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Ashley’s spin to win?

Posted on February 25th, 2010 | 42 Comments |

Spinderella?
Spinderella?
In another ‘exclusive’ leak from the club, apparently a ‘senior United’ source has been speaking to The Journal, revealing that Newcastle is losing around £500,000 a week at the moment. Now forgive me for doing some simple maths but that equates to roughly £25m a year, which is coincidentally what the NoTW reported over the weekend as per an earlier article on here.

Which begs the question, is that because there’s some truth in it or is it because Mr Edwards has just rehashed the same thread? As they state in the article, The Journal wrote before Christmas that Ashley was loaning the club £20m cover running costs, following the drop in revenue and the limit on cutbacks to wages, which has enabled Hughton to maintain a decent squad.

Some fairly erudite contributors to this site have estimated that rather than struggling to breakeven, Ashley might even be turning a small profit, with the increase in crowds. And these are the people who aren’t necessarily ‘anti-Ashley’ as it were. Yet the feed from the club is, hardly surprisingly, somewhat different.

In the words of the source:

“Newcastle United couldn’t survive at the moment without Mike’s money, it’s as simple as that. If Mike and the banks weren’t willing to cover the cost of relegation Newcastle may well be in a Portsmouth situation. It is costing Mike £500,000-a-week this season to keep Newcastle running without making further cutbacks, yet some people are saying the club should be able to wipe its own mouth, that it should be able to run by itself with the income coming in.”

“You can not lose £50m in revenue and expect not to have to take a hit, particularly when you have the overheads Newcastle have.”

“The wage bill was reduced, but it’s still way too big for the Championship.”

So where does the truth lie?

Can we still be making this sort of loss? Even considering slashing the wage bill almost in half, adding in parachute payments, also considering that the estimated drop in attendances isn’t as drastic as first thought. It’s not clear yet what we will have made from televised games but we’ve been on the box more this season than any I can remember in recent years.

The accounts will be published soon enough and it might mean giving a clearer indication of what has been going on. But it will only tell some of the tale in reality. But the evidence so far, suggests that the club is a going concern now and Ashley may soon hold the aces if we get promoted.

The article in question suggests that promotion is essential to avoid haemorrhaghing more money. But the reality is that, even if he is bankrolling us on a weekly basis, promotion will ensure that deficit is covered and then some.

Which should leave him in a position to sell a club which is eminently more saleable or to make a fist of this football lark and see what happens. The likelihood in my own eyes, is that he will jump ship at the first opportunity if he can claw back some of his money and subsequently call in his loans when he does, including the ‘big loan’ which paid off the original debt. But even if he isn’t able to sell immediately, for every season we’re in the Premiership, with a reduced wage bill and overall outgoings, he will continue to put a dent in his losses.

Either way, it leads you to wonder whether it’s all just spin from the club, in order to pacify a set of supporters he probably imagines he can now turn in his favour. Has Ashley reached the point where he thinks that reconciliation is a possibility. The inevitable question is though, why not just come out and say something if he intends to stick around? Tell everybody what the crack is and state your intentions. Otherwise bin the spin.

NUFCBlog Author: bowburnmag bowburnmag has written 234 articles on this blog.

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42 Responses

  1. I’m happy that we have a bit of stability at the moment. It’s been a long time. I’m just looking at the football, not querying the owner’s motives. Only he knows what they are. Doubt they’re as cynical as everybody thinks.

  2. As somebody said in thread from a few days ago, if he is losing this much, why didn’t he let it go to Moat who was only about 10 million short of the asking price. He could have cut his losses and would end up being better off in the long term.

  3. Wind up …. or winding up ….. that is the question!!!!!!

    All will be revealed in due course, but I know what I think.

  4. Why is everyone beliveing what they readin the Journal, its a crap-loid newspaper writing a load of toss just to get people to read it :(

    Yes he put money intothe club, yes it works out at 500k a week, yes he’s probably getting money back form ticket sale, tv & parachute payments but all in all, he owns the club, so its like any business, sometimes you get money, sometime you lose money, its no big deal!!

