Page 1 of How long until Newcastle go bankrupt then?

Haven`t heard a whisper in one of their players leaving in a while now and they have ludicrous wage bill (Even when they were in Premiership they did).

From estimates at the end of last season by Daily Mail the lowest earners in the first team squad were on £30k a week and they were: Steve Harper, Ryan Taylor, Sebastian Bassong.

Even on £40k a week you only had players such as Ameobi, Guthrie, Steven Taylor, Cacapa (who they`ve released so at least one down).


Raise the stakes to £50k a week you have- Gutierrez, Beye, Nolan, Xisco

£60k a week- Butt, Smith, Viduka, Geremi, Barton, Enrique, Collocini

£70K a week- Duff, Martins.



In summary, they are f*cked. This has been obviously known for a while, but with debts of £100million still with money borrowed against season ticket sales for the next 16years or so, they really don`t have much income for the season ahead. Getting rid of all the high earners was the big thing to help them survive.

You`d guess that they are going to end up paying part of the wages for most of those players now, as any player that may be of interest to other clubs is being held out to help force the wages a new club will have to pay plus the price paid.

The later it gets in the transfer window the less players that will be available on free transfers to come in to replace the players going, so looks like they could end up with a team of youth players with possibly the players that no other team wanted on ludicrously high wages.

I just wish Shearer had signed up for the job on a permanent basis.

www.last.fm/user/1mills

I`m sure (!) whoever wrote the contracts from Toon`s side had relegation wage reduction clauses written in. I doubt even a team like Man Utd would not have those in just in case. What that reduction is is hard to judge though. (Football manager sets them at 25% by default though ;-)).

The parachute payment for 2007-08 was £11.2million but I guess that would be higher for the season just past.

I suspect season ticket sales will be roughly same as last year but obviously that may drop if they do poorly in the Championship. They may have enough income to service the debt but whether they have enough to pay the running costs of the club is a different matter altogether.

Obviously the big miss will be the TV money and they are surely going to have to reduce the wage bill even further somehow.

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Could someone please
Remove these cutleries
From my knees...

I`ve seen quite a few articles that have stated that ludicrously Newcastle did NOT have relegation reduction clauses in.

I assume Man Utd etc would have them in because they aren`t run by a bunch on clowns.

Also last week it was reported that season ticket sales were to be only 15,000 but Newcastle have refuted this by saying that it is actually 25,000.

Like I said though they borrowed money against those season ticket sales so that money is set aside of the debt repayments on £100million.

They are in much worse position that Leeds ever were and that was when they expected to get money in for players and reduce the wage bill at the beginning of the summer.

Suprisingly no transfer requests have gone in either, which means the players will get a chunk of any transfer fee. Obviously no one really wants to be there, but know the club actively need to get rid (even of the players they would rather keep) so the club will be trying to sell anyway.

www.last.fm/user/1mills

Yeah, I heard the rumours about no relegation clauses but surely even a clown lawyer would`ve made sure it was in there? Surely? :/

There are usually ways to renegotiate debt so I think it is the wages that are the killer and, as you rightly said, the players aren`t going to put in transfer requests.

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Could someone please
Remove these cutleries
From my knees...

Until Ashley takes his fingers out of his ears and stops going Lah Lah Lah whenever anyone asks about the financial problems nothing will change.

There`s not a manager to put in a transfer request to which also means there`s not a manager to work on any kind of strategy to get players in or out. At this rate they are going to start the season in the same state they finished the last and they will be heading down the tubes quicker than Gordon Brown (and that`s bl**dy quick).

Snaps

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I used to be with it, but then they changed what `it` was.
Now, what I`m with isn`t it, and what`s `it` seems weird and scary

I thought Ashley had cleared most of the debt when he took it over??



YNWA
A.C.C
"Clarkson you infantile pillock" - J May, Top Gear, 9/11/2008

A Tribute - to remind us all of the good doc whilst his posting capacity is reduced. . . . . . . . . .

Quote:
But like any business with assets the club has debts. I paid £134 million out of my own pocket for the club. I then poured another £110 million into the club not to pay off the debt but just to reduce it. The club is still in debt. Even worse than that, the club still owes millions of pounds in transfer fees. I shall be paying out many more millions over the coming year to pay for players bought by the club before I arrived.

But there was a double whammy. Commercial deals such as sponsorships and advertising had been front loaded. The money had been paid upfront and spent. I was left with a club that owed millions and part of whose future had been mortgaged. Unless I had come into the club then it might not have survived. It could have shared the fate of other clubs who have borrowed too heavily against their future. Before I had spent a penny on wages or buying players Newcastle United had cost me more than a quarter of a billion pounds.

I knew that the club would cost me money every year after I had bought it. I have backed the club with money. You can see that from the fact that Newcastle has the fifth highest wage bill in the Premier League. I was always prepared to bank roll Newcastle up to the tune of £20 million per year but no more. That was my bargain. I would make the club solvent. I would make it a going concern. I would pour up to £20 million a year into the club and not expect anything back.


Just been looking around as I knew he cleared some of the debt, but knew he hadn`t done it all.

The above quote is from his statement when he said he was originally going to sell.

The fact that he felt the need to put in £20million a year to finance the club when they had full tv money and a full stadium, implies that there will be massive problems still now, as there is debt there and obviously a ludicrous wage bill that will soon put them in serious trouble if they can`t sort out.

I doubt they will be able to get the funding to get much further in debt that they are currently (Even if this is massively reduced from before) due to the state of the market and due to both the lowered income and ludicrous wage levels.

www.last.fm/user/1mills

This item was edited on Thursday, 23rd July 2009, 13:24

They`ve just been stuffed 6.1 by Orient in a pre-season match.

