.e. its not free.

 

 

Tried reading that 3 times now and my head hurts. My old MD used to throw rulers at the our accountant when he spoke like that.

 

Your MD must've had trouble with basic accounting.

 

As I've said before, I don't think SD shareholders or the board would accept throwing silly money on advertising with us as an acceptable way of reducing their corporation tax liability.

 

The marketing department will only care about the ROI on the spend not the amount. If they get the ad space at just below market rate, they will all be happy if there is a clear uplift on the SD sales line.

 

The bottom line in all of this is that the "branding package" on offer imo is not that valuable. Advertising within a ground on hoardings etc is not that expensive as it is. The fact that a few key areas of the ground are also on offer, doesnt imo suddenly make it mega valuable.

 

EG: A million quid gets you quite a lot of coronation street ads reaching millions of people in one go and is a direct selling message that prompts action.

 

I would have been shot for suggesting my old company pay 500,000 for this sort of package never mind a million.

 

It really needs dodgy deals like Man City or a super rich company on a branding ego trip or getting it for free.

[Christmas Tree 4847]

See this is the mock up United for Newcastle are putting out.

 

 

Im sure I read somewhere a few weeks back it was being renamed the SBR stand......too much to ask I guess.

[ChezGiven 0]

Having a look around this morning it appears that sports direct only has an advertising spend of £4 million. To put this in perspective, when I used to do the advertising for a sofa retailer with 60 stores, I had an advertising budget of £6 million and that soon gets eaten up on TV.

 

This is why we will probably see no big payments from SD to NUFC as their current "advertising budget" simply couldnt justify it.

 

It should however be a great opportunity for a big company with lots to throw at branding and therefore seems surprising that no one has come in for the @ St James package, thus leading to the only logical conclusion that it is indeed, not for sale.

The point i was making about tax is that the £4m is tax free as its a business cost. If SD get e.g. £2m advertising services out of us and dont pay for it, that £2m is now part of their profit (and not costs) and is subject to tax at corporation rate. Therefore, giving it to us for free costs SD the corporate tax rate of £2m i.e. its not free.

 

 

Tried reading that 3 times now and my head hurts. My old MD used to throw rulers at the our accountant when he spoke like that.

Sorry.

 

If a business has revenue of £10m and costs of £4m, then it makes £6m profit, of which e.g. 33% is taxed, giving £2m tax bill and post-tax profits of £4m.

 

If that company gets £2m worth of services, the profit becomes £4m and the tax bill is £1m. The £2m worth of services benefits both companies in the long term and they pay £1m less tax. Since SD is a PLC the reduced profits are translated into giving smaller dividends to shareholders.

 

Am not saying this is what he has done but there is a clear rationale for paying NUFC. It may be he prefers to keep all the money in SD because he is fighting to get every penny of profit on SD and doesnt give a shit about NUFC but i find that argument faintly ridiculous given his investments so far.

 

The flaw there is that the other shareholders and the board of SD simply wouldn't put up with their dividend/share value being eroded in such a way.

Not if they are getting cost efficient advertising for SD (the SD brands are on the stadium, the stadium is on the telly - how much does it cost to advertise on Sky during a game?) Thats where the value is, and the SD board will be more than happy if they are increasing their exposure through an otherwise expensive channel (Sky Sports) and there is evidence that sales are strong.

 

The board will sanction expenditures that are helping the sales lines and take a reduced dividend for these gains.

[peasepud 59]

considering the shirt sponsorship deal was something like £6m then I cant see how any company in their right mind would pay more than 3 times that for the priviledge of having their name become an email address and a few signs erected in a ground.

 

Shirt sponsorship has to be the most lucrative sponsorship deals going. Every image of the players, every time they appear on tv both home and away, thousands of people walking around the country with the name of your company in direct view of everyone that passes them, 7 days a week.

 

Thats why I believe £20m was a non-existent attempt at selling the space and at the same time meant he could go to SD shareholders and say "we've got £20m of advertising for nowt" when in reality its probably worth 1 or 2m

[ChezGiven 0]

Any figures i have mentioned were just pulled out of me arse, was just trying to illustrate what i was thinking.

