Post by QPR Report on Jan 23, 2009 6:44:02 GMT
That's a pretty impressive loss
Independent George Caulkin
Newcastle United report £34.1m loss
Mike Ashley recently announced that the club were no longer for sale, having failed to find a buyer
The black hole at the heart of Newcastle United’s finances has been revealed with the first set of figures from Mike Ashley’s disastrous spell as owner showing that the company set up to run the club made a pre-tax loss of £34.1 million.
The report also discloses that, of the annual turnover of £100.9 million, the wage bill amounted to £73 million, or 72 per cent of Newcastle’s income. About 60 per cent is generally accepted as the safe limit. This may explain why the club have been eager to cut the salaries of senior professionals such as Michael Owen, Nicky Butt and Steve Harper, all of whom are out of contract this summer, provoking disaffection in the dressing-room.
The accounts for St James Holdings Limited, the company established to buy and operate Newcastle, which it wholly owns, put into perspective recent problems on and off the pitch. While Ashley has promised to support the club through trying economic circumstances, it is clear that previous levels of spending are unsustainable.
The deficit of £34.1 million for the year ended June 30, 2008, includes £20.3 million that arose directly from the running of the club. It confirms that, after buying Newcastle for £134 million, Ashley has spent another £100 million to keep them afloat, including £70 million on cutting debts.
Ashley recently announced that the club were no longer for sale, having failed to find a buyer. The limited activity in the transfer market this month may be because the owner appears caught between a desire to slash costs and the need to revitalise a team caught in a relegation battle. As the report states: “the acquisition of players and their related payroll costs are one of the most significant and high-profile risks facing the Group.”
Under Ashley and Dennis Wise, the executive director (football), the club have bolstered their academy, although it was a dispute over transfer policy that led to the departure of Kevin Keegan as manager in September. Joe Kinnear, Keegan’s successor, has made similar criticisms of Newcastle’s wildly unbalanced first-team squad and the concern is that refusing to invest further in players will cause the cycle of underachievement to continue.
The figures provide an insight into the dangerous position Ashley inherited when he took the club into private hands and, while he remains an unpopular figure among supporters, the tenure of the Hall and Shepherd families, who previously controlled Newcastle, invites scrutiny.
Ashley has admitted publicly that he was unaware of the financial difficulties that faced him, having chosen not to study the club’s books before his purchase.
The accounts filed at Companies House show that more than £2.1 million was spent in compensation to former directors, including Douglas Hall and Bruce Shepherd, for “loss of office”, a huge sum for a company of Newcastle’s stature, while Ashley’s impatience at the slow rate of progress on the pitch also came at a high cost. The dismissal of Sam Allardyce, the former manager, and his backroom staff 12 months ago resulted in a payout of nearly £4.6 million.
If there is some empathy for the position in which Ashley found himself and a recognition that he has attempted to run Newcastle on a sounder footing, it will be balanced by the tactical blunders that have characterised his regime. A lack of communication with supporters has roused anger, as did the appointment of Wise and the undermining of Keegan with the signing of players such as Xisco and Ignacio González, which he had not approved.
While Ashley bought the club and took on the debt with his own money, at some stage the sportswear retailer expects to be reimbursed. The report shows that St James Holdings Limited was loaned money to buy and re-finance Newcastle and owes Ashley £238 million. He was understood to be seeking about £250 million when the club were officially for sale and would still accept a similar sum.
Matters are unlikely to improve during the present financial year, with Newcastle’s season-ticket sales and home crowds dropping appreciably, their income from corporate boxes also falling and a low finish in the Barclays Premier League table beckoning. In protest at Ashley’s management, the Newcastle United Supporters Club has been promoting a boycott of all official club merchandise.
Kinnear has been pressing Ashley to sanction the signing of five new players this month to “protect his investment”, but has stated that he will be be given only £10 million to spend on top of what he generates through sales. Kinnear’s first signing as Newcastle’s manager is expected to be confirmed today when Peter Lovenkrands, who is out of contract, joins until the end of the season.
The Guardian
Newcastle wage bill increases Ashley's losses and gloom over Tyneside• Parent company shed £34m in first year as owner
• Relegation would cost tycoon a fortuneMatt Scott
The Guardian, Friday 23 January 2009
Mike Ashley suffered £34m of losses in Newcastle United's parent company in his first 12 months as the club's owner. The news emerges less than a month after the sportswear retail tycoon withdrew Newcastle from sale. The losses massively exceed the "£20m per year but no more" which Ashley declared last September "was my bargain" upon putting the club on the market.
Ashley is the sole shareholder of St James' Holdings Limited, whose accounts to 30 June last year – which were signed off by Ashley a fortnight ago and include a £4.6m pay-off to the former manager Sam Allardyce and his backroom staff – state the losses had to be covered "from reserves". There was not, though, any mention in the accounts as to whether the losses had influenced his decision to attempt to sell the club. Newcastle's spokesman could not be reached last night.
