Newcastle's £90m debt

[Scottish Mag 3]

Graeme Souness's future may be in doubt as Newcastle manager, but can the club find the £5 million they might need to pay him off and get a replacement - it cost £1.65 million to bring Souness from Blackburn - let alone the £20 million needed to replace an ageing team?

 

Newcastle, the second-best supported club in the country with 50,000 fans every home game, rarely make a profit, they have just lost their best asset, Michael Owen, for most of the rest of the season, they will probably not play in Europe next year, and mid-table mediocrity beckons. Their debt is around £90 million.

 

The only people doing well at St James' Park are the directors.

 

Sixty-four per cent of the club is owned by the Hall and Shepherd families and the one executive director, Freddie Shepherd, is also the major shareholder. Two of the four non-executive directors are members of the Hall family. Last year Douglas Hall was paid £496,000, and Shepherd £552,000.

 

They also get handsome dividends. Although the club have recorded retained losses of £48m as at June 30 last year, the directors declared a total dividend of £3.95m, the same as the previous year. Net debt at June 30 was £66.7m, including £47m of senior loan notes secured against future season ticket sales and corporate hospitality receipts.

 

Add to this the net £20m spent on players last summer. Owen cost £16m, twice what Liverpool offered Real Madrid, Luque cost £10m and Nobby Solano £1m. Take away Jermaine Jenas, sold for £7m, and this still leaves outgoings of £20m.

 

This means the average net debt position is probably close to £90m. This is matched by the value of £93m put on the stadium.

 

The playing staff is valued by the directors at £40m. For 2004-05 turnover was £87m, of which £50m went on salaries, £23m on other operating expenses £23m and £14m on writing down the value of players in amortization. With interest of £4m a year there was a loss, but dividends were still paid, and this means Newcastle have a net asset value of 22p per share. The share price is 47.5p and it has gone as high as 60p.

 

But who would want to buy the club? Hall and Shepherd would probably be looking for 60p a share, valuing the club at £75m. This maybe one for rich Russians, but not for others.

[Rob W 0]

source?

 

sounds like Major-major to me................

[Renton 22001]

source?

 

sounds like Major-major to me................

77926[/snapback]

 

Why do you say Rob? Reading the annual reports I would have thought this was basically the mess the club is in, but I know I'm no accountant, so perhaps we should ask the ginger one.

 

It amazes me on this site, and others, when people say "we should buy him, and him, and him" without ever considering the consequences of the cost to the club. Simple arithmetic alone tells me that we spent half our gross season ticket income on Luque alone, and he may yet prove to be a total flop.

 

Without European competition again this year, we are in the clarts. Relegation and we are completley fucked. And it's all down to incompetence.

[East Stander 0]

It's from today's Telegraph. And no matter how much venom there is to get rid of Souness, the first paragraph highlights why fatso cannot afford to do it, imho. I'm sure he is waiting until the summer knowing fine well that we have no earthly chance of getting sixth place, winning the cup or improving on last season's position before having enough facts to add to reasons for Souness having to go.

[Renton 22001]

It's from today's Telegraph. And no matter how much venom there is to get rid of Souness, the first paragraph highlights why fatso cannot afford to do it, imho. I'm sure he is waiting until the summer knowing fine well that we have no earthly chance of getting sixth place, winning the cup or improving on last season's position before having enough facts to add to reasons for Souness having to go.

77949[/snapback]

 

But the finances aren't going to be any better in the summer, are they? Next years financial results are also going to disastrous, not that that will stop Shepherd and Hall dipping their grubby fingers into the pot.

[rikko 20]

It's from today's Telegraph. And no matter how much venom there is to get rid of Souness, the first paragraph highlights why fatso cannot afford to do it, imho. I'm sure he is waiting until the summer knowing fine well that we have no earthly chance of getting sixth place, winning the cup or improving on last season's position before having enough facts to add to reasons for Souness having to go.