    Also, i’m fedup reading how we the fans need to know whats going on inside the club, where the moneys going etc if you owned a business, would you like it if every customer kept coming up to you & said, I want to know where you’re spending my money, i want to know this, that & the other, you’d probably tell them to wind their necks in & stop being so bloody nosey, wo why do we expect to know what is happening inside Ashleys business, the club?? we never kept on at FFS & Hall regards where they were spending the money, so why are we doing it with Ashley, if we carry on, he’ll sell to a loser & we’ll be wishing he ws still with us!!

    Personally, as long as he keeps the club out of administration & puts some money on now & then, I’ll be happy, as long as we are winning games, it’ll take time for us to get back where we were 10 years ago, fighting for a Europe place but thats not good enough for some fans, they want oit all yesterday!!

  5. Cyprus – you’re grumbling about a fair few different viewpoints there mind ;)

    To be honest, that was my caveat at the start of the article, it’s more than likely a rehash by Luke Edwards. I don’t think anybody wants to know the margins he’s making on a cup of bovril but it would be nice to know after he’s failed to sell us numerous times what he intends to do, even if it’s the usual rhetoric.

    Re your last comment, I think that’s the whole point of the article if I’m honest and the overhanging uncertainty off the pitch. Is he putting that much money in and what does that mean?

  6. Cyprus toon, great post, far to many fans get over involved, after all do we not just pay money to watch a game of football?

  7. Any time I hear anything about the finances at Newcastle I always laugh. So called ‘facts’ from people who claim to be ‘club insiders’, ‘personal friends’ or ‘in the know’ are often diametrically opposite and usually appear within a few days or weeks of each other.

    It seems like only a week or two ago we were ‘reliably’ informed that Ashley made £7m a month on the club, now we are equally reliably informed he is losing about £2m a month on the club. They can’t both be right, somewhere in the middle lies the truth and by the time we find out what the truth is circumstances will have changed.

    No supporter really knows whats going on financially at the club, and even when the fabled accounts are published, they are a sanitized version of a years worth of wheeling and dealing, not a point in time snapshot.

    Simple fact of the matter is this, love him or hate him, it is likely that Ashley is all that stands between us and financial ruin.

    That said, if he is having to spend £25m a year just to keep us afloat, even with the reduction of salaries and staff affecting the entire club, not just the playing staff, then it’s hardly any wonder he couldn’t sell the club. He’d have difficulty give us away!

  8. hammy69 says:
    February 25, 2010 at 12:14 pm

    Cyprus toon, great post, far to many fans get over involved, after all do we not just pay money to watch a game of football?

    ====

    I don’t think it’s that simple.

    We do indeed pay to watch a game of football but we also support a team, which is important to us.

    We don’t want to see our club go into administration and we want to see it do well. Since money drives a lot of what a football club does I think it’s natural for (at least some) fans to be curious about the club’s finances.

  9. so if he’s having to pump this sort of money into a finacially valuless business how come he expects to sell it for £100 + million …….. i’m fcked if i understand it !?!….maybe the clever lads can explain it.

  10. If he hadn’t sanctioned massive salaries for the Allardyce signings then he might not need to pump extra cash in now. The likes of Viduka, Cacapa, Barton, Smith, Enrique etc were all given big wages, and so were Gutierrez and Coloccini allegedly. The wages problem can’t all be blamed on Shepherd. If Ashley is having to put extra money in now then part of the problem is of his own making.

  11. While it’s true Ashley only has himself to blame for some of the silly salaries he is currently paying, he was only following a trend not just at Newcastle (set by the previous hierarchy) but in Premier League football in general. I think even the most partizan of the anti-Ashley brigade could blame him for that. Players salaries have been spiralling out of control for years and no-one has had the courage to challenge it. Perhaps that will turn out to be Pompey’s legacy to football. Somehow I doubt it.

  12. macas,your spot on there, its his loss and profit and its all down to him, if he had made a small investment then we would still have been in the top flight but i think the whole plan has been for us to purge the club of top earners and re modelling the club and relegation was a necessary part of that.

  13. I think that, no matter who the owner of a club is, relegation should never be part of a plan.

    Costs could have been cut while still in the premiership but they were not. A salary cap could have been introduced the day he took over, but it wasn’t. I think the vast majority of what we saw last close season, including putting the club back on the market, was a knee-jery reaction to relegation.

    However bad they were/are, finances didn’t get us relegated. Many other things had a fare more direct baring on that outcome.

