Will he stay or will he go?

[ChezGiven 0]

Imo the accounts will show SD paid the Market rate for sponsorship. Why would Ashley allow a financially strong entity to not pay a financially weaker entity? Doesn't make financial sense to me.

 

I dont understand?

 

You saying that he would HAVE to of paid NUFC for SD's advertising?

 

Doesnt have to but why waste the opportunity to distribute wealth between the businesses? By not charging anything, he strengthens SD which is already strong and weakens NUFC which he apparently has to subsidise. Would make no sense to pass on the opportunity.

A little over two years again SD was carrying £450m of debt. This figure has improved but they still had to arrange a three year £220m banking facility recently. In absolute terms it’s debatable which of the two companies is in the worse financial position.

In 2007

Sports Direct has net debt of just £38m, a tiny amount for a company its size

http://www.telegraph.co.uk/finance/migrati...-toes-curl.html

 

This increased to an amount more normal for a company this size (through acquisitions i would assume) to £230m last year. Last year's revenue was £820m.

 

If NUFC had debts equal to 25% of annual revenue, our debt would be £20m.

[Guest Your Name Here]

A little over two years again SD was carrying £450m of debt. This figure has improved but they still had to arrange a three year £220m banking facility recently. In absolute terms it’s debatable which of the two companies is in the worse financial position.

 

The better-off is that which has actually turned a profit more than once in the last ten years.

True to an extent. Success for SD is measured solely in monetary terms in the form of dividends, whereas success for a football clubs isn’t.

[ChezGiven 0]

So its not really debateable which of the two companies is in a better financial position.

[Guest Your Name Here]

Imo the accounts will show SD paid the Market rate for sponsorship. Why would Ashley allow a financially strong entity to not pay a financially weaker entity? Doesn't make financial sense to me.

 

I dont understand?

 

You saying that he would HAVE to of paid NUFC for SD's advertising?

 

Doesnt have to but why waste the opportunity to distribute wealth between the businesses? By not charging anything, he strengthens SD which is already strong and weakens NUFC which he apparently has to subsidise. Would make no sense to pass on the opportunity.

A little over two years again SD was carrying £450m of debt. This figure has improved but they still had to arrange a three year £220m banking facility recently. In absolute terms it’s debatable which of the two companies is in the worse financial position.

In 2007

Sports Direct has net debt of just £38m, a tiny amount for a company its size

http://www.telegraph.co.uk/finance/migrati...-toes-curl.html

 

This increased to an amount more normal for a company this size (through acquisitions i would assume) to £230m last year. Last year's revenue was £820m.

 

If NUFC had debts equal to 25% of annual revenue, our debt would be £20m.

I wouldn’t argue against any of that. What’s interesting is the different ways the businesses are being run, with SD taking on debt to acquire assets that drive the business forward and NUFC shitting it pants about debt and selling the assets that could drive the club forward.

 

At the end of the day any commercial deals between SD and NUFC create a conflict of interest for FMA and the waters would be less muddy if both parties looked for other ‘partners’. It’s not like SD is the only company that would pay to advertise at SJP, or SJP is the only ground they could deface with their tacky logo.

[Matt 0]

I don't think the club have been shitting its pants about debt, I think it has been more concerned with the wage bill relative to income.

[Guest Your Name Here]

So its not really debateable which of the two companies is in a better financial position.

No, it is debatable. A PLC like SD is very vulnerable to market confidence, and with its supply lines spanning the globe it’s also at the mercy of global politics/economics. It also has no brand loyalty and bargain basement sportswear is a market with no significant barriers to entry except economies of scale. Further, like most floated companies the need to deliver competitive dividends to maintain share value can lead to short term thinking and less than enlightening accounting strategies. All of which means its relative debt/profit/turnover ratio isn’t a crystal clear indicator of financial health.

 

NUFC on the other hand is a very simple business with a rock solid customer base and therefore far more resilient to external factors and the dark side of the free market.

[Matt 0]

Are you are suggesting that NUFC has a greater capacity of debt relative to earnings than Sports Direct?

[ChezGiven 0]

So its not really debateable which of the two companies is in a better financial position.

No, it is debatable. A PLC like SD is very vulnerable to market confidence, and with its supply lines spanning the globe it’s also at the mercy of global politics/economics. It also has no brand loyalty and bargain basement sportswear is a market with no significant barriers to entry except economies of scale. Further, like most floated companies the need to deliver competitive dividends to maintain share value can lead to short term thinking and less than enlightening accounting strategies. All of which means its relative debt/profit/turnover ratio isn’t a crystal clear indicator of financial health.