Alarmingly, the deficit came after a player-trading profit of £10.8m and it looks as if there will have to be some radical surgery of Newcastle's finances to put them back on an even keel.
Despite a healthy turnover of £100m the club continues to be weighed down by a wage bill of £73m. The stated wages-to-turnover ratio of 72% does not look like improving in the near future after another year without European football, added to which is the impact of falling gates on Tyneside and the uncertainty surrounding the club's shirt sponsorship deal with Northern Rock.
Ashley explicitly referred in the accounts to his club's reliance on the "Premier League's new three-year television deal", meaning that Newcastle's current league position of two points above the relegation zone and without a win in six matches represents another big risk.
With relegation Ashley would stand to lose a fortune. On 30 June last year he had £238m tied up in the club in the form of unsecured loans. Ashley, who cleared the club's £160.7m of external debts 16 months ago, has not been charging interest on his loans. However, there is a facility outlined in the accounts for it to accrue to Ashley at 0.5% above the Libor, or London Inter-Bank Offered Rate, which at current rates would earn him £5.6m a season, still less than the club was paying on its loans under the previous regime.
Keith Harris, the banker engaged to sell the club for Ashley, said earlier this month that these "soft" loans made Newcastle a sound investment. "One of the things that I thought was very attractive was that Mike Ashley put his hand in his own pocket and paid off all the debt," he said. "So in the case of Newcastle what you were acquiring would have meant not looking at having to worry about what do I do when the banks we want their money back."
Yet that picture now appears to have changed as two months ago the club took out a mortgage with Barclays for an unspecified sum. Since June, Ashley has also added another £10m in additional funding. But despite that cash inflow, there is no evidence of Newcastle becoming more active in the transfer market.
The club's sales last summer of Emre, Abdoulaye Faye and James Milner raised £13.6m, with an almost exact equivalent sum spent on the purchases of Jonás Gutiérrez, Danny Guthrie, Fabrizio Coloccini and Xisco. So far in this transfer window no cash has been released for the manager, Joe Kinnear, to strengthen the squad, although the club has made offers for two France-based players.
But at least Kinnear is still in work. There is a fascinating insight into the costs associated with Newcastle's numerous recent managerial changes. In May 2007, Glenn Roeder was replaced by Allardyce at a cumulative cost of £1.13m. When Allardyce and his vast backroom staff left the club 12 months ago "costs relating to this reorganisation" totalled £4.6m.
Independent George Caulkin
Newcastle United report £34.1m loss
Mike Ashley recently announced that the club were no longer for sale, having failed to find a buyer
The black hole at the heart of Newcastle United’s finances has been revealed with the first set of figures from Mike Ashley’s disastrous spell as owner showing that the company set up to run the club made a pre-tax loss of £34.1 million.
The report also discloses that, of the annual turnover of £100.9 million, the wage bill amounted to £73 million, or 72 per cent of Newcastle’s income. About 60 per cent is generally accepted as the safe limit. This may explain why the club have been eager to cut the salaries of senior professionals such as Michael Owen, Nicky Butt and Steve Harper, all of whom are out of contract this summer, provoking disaffection in the dressing-room.
The accounts for St James Holdings Limited, the company established to buy and operate Newcastle, which it wholly owns, put into perspective recent problems on and off the pitch. While Ashley has promised to support the club through trying economic circumstances, it is clear that previous levels of spending are unsustainable.
The deficit of £34.1 million for the year ended June 30, 2008, includes £20.3 million that arose directly from the running of the club. It confirms that, after buying Newcastle for £134 million, Ashley has spent another £100 million to keep them afloat, including £70 million on cutting debts.
Ashley recently announced that the club were no longer for sale, having failed to find a buyer. The limited activity in the transfer market this month may be because the owner appears caught between a desire to slash costs and the need to revitalise a team caught in a relegation battle. As the report states: “the acquisition of players and their related payroll costs are one of the most significant and high-profile risks facing the Group.”
Under Ashley and Dennis Wise, the executive director (football), the club have bolstered their academy, although it was a dispute over transfer policy that led to the departure of Kevin Keegan as manager in September. Joe Kinnear, Keegan’s successor, has made similar criticisms of Newcastle’s wildly unbalanced first-team squad and the concern is that refusing to invest further in players will cause the cycle of underachievement to continue.
The figures provide an insight into the dangerous position Ashley inherited when he took the club into private hands and, while he remains an unpopular figure among supporters, the tenure of the Hall and Shepherd families, who previously controlled Newcastle, invites scrutiny.
Ashley has admitted publicly that he was unaware of the financial difficulties that faced him, having chosen not to study the club’s books before his purchase.