  14. Sick of all the talk of Ashley and what he’s putting in – he owns the club – if he’s putting money in then he is actually giving it to himself. Also, add up all the cutbacks and then add up the turnover last year plus all the sales and I cant see how Ashley could be making a loss. Must be short of stories at the Journal ..again!

  15. As starkadder points out , football wages and transfer fees have been spiralling out of control for years now and it has to stop . When the likes of Manchester united , Liverpool and Ourselves have massive debts considering our fan bases and stadiums then what chance the rest . Portsmouth seem to be the first premiership club that will go to the wall , but how many more will follow . When we get promotion then next season we could well be one of the more financially healthier clubs , this means we will be able to compete in the transfer market with most teams . The result of this being with the addition of maybe 4 quality signings to add to what we already have is a midtable finish in our first season back . With a vastly reduced wage bill than under FFS and the same sort of revenue coming in and hopfully the likes of Kadar , Caroll , Krul making the grade at premiership level , then i can see us over the next 3 seasons being on level terms with the likes of Villa & Spurs .

  16. Look what he does is his business, he OWNS the club.
    And to comment on whether the club is still for sale or not is his perogative.
    No doubt every thing has it`s price and if offered the right amount i`m sure he would sell.
    But as I have stated prior in this blog he appears to be enjoying the teams recent success, he has reintroduced the policy of bringing in young prospects, that plus the salary cap coupled to an age limit on incoming players.
    All signs of a long term policy, were he to want out why would he impliment such plans ?
    And why are so many PL clubs changing hands these days, something we never saw in the past, could it be there`s money to be made ?
    With fifty million tv revenue , shirt and bums in seats money, advertising etc. should be enough income to generate a profit for any well run club, No ?

  17. Most clubs are in debt and losing money, it’s all about how much debt a club can sustain before having to start defaulting on debts and therefore going into administration.
    Portsmouths top earner is on a 50k basic wage but player bonuses were what eventually stuffed it (winning fa cup and european qualification – however all clubs have a bonus structure usually based on….

    Number of Games played
    League position
    Cup runs
    Goals
    Clean sheets

    the list goes on and on

    So if we’re paying Collo 60k a week he’ll prob get another 10k a week for clean sheet, 100k every 20 games he plays, 200k? for winning championship etc etc – you can see how this can easily mount up espec in the prem where the bonuses are likely to be twice that (utaka was on a basic of 30k but was actually taking home 80k because of bonuses!)

    I can’t imagine we’ve received all our transfer money from the likes of Bassong, Given etc as the majority of clubs like to pay over 3 years for depreciation purposes (standard in any business)

    We now have a sponsorship deal that pays us over the term of the sponsorship deal rather than all upfront as in the FFS days so I doubt we’ve even seen any of that
    This is also significantly less than our previous deal.

    Parachute payment / TV revenues in the championship are nothing conpared to the prem (Since 2006/7 the average Premier League team receives £45 million while a team relegated to the Football League Championship club receives £6.5 million for first two years and then drops to around £1 million!!)

    Whilst our attendances have been good they are still around 20% below capacity – if we’re also adding in lack of corporate sponsors etc that probably rises to 30% of revenues at least

    Even though we’ve cut the wage bill by 40 – 50% dependant on who you beleive it’s easily the biggest in the championship and probably bigger than a fair number of prem teams
    It’s quite easy to see how we’re losing money in my view and if we don’t get promoted this season we’ll be in the championship for quite a while!