77949[/snapback]

 

But the finances aren't going to be any better in the summer, are they? Next years financial results are also going to disastrous, not that that will stop Shepherd and Hall dipping their grubby fingers into the pot.

77954[/snapback]

 

It wont be so much dipping into the pot as taking the actual pot itself. I may not fully understand the business world but surely taking a large dividend when a company makes massive losses is bad practise?

[Renton 22001]

It's from today's Telegraph. And no matter how much venom there is to get rid of Souness, the first paragraph highlights why fatso cannot afford to do it, imho. I'm sure he is waiting until the summer knowing fine well that we have no earthly chance of getting sixth place, winning the cup or improving on last season's position before having enough facts to add to reasons for Souness having to go.

77949[/snapback]

 

But the finances aren't going to be any better in the summer, are they? Next years financial results are also going to disastrous, not that that will stop Shepherd and Hall dipping their grubby fingers into the pot.

77954[/snapback]

 

It wont be so much dipping into the pot as taking the actual pot itself. I may not fully understand the business world but surely taking a large dividend when a company makes massive losses is bad practise?

77959[/snapback]

 

I don't understand the details either, but I have read several articles in broadsheet papers that say the way NUFC is managed financially is nothing short of a disgrace, and no other failing companies would ever justify such high dividends and salaries. Then, of course, there is all the money from dodgy transfer deals and agents to consider - didn't Boumsong's agent get paid over a million quid?

Edited January 12, 2006 by Renton

[East Stander 0]

It's from today's Telegraph. And no matter how much venom there is to get rid of Souness, the first paragraph highlights why fatso cannot afford to do it, imho. I'm sure he is waiting until the summer knowing fine well that we have no earthly chance of getting sixth place, winning the cup or improving on last season's position before having enough facts to add to reasons for Souness having to go.

77949[/snapback]

 

But the finances aren't going to be any better in the summer, are they? Next years financial results are also going to disastrous, not that that will stop Shepherd and Hall dipping their grubby fingers into the pot.

77954[/snapback]

 

You are absolutely right about the finances, my point (not well put I admit!) was that fatso won't have to pay out the £5 mill compo.

 

The PLC does contravene many areas of corporate governance in the accounts, too many to mention and bore non-accountants but I'll highlight this one which refers to the dastardly duo:

 

"The remuneration package for Executive Directors does not formally link a significant proportion of their total remuneration to corporate and individual performance (Provision B1.1)"

[LeazesMag 0]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

[Guest alex]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

All but the deluded would realise Shepherd has to take a huge slice of the blame, given he controls the purse strings and appointed Souness.

[LeazesMag 0]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

All but the deluded would realise Shepherd has to take a huge slice of the blame, given he controls the purse strings and appointed Souness.

77993[/snapback]

 

but, as you all said, or most of you, back him and give him time .......

 

whereas I said sack him.

 

Only the deluded thought Souness would ever be a half decent manager, so those who said give him time are just as wrong and deluded as Shepherd

Edited January 12, 2006 by LeazesMag

[Guest alex]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

All but the deluded would realise Shepherd has to take a huge slice of the blame, given he controls the purse strings and appointed Souness.

77993[/snapback]

 

but, as you all said, or most of you, back him and give him time .......

 

whereas I said sack him.

 

Only the deluded thought Souness would ever be a half decent manager, so those who said give him time are just as wrong and deluded as Shepherd

78002[/snapback]

I wouldn't have appointed him in the first place but I don't see how you could argue he should have been sacked from day one. You thought he was going to fail, so did nearly every one. I find it strange how you continue to back Shepherd though, bearing all this in mind.

[Renton 22001]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

All but the deluded would realise Shepherd has to take a huge slice of the blame, given he controls the purse strings and appointed Souness.

77993[/snapback]

 

but, as you all said, or most of you, back him and give him time .......

 

whereas I said sack him.