The accounts filed at Companies House show that more than £2.1 million was spent in compensation to former directors, including Douglas Hall and Bruce Shepherd, for “loss of office”, a huge sum for a company of Newcastle’s stature, while Ashley’s impatience at the slow rate of progress on the pitch also came at a high cost. The dismissal of Sam Allardyce, the former manager, and his backroom staff 12 months ago resulted in a payout of nearly £4.6 million.
If there is some empathy for the position in which Ashley found himself and a recognition that he has attempted to run Newcastle on a sounder footing, it will be balanced by the tactical blunders that have characterised his regime. A lack of communication with supporters has roused anger, as did the appointment of Wise and the undermining of Keegan with the signing of players such as Xisco and Ignacio González, which he had not approved.
While Ashley bought the club and took on the debt with his own money, at some stage the sportswear retailer expects to be reimbursed. The report shows that St James Holdings Limited was loaned money to buy and re-finance Newcastle and owes Ashley £238 million. He was understood to be seeking about £250 million when the club were officially for sale and would still accept a similar sum.
Matters are unlikely to improve during the present financial year, with Newcastle’s season-ticket sales and home crowds dropping appreciably, their income from corporate boxes also falling and a low finish in the Barclays Premier League table beckoning. In protest at Ashley’s management, the Newcastle United Supporters Club has been promoting a boycott of all official club merchandise.
Kinnear has been pressing Ashley to sanction the signing of five new players this month to “protect his investment”, but has stated that he will be be given only £10 million to spend on top of what he generates through sales. Kinnear’s first signing as Newcastle’s manager is expected to be confirmed today when Peter Lovenkrands, who is out of contract, joins until the end of the season.
The Guardian
Newcastle wage bill increases Ashley's losses and gloom over Tyneside• Parent company shed £34m in first year as owner
• Relegation would cost tycoon a fortuneMatt Scott
The Guardian, Friday 23 January 2009
Mike Ashley suffered £34m of losses in Newcastle United's parent company in his first 12 months as the club's owner. The news emerges less than a month after the sportswear retail tycoon withdrew Newcastle from sale. The losses massively exceed the "£20m per year but no more" which Ashley declared last September "was my bargain" upon putting the club on the market.
Ashley is the sole shareholder of St James' Holdings Limited, whose accounts to 30 June last year – which were signed off by Ashley a fortnight ago and include a £4.6m pay-off to the former manager Sam Allardyce and his backroom staff – state the losses had to be covered "from reserves". There was not, though, any mention in the accounts as to whether the losses had influenced his decision to attempt to sell the club. Newcastle's spokesman could not be reached last night.
Alarmingly, the deficit came after a player-trading profit of £10.8m and it looks as if there will have to be some radical surgery of Newcastle's finances to put them back on an even keel.
Despite a healthy turnover of £100m the club continues to be weighed down by a wage bill of £73m. The stated wages-to-turnover ratio of 72% does not look like improving in the near future after another year without European football, added to which is the impact of falling gates on Tyneside and the uncertainty surrounding the club's shirt sponsorship deal with Northern Rock.
Ashley explicitly referred in the accounts to his club's reliance on the "Premier League's new three-year television deal", meaning that Newcastle's current league position of two points above the relegation zone and without a win in six matches represents another big risk.
With relegation Ashley would stand to lose a fortune. On 30 June last year he had £238m tied up in the club in the form of unsecured loans. Ashley, who cleared the club's £160.7m of external debts 16 months ago, has not been charging interest on his loans. However, there is a facility outlined in the accounts for it to accrue to Ashley at 0.5% above the Libor, or London Inter-Bank Offered Rate, which at current rates would earn him £5.6m a season, still less than the club was paying on its loans under the previous regime.
Keith Harris, the banker engaged to sell the club for Ashley, said earlier this month that these "soft" loans made Newcastle a sound investment. "One of the things that I thought was very attractive was that Mike Ashley put his hand in his own pocket and paid off all the debt," he said. "So in the case of Newcastle what you were acquiring would have meant not looking at having to worry about what do I do when the banks we want their money back."
Yet that picture now appears to have changed as two months ago the club took out a mortgage with Barclays for an unspecified sum. Since June, Ashley has also added another £10m in additional funding. But despite that cash inflow, there is no evidence of Newcastle becoming more active in the transfer market.
The club's sales last summer of Emre, Abdoulaye Faye and James Milner raised £13.6m, with an almost exact equivalent sum spent on the purchases of Jonás Gutiérrez, Danny Guthrie, Fabrizio Coloccini and Xisco. So far in this transfer window no cash has been released for the manager, Joe Kinnear, to strengthen the squad, although the club has made offers for two France-based players.
But at least Kinnear is still in work. There is a fascinating insight into the costs associated with Newcastle's numerous recent managerial changes. In May 2007, Glenn Roeder was replaced by Allardyce at a cumulative cost of £1.13m. When Allardyce and his vast backroom staff left the club 12 months ago "costs relating to this reorganisation" totalled £4.6m.