Newcastle United Accounts 2017-18 | Vital Football

Newcastle United Accounts 2017-18

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Rexn

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The accounts have been released (late again). Full details and a review will be available within a couple of days of Companies House publishing them. However, it is interesting to see as compared with our estimates.

Turnover £178.5m against our expectation of c£180m
Wages £93.6m, expected c £95 million
Other operating costs £24.6 million, expected c£25 million
Commercial revenue £26.7m, expected c£25m

We didn't know about how much would be taken out in loan repayments to Ashleigh but expected a change in cash position minus loan repayments to be around £80 million. In fact, a bit further out than in other areas as £42.1 million plus £33 million loan repaid (expected £30 million), so £75.1 million. It should also be remembered that player sales took place in the current financial year, not the previous one.

In broad figures, a Newcastle Manager should have a transfer budget (ball park) of a net £100m this summer, subject to confirmation from the more detailed accounts which will give more clues to transfer instalments.

In short, if I were Rafa, I would be inclined to walk on the basis that Ashleigh's public promise of "every last penny" had not been kept.

P.S. I'm a bit hard up this year so if any journalists who read this want to contact me for deeper analysis, I'm open to negotiate a fee.
 
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How does the income from a transfer, say Sissoko, get detailed in the accounts Rexn? I understand the fee of £30m was in £5m a year instalments . Conversely with incoming transfers. Is the deal broken down if an instalment scenario arrangement has been agreed?
 
Good question.

First, his incoming transfer fee is written off over his contact so if we paid £2m on a 4 year contract, that is £500k per year notionally comes off. If we had him for 2 years, his cost to us is effectively £1m, so if sold for £30m, shows a £29m paper profit.

Next comes the cash side. Let's say he is paid for over 5 years, that is £6m per year. Therefore, in the first year, it counts as £6m cash in, £6m in current assets (i.e. cash that is due within a year and the balance of £18m as long term debtors. In the next year, £6m comes in as cash, long term debtors goes down by £6m.

I hope that wasn't too concise, any questions, please ask. (I know I changed it to 5 times £6m and missed out two steps).
 
Thanks Rexn, but what I'm struggling with is: if we made £29m paper profit, how does that show in the accounts? We know it is to be paid in instalments.
 
If it makes it any easier, a company has to produce two lines of accounts; Profit and Loss Account which shows whether there has been an increase/decrease in assets and the second is a Balance Sheet which shows assets (what is owned) and liabilities (what is owed).

So there are two parts to the accounts. The £29m (or whatever it was) offsets paper losses, bearing in mind he was sold in the Championship season, so effectively reduced losses in 2016-17. However, the cash side is different to paper profit.

The sale produces assets. We would ordinarily expect the asset to be cash but if not cash, then it comes in the form of debtors, people who us us money that will come in at a later date.

After the profit (or reduction in loss) is realised on the sale, then the asset values need shuffling over the period of payments, four or five years, whatever.

In some ways it can be equated to a "marker" in the gambling world. first instalment is cash, the other 4 instalments are markers.

Does that help?
 
Whats more worrying is the club want to revert to the old transfer ways of buying younger players and improving them to sell for a profit. The foreign market has changed now and you aren't going to pick up your Cabaye's for 2.5m but will end up paying upwards of 10m for shit like Riviere.

The way forward is to develop your academy and hopefully bringing through players like Carroll and Longstaff.

No word from the fat pig regarding Rafa's conditions but listeneing to the fat, four-eyed **** Charnley they are not going to be met. We'll probably go for a foreign coach who seem to be the dogs bollocks at the minute, but our foreign coach will be more in the class of the Fulham and Huddersfield standard rather than the Spurs and Man Ciy standard.
 
'Benitez wants Champions League win before he's 70', is a headline on an article I'm reading now. Penfold is a bigger prick (if that's possible) than I thought with his comments.
As he unveiled annual accounts this week that showed an £18.6 million profit, Lee Charnley, the managing director, said: “Has a player turned round and said, ‘I’m not signing for Newcastle United because of the training facilities?’ No. Did it stop us getting out of the Championship? Did it stop us finishing tenth? Did it stop us having a good season in this campaign? No.”
Sums the the expectations of the club.
 
It didn't stop us getting relegated twice and fighting relegation annually either. The stupid fat, four-eyed **** thinks we've had a good season. Only at Newcastle can abject failure warrant a 100% payrise.
 
Can't believe he's said that, what a fucking arsehole. The fact is loads of players have said no to Newcastle since Ashley has been here and employed that little sycophant, in fact not just said no, laughed at the pitiful deal that was offered.
Did it stop us getting out of the championship or finishing 10th, jesus christ listen to that ambition.
 
In Ashley world the season has been a complete success. Profits made and ground full every week. So the fans must be happy right?
 
Part of an article in this mornings Times. Make of it what you will, my thoughts are of scheming, manipulating and any other word applicable:

Newcastle United appear to have pulled off an unprecedented feat in having a smaller wage bill in the Premier League than the Championship, but finance experts believe that accounting tools have been used to make the club look more attractive to potential buyers.

The club’s latest accounts show that Newcastle’s wage bill in 2017-18 was £93.6 million, nearly £20 million less than the £112.2 million in the previous season in the Championship.

On paper, Newcastle are the first club in the history of the Premier League to have achieved such a feat. But Kieran Maguire, a lecturer in football finance at the University of Liverpool, said it appeared that some £22 million in “future salary costs” for 2018 and 2019 had been included in the 2016-17 accounts, based on salaries for players not expected to be in the first-team squad.

The figure appears in the accounts under “provisions for liabilities”, and the latest annual report for Newcastle United Ltd also shows that the accounting tool allowed £9.7 million to be taken off the 2017-18 wage costs.
The lower salary costs helped Newcastle report an £18.6 million profit last season compared with a £41.6 million loss the year before, with wages down at 52 per cent of turnover, one of the lowest in the Premier League. Maguire believes that a more realistic figure of Newcastle’s wage bill would have been £103 million last season, and £90 million for the season before.
 
To be honest, McNamee, I wouldn't pay too much attention to that article. In context, the Championship wage bill was up to £112 million from £75 million in the relegation season before dropping to £95 million back in the Premier League.

There were 2 or 3 big issues, depending on how you categorise them.

In no particular order, the first was bonuses paid to the players for securing Ashley's access to turnover up by £100 million compared with the TV revenues before TV contract revisions.

The second is squad rationalisation.

Part A, using Coloccini as an example, his contract was paid up, albeit perhaps over a period of time, allowing Rafa to focus on a back line to deal with the Championship and with the potential to grow. Colo alone might account for £10 million (+ loyalty bonuses) of that.

Part B was the sale of McLaren's super buys. If they did not request a transfer, then "loyalty" bonuses would have to be paid as a part of the nature of the contract. Typically, these are a percentage of the total contract value. Bearing in mind that the long contracts that some like Wijnaldum, Janmaat and Sissoko were on were hailed as successes when they signed, the amounts would be considerable.

Ashley's team decided to take the hit in the relegation year, offset by profits on disposal of players, also keeping within Financial Fair Play. Transfers reduced the loss by £42.3 million. The remaining loss could be offset against Ashley's tax bill. For his own accounts, he has Debenhams to offset his tax bill this year.

Some people raise their profile by making claims. Others of us remain relatively anonymous and don't create fake news.
 
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