 

Only the deluded thought Souness would ever be a half decent manager, so those who said give him time are just as wrong and deluded as Shepherd

78002[/snapback]

 

Whichever way you look at it though, Shepherd has cocked up big time. This I may be willing to forgive, as everyone makes mistakes, but what is unforgivable in my book is the amount of money he leeches from the club - money we can't afford.

[LeazesMag 0]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

All but the deluded would realise Shepherd has to take a huge slice of the blame, given he controls the purse strings and appointed Souness.

77993[/snapback]

 

but, as you all said, or most of you, back him and give him time .......

 

whereas I said sack him.

 

Only the deluded thought Souness would ever be a half decent manager, so those who said give him time are just as wrong and deluded as Shepherd

78002[/snapback]

I wouldn't have appointed him in the first place but I don't see how you could argue he should have been sacked from day one. You thought he was going to fail, so did nearly every one. I find it strange how you continue to back Shepherd though, bearing all this in mind.

78012[/snapback]

 

I can assure you if Shepherd backs another shite manager after Souness, he will lose my support on football grounds. Until then, as i said, everyone makes one bad appointment [sometiimes more..Liverpool appointed Souness and Evans, in fact all the top clubs appoint more than one, bar manu bet we will see how they get on when Fergie goes]

 

And, if he does make a bad appointment, I won't be saying give him time, I'll be saying kick him out, just like this one.

[Rob W 0]

Of course if you read the article you will realise that they make no allowance for ANY income and God knows where they got the debt number from

 

The accounts show we have a Net Debt at 31st July 05 of £ 37 million - not £ 66.7........... they are confusing Creditors with Debt and forgetting that we actually have an income and are also owed money

 

We turned over £ 87 million last year and are generally considered to be the second most robust plc in the PL

[Renton 22001]

Of course if you read the article you will realise that they make no allowance for ANY income and God knows where they got the debt number from

 

The accounts show we have a Net Debt at 31st July 05 of £ 37 million - not £ 66.7...........  they are confusing Creditors with Debt and forgetting that we actually have an income and are also owed money

 

We turned over £ 87 million last year  and are generally considered to be the second most robust plc in the PL

78340[/snapback]

 

 

Was that not when we were in Europe and before we blew a net £30 M on players Rob? Newcastle's profit margin is small or non-existent, and yet the board still take a fortune in dividends and salary.

 

Wait for the next financial results. I think you'll be unpleasently surprised.

 

P.S. The Telegraph is famous for being an innacurate source of financial information, isn't it?

Edited January 12, 2006 by Renton

[Isegrim 9900]

So the basic message is that Newcastle cannot afford to sack Souness. But can they afford to keep him in charge?

 

I'd like to know what the wages/turnover ratio is these days, i.e. without income via European cups. The likes of Owen, Luque, Boumsong won't be paid in peanuts. Neither is Babayaro (especially when you believe the numbers from Comical Ali). Parker will be on huge contact as well. Then Dyer's improved contract (I've backed him in the past but giving him an improved contract was idiocy). So comparing these days with the squad under Robson I am pretty sure the wage bill has increased while the income decreased (I haven't seen any casino yet...).

 

So again, can Newcastle financially afford lumbering in midtable mediocrity?

[Papa Lazaru 0]

Its a joke that Fat Fred has made it that expensive to sack Souness. But the simple fact is with each place higher you finish in the prem worth a load of money (is it £500,000?) you could easilly point out that sackign him and a caretaker or new boss improving things will get back most if not all of the money by climbing higher than Souness would in a very average premisership.

 

As for the blame, Souness has been a one man disaster who has ruined us, but Fat Fred can't escape blameless.

 

He hired a known shite manager who was busy relegating Blackburn, paid them for him, paid Souness a fortune nad has failed to sack him at any point thus far.

Also i haven't forgotten Fred allowing (and even joining in) Souness' character assasination of Bellamy and Robert as he was about to sell them, makign sure every club knew we were desperate and would accept crap money for both. For a supposedly shrewd businessman Fred wants shooting for that episode.