 

NUFC on the other hand is a very simple business with a rock solid customer base and therefore far more resilient to external factors and the dark side of the free market.

Resilient to things like relegation you mean? The ultimate expression of failure in a competitive environment.

 

The point was that SD is stronger financially than NUFC. The financial data proves this, so am not debating it anymore.

[Guest Your Name Here]

Are you are suggesting that NUFC has a greater capacity of debt relative to earnings than Sports Direct?

No. I'm suggetsing everything that glitters is not gold, especially when it is to be found in PLC profit margins.

[toonotl 2406]

Anyone that suggests Ashley won't sell unless he gets back what he paid plus what he's put in needs to have a rethink.

 

No serious businessman/entrepreneur would operate in such a manner.

 

Its a sure fire recipe for disaster, ask anyone that had Enron shares.

 

Ashley may be a lot of things but he is not an idiot, at least in the department of business acumen.

Edited March 21, 2011 by toonotl

[Guest Your Name Here]

Serious businessmen don’t do the conga around the boardroom in front of their peers, down pints in one for the benefit of TV, or conduct wagers that involve the managing director getting his cock out in public.

Edited March 21, 2011 by Your Name Here

[toonotl 2406]

I didn't say he wasn't a idiot in general.

[Matt 0]

Anyone that suggests Ashley won't sell unless he gets back what he paid plus what he's put in needs to have a rethink.

 

No serious businessman/entrepreneur would operate in such a manner.

 

Plenty do- you have to know when to cut your losses if things haven't gone to plan.

 

Unfortunately for us Ashley does not seem to operate in that way.

[U_V 0]

Imo the accounts will show SD paid the Market rate for sponsorship. Why would Ashley allow a financially strong entity to not pay a financially weaker entity? Doesn't make financial sense to me.

 

I think we'll be getting something, but it will be well below market value.

 

Despite people saying Ashley doesn't care what we think, he has always gone out of his way to try to put as much of a positive spin on what he does out to the media as is possible. For the first couple of years we never stopped hearing about how he saved the club from near-extinction and how we'd soon be competing for everything. When he's been trying to sell the club, we hear about how he wont just sell to anyone, he wants us in safe hands. When we sacked Hughton for no good reason, it was so we could get someone more experienced in. When we loan out/sell players in January we need for the rest of the season it's so we can free up space/generate cash for transfers to improve the squad in the Summer. Maybe it's down to a desperate need for some to have hope that Ashley is trying to do what's best for the long term good of the club, and not just what's best for himself financially in the short term, but it seems some are taken in by it.

 

The reason therefore I think it's unlikely that we're getting a decent going rate for all the SD advertising - let alone something above the market rate - is that we haven't heard a peep about it. When we signed a new deal with Northern Rock for half the previous amount and dependant on being in the PL, Llambias was in the press "absolutely delighted" about it. If we were getting £5m+ from SD you can be sure he would have been all over the press mentioning at every possible opportunity how we were lucky to have an owner like Mike who could use his other business to give the club such a great deal. Instead we got:

 

The managing director Derek Llambias told the BBC: "We will showcase Sports Direct until the end of the season. I'm sure we're going to get a sponsor in for next season."

 

Llambias admitted that the way the plan to sell naming rights was put to fans could have been handled better, but said the decision was important for the club's future.

 

"We could have worded it better, and that's why we came out yesterday to explain what we're trying to achieve," he said.

 

"With the renaming it was always going to be whatever brand it was, at St James' Park. For the remainder of this season, we already have sportsdirect.com on the Gallowgate so we'd like to take that branding through the rest of the stadium."

 

Llambias said that any future naming deal would still include the phrase "@StJames'Park".

 

"In our reign, absolutely, it's just adding to the name. If this brings in a good chunk of money to the club, that goes straight to the team, so it's a revenue we should look at."

 

Subsequently, despite being promoted and immediately being guaranteed to be on the TV more than most others in the division, it seems no-one at all was interested, and we've had to have another year of SD "showcasing" the advertising opportunity. Hmmn.

[ChezGiven 0]

I thought the stadium naming rights was separate to general sponsorship?

 

Anything that is incremental to previous advertising spaces / revenues could well be done on the cheap for free if it means 'selling' the slot (so naming rights and the thing on the roof are not taking from an existing revenue generating space).

 

Where previous advertising exists, taking those spaces and filling them with SD adverts is financially stupid. If SD branding is only in spaces where previously nothing existed, then you may be right. If SD advertising has displaced other advertising, then the basic analysis should hold. It would be daft to not subsidise the weaker business entity.