  18. it should be fairly simple to work out if ashley is spouting a load of pap to be honest. it should just take a bit of nufc research which i cant be arsed doing as i know he is making money from us. anyone who beleives his spin is pretty much stupid really. Also as you can not split the man in two pieces it means if you believe this latest charm offensive on the toon army then you will also have to side with ashley over every other lie he has said. The man in my eyes is full of hot air and is and has always made money from nufc. WOW, someone says he has pumped in 25 million to keep us afloat this season as our wages are still high for a ccc club. Well unless i am missing something, he sold players to that equiv in the summer window – so there is your money that has been pumped in straight away. none of it has come from his own ‘very generous pocket’ but infact, it has been self generated through the sale of players.
    getting back to the original idea of if he is making any profit or not – if anyone can be bothered…. lets say we had 80 million debt when the turd bought us, you MUST deduct the amount that is the stadium extension as this would not represent an acurate figure of day-to-day debts made or lost through running of the club… so what was our player etc running debt? It was something in the region of 33 million (as the amount owed on stadium was 47 million). Lets then look at the three years BEFORE ashley turned up and see who we have bought and add them all together to see the cost of purchase price only on players. Then see how much we got for them same players when they left. That will give us the figure we have wasted or lost on purchases against selling in those three years – i bet it is massive – we have over 23 million of loss just on owen and boumsong. All of these losses but only around 33 million of player debt too eh. I bet we would be stunned at how much we had lost on players on just those three years alone, let alone going further back.It would prob be well over 50 million loss in three years…. but still only debt around 33 million atributed to players and running costs.
    Now look at ashley…. he has spent ZERO money in all the time he has been here on players..seriously….nothing at all. So if we could under the previous management spend probably around 50 million plus on players minimum in even just the three yeas before ashely came in, and with much less tv revenue and cheaper ticket prices and all the other things… how come ashley can have increased revenue, have no outlay on players at all plus sell three seasons worth of season tickets to many of us plus raise tickets by 10% and see tv revenue go through the roof and also claim no debt at all (which in itself saves millions every year on intertest) and yet still proclaim to me making less money than under FF and also be losing 20 million a year……….load of crap and spin to win over the gulable fans that some of us are. forget figures HE tells us and what his books show…. they mean nothing. Use your heads and just stop and think about it for a second.

  19. I’ve never been particulary pro or anti ashley but I’m happy if he’s making a profit as long as we get promoted, finish mid-table, playing good football (at home at least) and challenging for uefa cup football.

    Champions league would be nice but realistically that’s for the arab billionaires and american debt laden clubs. At least we’ll be here in 20 years time if Ashley’s still at the helm and I can take the odd uefa cup run and maybe 2-3 fa cup finals in that time. Rather that than be Pompey.

  20. Financial-topic aside first.

    What exactly happened to the training field??? is it cursed or the players now easily prone to injuries????

    Till now, i really hardly see a full-squad yet. Even before the latest transfer window.

    NEWCASTLE United will be without Jose Enrique, Peter Lovenkrands, Wayne Routledge and Nicky Butt for the weekend trip to Watford.

    haiz.

  21. Financial-topic aside first.

    What exactly happened to the training field??? is it cursed or the players now easily prone to injuries????

    Till now, i really hardly see a full-squad yet. Even before the latest transfer window.

    NEWCASTLE United will be without Jose Enrique, Peter Lovenkrands, Wayne Routledge and Nicky Butt for the weekend trip to Watford.

  22. Kinda felt gutted not to see the first 3 players playing.

    I wonder when will we have a full squad that can last at least 4-5 matches without any injuries.

    haiz.

  23. toonsy… it says just 70 million debt..is that taking into account 47 million on the stadium? i am sure it is. that makes just 23 million debt, stadium aside. Ami wrong – thanks.

  24. angelofdeath….. its still better this season for injuries i think than normal. usually we have a complete mare all season. we only really miss routledge and loven at minute. who ares about butt. with ay luck he will be fit again once we have already secured promo!

  25. It also says we were losing 30 million a year and had no further assets we could borrow against and that was when we were in the prem!

    I don’t even like the fat tw£t but it’s pretty obvious he’s supporting the club financially at the moment – I don’t feel to sorry for him as he’ll eventually get it all back if we get promoted, obviously if we dont get promoted he’s chucked his cash down the toilet.
    We can hardly slag him off for subsidising the club and getting it on a sound financial footing even if it is in his own benefit as it’ll make the club a llot easier to sell when we get promoted (which I think he will def do)

  26. Ya, i agree,the injuries this season is way way way much lesser than previous, but i do hope we can have a full squad that can last at least 4-5matches.**butt inclusion is not needed**.hehes.

    The good thing is that,when one player is down injured,the other player right now can swiftly “replace” him.that’s quite rare in previous season.

    At Start, we have shola bagging goals like crazy.Then he is down with injury.

    Harewood came in and sort off “replace” him. After his Loan deal finsh,

    We have Lovekrands.But Now he is down.So who is gonna “replace” him????

