newcastle's £90m debt

[liverbird04]

Newcastle's £90m debt

By Mihir Bose (Filed: 12/01/2006)

 

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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.

 

 

http://sport.telegraph.co.uk/sport/main.jh...12/sfnnew12.xml

[Guest JV]

Sounds like Leeds.

[Sir Tokyo Sexwale]

I'd expect better from the Telegraph - how does 2nd most supported team equate to 2nd BEST supported team? Their fans are gash

[Guest efcrmagic]

I'd expect better from the Telegraph - how does 2nd most supported team equate to 2nd BEST supported team? Their fans are gash

 

But they get 50,000 of your most passionate, bSKYb believing, fat, bald, shirt waving, t*** like fans every week.

 

If Sky say they're the best, most loyal in the 14 year of football excistence then who are you or me to argue, eh?

 

Think about it.

[Maldini]

they don't wear shirts...how can you argue with that?

[ozziecazzie]

fire sales this summer!

[drdooom]

With the exception of Shearer, don't think any of their first teamer is above 30.

They still have to replace all of them

[AE]

If I was a toon fan I would be really ****ed off with my board. All the **** about shirt prices etc a few years ago and now the fact that they actually take money out of the club.

 

Thank goodness we have Moores.

[liverbird04]

"The revenue looks to be down to £81m. The costs look to be up to £98m. The payroll will be roughly £48m.

 

The target of having wages at 50% or less of the turnover will be failed again. The figure looks likely to be over 59% with no managerial change and to over 62% if there was a change of manager.

 

The business would make a loss of £17m. This would reduce the net assets of the business to around £11m, and make the shares worth less than a penny each. If the dividend for 05/06 is paid in cash, and is the same size as the previous 5 years then the assets of the business would be around £7m. (note that in 2000 the club lost £15m and the major shareholders still demanded share dividends costing £3.8m)

 

It is likely that these sizes of losses will also drain the cash the club have in the bank, almost to zero.

 

At this point the club is close to insolvency. According to the nufc.com web site Emre, Boumsong, Dyer, Owen, Faye, Milner, Parker, Luque, Ameobi, Taylor, and Babayaro all have contracts with the club that extend to at least the end of the 2008-09 season. This is fine for a side playing in the Champions League, or at least the Uefa Cup, and bringing in more money all the time, not so for a club with no money, and a dwindling income.

 

If season ticket sales look poor for next season expect that the club may have to sell of a large number of the players on long-term contracts."

 

 

 

 

don't know what it all means but it doesn't sound good to me.sounds like leeds united .

http://www.nufc-finances.org.uk/future.htm

[Eskimo]

don't know what it all means but it doesn't sound good to me.sounds like leeds united .

http://www.nufc-finances.org.uk/future.htm

 

A lot of guess work there....

[Guest redmilky]

I remember looking at their accounts last year i think (maybe year before) and thinking they were in relatively good shape.

 

Just had a very quick scan of their latest and it certainly doesnt look terribly healthy for the year ahead. That said, i would be of the opinion that the press reports, and that website, are being pessimistic. Particularly in light of the ability of certain characters to bail them out with cash injections.

[Ronnie Whelan]

The big thing from that article is Fat Freddy and his mates taking a dividend from a loss making business. Outrageous.

[Scally Bob]

At least they own their own ground

For now. Fat Freddie was buying up shares last week and it's rumoured he wants to take the club private again. He won't be doing it for the benefit of the club. If he launches a takeover then does a sale and leaseback on the ground he could easily take a wad of cash out.

 

Would you bet against it.

 

Newcastle are a joke and their idiot fans (who believe their own publicity) are a joke as well.