[Matt 0]

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

 

Plenty of chairmen would have done better, but then I can think of more than a few who would have done far worse.

 

Shepherd, while using the club as a source of his disposable income, is controlled by the fans. Without the ticket sales, his empire is torpedoed. Which is why he in turn controls the fanbase with regular star signings and any positive spin that bums on seats on a season-by-season basis.

 

The club should not have paid the level of dividends they have given the respective profit figures- but that is the choice of the people who own the club. It's their money either way, just a case of which account they're keeping it in.

 

For all his faults, I'm not going to blame Shepherd for the Souness debacle. It was Hall who wanted Robson sacked and it's not as if Souness was our first choice. Or second or third of fourth for that matter.....

[LeazesMag 0]

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

 

Plenty of chairmen would have done better, but then I can think of more than a few who would have done far worse.

 

so who has ?

 

Shepherd, while using the club as a source of his disposable income, is controlled by the fans. Without the ticket sales, his empire is torpedoed. Which is why he in turn controls the fanbase with regular star signings and any positive spin that bums on seats on a season-by-season basis.

 

The club should not have paid the level of dividends they have given the respective profit figures- but that is the choice of the people who own the club. It's their money either way, just a case of which account they're keeping it in.

 

For all his faults,  I'm not going to blame Shepherd for the Souness debacle. It was Hall who wanted Robson sacked and it's not as if Souness was our first choice. Or second or third of fourth for that matter.....

78392[/snapback]

 

agree with the rest

[Matt 0]

So who has?

 

Plenty of businessmen would not take out the level of dividends that our lot. I don't have the figures to hand, but over the last few years only Man Utd have paid out more in dividends, with Old Trafford having been a cash-generating machine for years. I just think it's a little excessive. I wasn't thinking of 'chairmen' as a category as you would 'left winger' but more a general business sense.

 

I can't comment on our chairmen past as they're before my time, but I can see why Shep and Co seem like saviours compared to their predecessors.

 

Equally, we could have someone like Doug Ellis or Malcolm Glazer.

[Gemmill 46030]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

 

Leazes - if the club has been financially mismanaged to the degree that you seem to think it has been, whose fault is that? Will you blame Shepherd for anything, I wonder? Mismanagement on the pitch is all down to the manager, financial mismanagement is the fault of the Chairman. So if we really are in the shit to the extent that this article claims and which you clearly believe, are you still blaming Souness for it?

 

Incidentally, the article isn't great - for example, it immediately assumes that player additions were financed by debt. Perhaps not an unfair assumption, but not one that you would want to base an article on, given that the club had just taken in at least £18m in season ticket sales - not ALL player transfers are financed by debt. And whilst arguing (probably incorrectly) that the debt has gone up to £90m since the year end, the writer doesn't bother to add the new player values to the figure of £40m which he quotes (he just took that straight from the accounts without bothering to adjust for the likes of Owen and Luque at a value of around £27m).

[Renton 22001]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

 

Leazes - if the club has been financially mismanaged to the degree that you seem to think it has been, whose fault is that? Will you blame Shepherd for anything, I wonder? Mismanagement on the pitch is all down to the manager, financial mismanagement is the fault of the Chairman. So if we really are in the shit to the extent that this article claims and which you clearly believe, are you still blaming Souness for it?

 

Incidentally, the article isn't great - for example, it immediately assumes that player additions were financed by debt. Perhaps not an unfair assumption, but not one that you would want to base an article on, given that the club had just taken in at least £18m in season ticket sales - not ALL player transfers are financed by debt. And whilst arguing (probably incorrectly) that the debt has gone up to £90m since the year end, the writer doesn't bother to add the new player values to the figure of £40m which he quotes (he just took that straight from the accounts without bothering to adjust for the likes of Owen and Luque at a value of around £27m).