  27. toonsy…. it all means nothing mate. Its all about who you belive. In 2007 the debt was 70 million but lo and behold, when ashley takes over and gets his high flying acocutnants to twist the figures in any direction he wants they say its 124 million… wtf did that figure come from. also, the whole article has several areas that are not factual, for instance having to pay off all the debt when he bought it… he didnt, he only had to pay off the stad. It all begs the simple question….. why is ashley hanging onto the club for grim death instead of selling it?? he wanted 80 million form moat but moat only hhad 70. so… why not seel for 70 million instead of keeping it nad having to pump in another 20/25 (if you believe a single word)!

  28. as someone already pointed out, there was that article a few weeks ago saying he’s making money each month off the club. honestly, whether he’s making or losing money, who cares? he owns the club, and thus has every right to spend/not spend where he sees fit. he’s paid off the debt we had, and got us steady financially despite being relelgated. i’m by no means a big fan of the guy, given the mistakes he’s made, but credit where credit is due.
    we’re (fingers crossed) on track for promotion, which is the ultimate goal, and getting back up with reduced running costs will only further help us moving forward.

  29. Craig – Perhaps because he never really wanted to sell in the first place?

    We are seeing things now that make me think maybe he is here for a while. Things such as the scouting network, sensible buys, relative stability.

    The amount of debt is kind of irrelavant I’ll agree. It’s just a number. The key thing in those links that I supplied is the fact there was nothing else to borrow against so we would have run out of money under Shepherd regardless, the only difference being that Sir Pie-a-lot didn’t have a personal fortune to fall back on and bail us out.

  30. What people have to understand is it’s not as simple as saying we brought in £20 million in sales so how can we be losing money, I think the club could be break even if going off P&L but cashflow wise we are struggling, that would mean Ashley puts it in as a loan to cover costs like players wages etc.

  31. The clubs debt wasn’t ‘just £70 million’ when he took over, after he had bought SJH’s shares but before he bought the rest the club announced a loss of £33 million for the previous year which Ashley had to pay for.

    You also have to include the stadium debt too as the club has continually made repayments on the loan only to borrow back on it again to cover running costs, so we’ve only been servicing the interest on the loan rather than paying any of it off.

    Also where is the talk of Moat only having £70 million to buy us that people seem to be taking as fact? Moat didn’t buy us because he couldn’t afford to do what Ashley is doing now which is putting money in to support cashflow and he couldn’t get an overdraft off anyone as the club is technically insolent.

  32. rangerman , you seem to know what your talking about so could you please explain to me …if the club is technically insolvent how it has a valuation of £100 + million ?…

    …thanks.

  33. @komfort – same way sullivan and gold bought west ham for 50 mill even tho club was completely crippled financially along with numerous people who have paid good money to Portsmouth thinking they can turn it round or at least get a chunk of money – pure speculation mate – theres no real business sense in owning a football club, however you can take a couple of mill in dividends and pay yourself a fiar whack while all the while loaning the club money at a lowish interest rate ( but at least interbank rate + 0.5) so you’re quids in really, you’ll eventually get your loans back unless club goes to the wall!

  34. Komfort – Because what we value our players at at their book price through amortisation is not necessarily what they are worth, for example Steven Taylor’s book price is £0, so while we would struggle to borrow money as our assets are viewed as negative by book price this might not be a true reflection of how much our assets are worth.

    You wouldn’t just be purchasing the assets either, you’re buying the name, the brand and the potential which isn’t taken into consideration when valuing assets.

  35. Portsmouth will become the first English Premier League club to go into financial administration on Friday, after they missed a deadline for a potential takeover.

    Andrew Andronikou of accountancy firm UHY Hacker Young told The Associated Press on Thursday that “we made a conscious decision to put it into administration tomorrow morning.”

    Four undisclosed buyers failed to prove they had the funds to buy the club by a Thursday afternoon deadline and Andronikou, who will act as the administrator, will issue a detailed statement on Friday outlining how the club will be restructured and made attractive for a potential buyer.

    Pompey chief executive Peter Storrie told Soccernet: “We are all waiting to hear what happens next. The staff face savage cuts. There are three parties, though, interested in taking over the club, so I don’t anticipate it will be in the hands of the administrator for long.