We all know that pre season matches aren`t necessarily about results but that is not looking good. As has already been said they could well be doing a Leeds.

Snaps

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I used to be with it, but then they changed what `it` was.
Now, what I`m with isn`t it, and what`s `it` seems weird and scary

An article on the Guardian website gives a bit more information, but also admits that putting Newcastle into administration is at least a consideration at the moment, especially if a new investor doesn`t come in.
Quote:

Mike Ashley remains optimistic about selling Newcastle United by the end of the summer and will resist the temptation to place the troubled Championship club in administration. Although Newcastle`s owner is unpredictable and, in the football sphere at least, has a track record of about-faces, a source close to the club said administration was "the last thing" on Ashley`s mind.

Indeed two "very serious" potential buyers are understood to have virtually completed exhaustive due diligence on Newcastle and would be in a position to seal a takeover in around two weeks were they to decide to proceed.

With Keith Harris, the executive chairman of the investment bank Seymour Pierce and the man brokering the sale, having now returned from a short break there are no obstacles to a speedy conclusion of the matter. Ashley`s problem, though, is that bidders have had second thoughts after realising the scale of the challenge they would be shouldering at St James` Park.

While Newcastle offers immense potential it is currently football`s answer to a once stately home gone to rack and ruin which will prove extremely costly, difficult and potentially emotionally draining to restore. Right now Ashley`s prospective successors are weighing up the benefits of possibly huge long-term gains against considerable short- and medium-term pain.

Immediate pitfalls include the annual player wage bill, currently around £65m and far too high for a Championship club, the £40m overdraft, Kevin Keegan`s outstanding constructive dismissal claim which could cost new owners as much as £8m to resolve, a £1m demand from former deputy chairman Douglas Hall and the sum of around £20,000 a week currently payable to ex-director of football Dennis Wise under the terms of his severance agreement.

Ashley, who has invested around £250m in Newcastle including a £100m interest-free loan, is asking £100m for the club and continues to hold out for a sum close to that asking price.

Were he to place Newcastle in administration - in which case the Football League would immediately impose a 10-point deduction on the team - Ashley would be the principal creditor. Although his losses at St James` Park could potentially reduce the multimillionaire sports goods magnate`s overall tax bill, the source stressed he remains committed to recouping some of his investment by finding a buyer.

Even so, if one does not materialise by autumn Ashley - who has currently placed an embargo on all transfer activity in the hope a take-over is completed before the end of August - will be forced to increase his investment on Tyneside by appointing a manager.

One consortium who will not be moving into St James` Park is the Profitable Group. The Singapore based investment company was never regarded as a serious contender by either Seymour Pierce or Ashley but nonetheless, Steve McMahon, its commercial director, expressed his disgust with Newcastle yesterday.

Explaining that the Profitable Group had ended its interest in buying the club due to a lack of "communication and response" from Ashley, McMahon`s words proved as hard hitting as some of the tackles the former Liverpool and England midfielder once inflicted on opponents.

"We have pulled out, how long can you hang on?," said McMahon. "We put in a bid two weeks ago and we have had no communications, no response, nothing. It really is poor form from Newcastle. I just feel sorry for the supporters up there. They deserve much, much better. They deserve to know what is going on."

Newcastle, still under the caretaker charge of Chris Hughton, are next at home to Leeds United in a pre-season friendly expected to attract one of St James` Park`s paltriest crowds in recent years.

The interesting points there, is that the £100million he paid off is currently still there as a interest free loan. I can only assume that will become interest bearing if a new owner comes in, or will at least have some kind of restrictive covenants on the new owners in terms of how it should be repaid.

The £40million overdraft would be a concern aswell as that will probably be incurring a higher rate of interest than any normal loans, but could also be recalled by the banks at short notice. Give the ludicrous wage bill they are probably going to need an even bigger overdraft to cover outgoings given their reduced income in the coming months.

Although the article claims that Ashley is confident of new investors coming in before the end of the summer, that has been the official stance since about this time last year, so I won`t put too much faith in that at present.


www.last.fm/user/1mills

A week from the start of the season, a month from the end of the transfer window.

Arguably the biggest (by a huge margin) wage bill in the championship, racked up by a number of players with (comparatively) little sell on value, diminished further by an inherent NEED to sell before any purchases can be made.

If this club is bought by the end of august, the new owners are going to be left with a bunch of players they cant sell, and will be overpaying until at least January. These are much the same bunch who hopelessly underperfomed and listlessly got themselves relegated last year without so much as a fightback.

No manager, no money, no (lets be honest here) real chairman or interested Board of Directors. Newcastle will struggle to survive one championship year, let along bounce straight back again. This alone will diminish the asing price further as every year out of the prem carries a massive depreciative value and the parachute payments are just not good enough to sustain.

Rumours are that Martins is off to Wolfsburg for about 9 mill. Didnt ask for a transfer so will pocket a portion of that. How much will go into transfer kitty? Likely to be a fat zero, although 70k per week will be freed up from the wage bill, or will that just be a deduction in operating costs?

Bassong, Taylor, Gutierrez, Nolan et al, will probably panic at the last moment and slap in a transfer request leaving the guts [sic] ripped out of the team, and perhaps 6 hours to find a motley crew of freebies from the world who will be charged with keeping the good ship Toon afloat for 4 months until the Jan transfer window opens, by which time it will be too late.

Grave times ahead, Leeds still havent fully recovered yet and it could be longer for newcastle.