78503[/snapback]

 

£40 Million player value seems about right to me really, especially if we had to sell. I can't see us getting our money back on Owen or Luque. We might get some decent money for the likes of Parker, Given (whose approaching the end of his contract) and maybe Emre, and maybe Taylor and N'Zogbia, but the rest probably would struggle to command a 7-figure transfer value.

[Gemmill 46030]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

 

Leazes - if the club has been financially mismanaged to the degree that you seem to think it has been, whose fault is that? Will you blame Shepherd for anything, I wonder? Mismanagement on the pitch is all down to the manager, financial mismanagement is the fault of the Chairman. So if we really are in the shit to the extent that this article claims and which you clearly believe, are you still blaming Souness for it?

 

Incidentally, the article isn't great - for example, it immediately assumes that player additions were financed by debt. Perhaps not an unfair assumption, but not one that you would want to base an article on, given that the club had just taken in at least £18m in season ticket sales - not ALL player transfers are financed by debt. And whilst arguing (probably incorrectly) that the debt has gone up to £90m since the year end, the writer doesn't bother to add the new player values to the figure of £40m which he quotes (he just took that straight from the accounts without bothering to adjust for the likes of Owen and Luque at a value of around £27m).

78503[/snapback]

 

£40 Million player value seems about right to me really, especially if we had to sell. I can't see us getting our money back on Owen or Luque. We might get some decent money for the likes of Parker, Given (whose approaching the end of his contract) and maybe Emre, and maybe Taylor and N'Zogbia, but the rest probably would struggle to command a 7-figure transfer value.

78508[/snapback]

 

Whether we get our money back is irrelevant. He's talking about the capitalised value of the players in the financial statements - Owen would have been capitalised at his transfer value and then written down over the length of his contract. It's not just a question of him placing a value on what he thinks we could get for our squad.

[Renton 22001]

As I've said from day 1 - almost - despite protestations from the accountant, that Souness management was doing this to us, I can hardly say I'm surprised.

 

Maybe it will also help those who have delusions of grandeur that a different chairman would enable the club to spend yet more money, as well as those who think that dogless and FS taking 1m a year out of the club has a severe detrimental effect on such figures.

77977[/snapback]

 

Leazes - if the club has been financially mismanaged to the degree that you seem to think it has been, whose fault is that? Will you blame Shepherd for anything, I wonder? Mismanagement on the pitch is all down to the manager, financial mismanagement is the fault of the Chairman. So if we really are in the shit to the extent that this article claims and which you clearly believe, are you still blaming Souness for it?

 

Incidentally, the article isn't great - for example, it immediately assumes that player additions were financed by debt. Perhaps not an unfair assumption, but not one that you would want to base an article on, given that the club had just taken in at least £18m in season ticket sales - not ALL player transfers are financed by debt. And whilst arguing (probably incorrectly) that the debt has gone up to £90m since the year end, the writer doesn't bother to add the new player values to the figure of £40m which he quotes (he just took that straight from the accounts without bothering to adjust for the likes of Owen and Luque at a value of around £27m).

78503[/snapback]

 

£40 Million player value seems about right to me really, especially if we had to sell. I can't see us getting our money back on Owen or Luque. We might get some decent money for the likes of Parker, Given (whose approaching the end of his contract) and maybe Emre, and maybe Taylor and N'Zogbia, but the rest probably would struggle to command a 7-figure transfer value.

78508[/snapback]

 

Whether we get our money back is irrelevant. He's talking about the capitalised value of the players in the financial statements - Owen would have been capitalised at his transfer value and then written down over the length of his contract. It's not just a question of him placing a value on what he thinks we could get for our squad.

78513[/snapback]

 

Fair enough, but surely that original £40M figure would have included large values for players like Robert and Bellamy then? I agree the article is pretty lazy, but common sense tells me Newcastle are financially now on extremely shaky ground, especially if we can't even afford to change managers. One of my worries is that next year we will see a slump in season ticket sales - after all, this year we only just sold them after an extensive TV campaign and by buying Owen. If we lose more income, well, things are looking grim indeed.