 

I also have to say, its much more complex than the example on tax and depends on loads of political and financial factors. Nothing i have said rules out the possibility that SD are paying nothing for the priveledge of putting their tacky signage all over the stadium. The reaons might be quite specifically linked to the SD share price (boosted by sales, boosted by free advertising) and e.g. MA selling shares in SD or something, there could be all sorts going on basically.

[Guest Your Name Here]

For what it’s worth FF said a couple of years back that Sports Direct had paid £42k for the first batch of advertising space they got at SJP, which ties in rather neatly with the accounts. That’s£42k for the advertising hoardings around the ground, the shit on the facia of the Gallowgate and a prime slot on the sponsor’s backdrop. Whichever way you look at it that’s way below the market rate... works out at about a £10k a year for a blue chip package with a PL club with global reach.

 

Since this initial and apparently one off payment there has been a second batch of normal hoardings, a prime slot on the electronic hoardings, the rebranding of the foyer, the gaint SD logo on the roof of the Gallowgate, SD logos all over the dug, a large SD flag on the pitch pre kick-off and a half-baked renaming of the ground.

 

No matter how complex the anyone wishes to make the accounting process the bottom line is it is not in the commercial interest of NUFC for its premium advertising to be given away for what appears to be next to nowt.

[ChezGiven 0]

I call bullshit.

[Craig 6700]

I've said it jokingly in the past but I genuinely wouldn't put it past them to re-brand the club at some point - probably retain 'Newcastle' in some capacity but either change the name or our colours.

 

We'll all say now something like "they wouldn't, there'd be hell on!" but 3 years ago we'd have said the same thing about the posibility of painting their logo on the Gallowgate roof and renamining the ground.

[Christmas Tree 4847]

I've said it jokingly in the past but I genuinely wouldn't put it past them to re-brand the club at some point - probably retain 'Newcastle' in some capacity but either change the name or our colours.

 

We'll all say now something like "they wouldn't, there'd be hell on!" but 3 years ago we'd have said the same thing about the posibility of painting their logo on the Gallowgate roof and renamining the ground.

 

 

Wimbledon

[Roy Aitken's Debut 0]

You used to able to see it through the gate but they hung a massive rubber curtain from it a couple of years ago.

Resisting the temptation to comment on your rubber curtain it was taken down a couple of years ago I think, I stand at the mouth of that tunnel on match days and can't recall having to shift it out me way for a while now.

[Guest Your Name Here]

I call bullshit.

Makes more sense than your absurd tax avoidance idea.

[ChezGiven 0]

I call bullshit.

Makes more sense than your absurd tax avoidance idea.

I work for a conglomerate that operates this way, its what most businesses would do. Its bullshit because FF would know fuck all about anything that happened to the business once he was kicked out in July 2007. Were SD "advertising hoardings around the ground, the shit on the facia of the Gallowgate and a prime slot on the sponsor’s backdrop" implemented in July 2007. If no, its bullshit.

[Guest Your Name Here]

I call bullshit.

Makes more sense than your absurd tax avoidance idea.

I work for a conglomerate that operates this way, its what most businesses would do. Its bullshit because FF would know fuck all about anything that happened to the business once he was kicked out in July 2007. Were SD "advertising hoardings around the ground, the shit on the facia of the Gallowgate and a prime slot on the sponsor’s backdrop" implemented in July 2007. If no, its bullshit.

He said the information was in the accounts, which it is.

 

And there’s no way that most business get their ‘suppliers’ to provide goods and services for nothing.

[DEADMAN 0]

heh ashley wouldnt rename that stand the sbr he would name it sports direct stand or the gambling stand or the im taking the piss stand haha

[ChezGiven 0]

I call bullshit.

Makes more sense than your absurd tax avoidance idea.

I work for a conglomerate that operates this way, its what most businesses would do. Its bullshit because FF would know fuck all about anything that happened to the business once he was kicked out in July 2007. Were SD "advertising hoardings around the ground, the shit on the facia of the Gallowgate and a prime slot on the sponsor’s backdrop" implemented in July 2007. If no, its bullshit.

He said the information was in the accounts, which it is.

 

And there’s no way that most business get their ‘suppliers’ to provide goods and services for nothing.

Which has been my argument all along, it makes no business sense not to charge for sponsorship. One of the core objectives of a football club is to boost sponsorship revenue. Its part of the core business, along with TV and tickets. Assuming he treats NUFC and SD equally, there is no reason not to transfer cash. He might hate us and just be using NUFC to advertise SD but thats an absurdly expensive advertising campaign. There is also the loss in revenue from those who would advertise in those spaces.

 

He is 100% exposed to NUFC but only part owns SD and its a PLC so governed by all the regulations. By giving away e.g. £5m of advertising spaces for nothing to SD, NUFC's incomes drops from £80m to £75m. If any losses are made here, he bears them all.

 

Even on the basis of all this, i bet you are still going to reply sticking to your point because i called you out for bullshitting. Which you blatantly were.

[peasepud 59]

This is just hypothetical because I really havent got a clue but how about the following scenario.

 

He owns a major business and a football club. He puts zero into the business because its profitable and as a result he makes a fortune based on its performance. The football club on the other hand has been losing money but is now close to breaking even, sometimes he has to put money into the club however this is in the form of loans that somewhere down the line he'll get back. He knowns however that if he takes a profit out of the club there'll be hell on especially if its at the expense of the team.

 

So what he does is takes his profit in the form of free advertising for the other business, this results in increased profits and higher share value, that in itself makes him money. The club "technically" isnt losing out because much of it is advertising space thats not been sold anyway.

 

I hate what hes done to the ground, the Gallowgate roof is a disgrace and an eyesore. Removing the name from the East Stand and replacing it with SD will be horrible and the addition of another load of electronic boards flashing the name out but and this is a big but, if its not losing the club money and stops him taking some out then so fucking be it.

 

 

 

 

 

 

 

 

The fat twat.

[LoveTheBobby 1]

The Code starts on bbc2 in a few mins.

 

Maybe there will have some clues in there

 

 

 

 

 

 

 

 

The obese monstrosity .

[geordieshandy 0]

I think Chez might be about half right with his interpretation.

 

Personally I think most of Ashley's actions in the last couple of months point to the fact that he has very little cash. I'd say his cashflow is pretty much knackered.

[manc-mag 1]

This is just hypothetical because I really havent got a clue but how about the following scenario.

 

He owns a major business and a football club. He puts zero into the business because its profitable and as a result he makes a fortune based on its performance. The football club on the other hand has been losing money but is now close to breaking even, sometimes he has to put money into the club however this is in the form of loans that somewhere down the line he'll get back. He knowns however that if he takes a profit out of the club there'll be hell on especially if its at the expense of the team.

 

So what he does is takes his profit in the form of free advertising for the other business, this results in increased profits and higher share value, that in itself makes him money. The club "technically" isnt losing out because much of it is advertising space thats not been sold anyway.

 

I hate what hes done to the ground, the Gallowgate roof is a disgrace and an eyesore. Removing the name from the East Stand and replacing it with SD will be horrible and the addition of another load of electronic boards flashing the name out but and this is a big but, if its not losing the club money and stops him taking some out then so fucking be it.

 

 

 

 

 

 

 

 

The fat twat.

 

I'll be honest and say I think the bit in bold gets over egged a bit. Not by your good self necessarily, but it's often talked of as though it's some sort of evil that the money's only being made available as a loan rather than a gift and he'll want to call it in one day. Yes he'll want the loans back, but ultimately it'll probably only be realistic on exit of the club. And the fact there's loads of loans repayable on demand when he sells the business will mean he'll have to accept less for the business when he sells it. Ie anyone who does due diligence will know about the fact of the loans and then knock that off the valuation accordingly. It's only doils like MA who allegedly didn't make those sorts of inquiries who would miss that and there aren't that many of those type of people about.