NUFC Debt

[ChezGiven 0]

Bottom line of the graph: Total Mike Ashley loan = £238m. £138m to purchase the club and £100m to recapitalise the business.

 

Its a leveraged buy-out?

 

On a serious note, reckon it's worth ventilating in front of any (non-North East) journalists? Just by way of an open question via email.. sure they'd have forensic financial types they could run it by just to see if they think it smells off.

 

I'd like to hear an experts view on the question. There may be an explanation but when i asked Swiss Rambler he said 'You're right that the value of the loan in St James Holdings Ltd is the same as the price paid for the club, but this in itself does not tell us how the loan was funded.' and then didnt answer my follow up questions.

 

Happy for the post to be linked to any journos people know well enough to get them to look at it. Even if its just to rule out the idea.

 

Have stuck it the way of Brian McNally & Simon Bird.

 

Attach a photo of KSA's doctored Ben Arfa pic so they've got a picture of the whistleblower to publish when this shit goes national.

:clapping:

[Christmas Tree 3997]

Feel free to put this in Janet and John speak Chez.

[Ayatollah Hermione 12736]

Very interesting. Couldn't chime in myself with anything worth reading but I'll be watching this.

[Craig 6287]

I've had a response from Brian McNally

 

McNallyMirror Brian McNally

@dr_tennant Ashley buyout & his loans something I have investigated. Seemed strange to me but financial gurus advised me it was OK & legal

[Kid Dynamite 5883]

No fear, if we all remortgage out houses and give £10,000 each to NUST they will offer Ashley half of what he has in the club, he'll accept it and then we can use magic beans for the daily operating costs and players wages etc.

 

Can't believe some people actually thought this was a viable plan

[ChezGiven 0]

What it needs is a quote from a financial expert likening it to a leveraged buy-out in principle, then you can run the story as us being sold a lie that the club was bought outright but in reality is paying a debt back that was used to purchase it. If this is the case.

 

I dont doubt its legal, what the Glazers did was 'legal' but with them you knew what you were getting, with us its appears to be similar.

 

If Ashley bought us for £138m, how come we had £138m added to our gross debt? Why are we paying that £138m off as shown in the graph?

[Kid Dynamite 5883]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

[LeazesMag 0]

Well after a bitterly disappointing end to the transfer window, my mind has turned to the financial state of the club. Many apologies for being a boring bastard but for me if any sense is to be made of what is going on then some answers must come from the finances. I have said a few times on here that the Carroll money must be being used to cover the losses of the previous 2 seasons. Thats not offered in any capacity other than an explanation for why he wont spend. What troubles me more is that if the Carroll money has been used to cover these cash losses, then in effect these losses never occurred, its as though (financially) we stayed in the premiership, we just lost a player. However, given the increasing TV revenue and the massive reduction in wages then surely this last season should have seen a surplus and surely this surplus is what should have been invested. What possible reason is there for not having extra funds available?

 

The only reason i can think of is the total debt of the club. Any surplus made is being funnelled to pay off debts, this has happened at low levels over the last few seasons.

 

So i went back to the debt data and one thing struck me that i admit has always been in the back of my mind but never had the time to delve into (I did make some comments to the swiss rambler on this over the summer but he never got back to me). There has been a few discussions on here on this so maybe this has already been resolved and i missed it but i wanted to work out why we have £240m worth of debt? In the chart below you will see that the debt grew from £55 to £77m from 2005 to 2007. Our debt position was clearly getting worse but it then jumps by £138m in 2007, showing up in 2008.

 

 

Now, unless i'm mistaken regarding the liability of the club for debt held by SJH Ltd, it seems to me that Mike Ashley lent SJH Ltd £138m in 2007, which is the exact price Ashley paid for the club. Although not the exact definition of a leveraged buy-out, where a bank lends money secured against the asset, the principle is the same if the money earned from the business is then used to pay back this debt as per Man Utd. What causes me concern is the figure in the chart for 2009 which shows that the specific £138m debt to Ashley is reduced to £132m. Forgive me for not being a proper financial expert but in what way is this different from the Glazers using Man U funds to pay back the debts they used to buy the club?

 

Surrely if the Carroll money covered the losses of the last 2 seasons and Ashley bought the club outright then the debt position should be slowly reducing itself from £77m as per 2007 accounts (which included stadium expansion). If i havent got this completely wrong (i dont really understand the financial relationship between the holding company and us and why the SJH Ltd debt is showing in our accounts), then was NUFC subject to a covert leveraged buy-out? Does this explain why we are so stifled financially? Was it a leveraged buy-out or similar in principle? Maybe this post is a waste of time but i dont get it.

 

Chez - he ISN'T running the club as a "normal business" mate. He bought the club to run alongside Sports Direct for commercial and promotional reasons. He - after a short period of finding his feet - decided to run the club at a lower level of expenditure, to make himself a small profit on an annual basis. He does this by either making a small operational profit [because that is all you are going to get in a football club unless you qualify for the Champions League - which in itself demands massive speculation and for that reason isn't on his radar and is not going to happen] or by selling a player for decent or big money.

 

It is far, far easier for him to sell a player on an annual basis, like Carroll or Enrique for instance, than to gamble on buying good footballers and hopefully qualifying for the Champions League. So this is what he decided to do, ages ago.

 

I've been saying this for years, and people [some noteworthy self proclaimed intelligent people too ] have disagreed with me roundly. This is now becoming ever increasingly more and more obvious.

 

This feeling I have had has now grown into a possible 2nd scenario, which is what Keegan implied. Mike Ashley is selling players to make as much money as possible [to recover his expenditure ?] then he will sell the club at the earliest opportunity, when the time and the money, is right for HIM, and nobody else.

 

He doesn't really care if the club makes a profit in the lower league, or in the premiership, although he may have realised that the myth of 50,000 Geordies at every game is precisely that - a myth, a myth that he bought into, like many people across the country. This support was attracted to the club, basically, and his actions are now leading to that support decreasing. It will continue to decrease, unless we are relegated and we win again in the lower league.

 

Consequently, he is caught between 2 stools. Stay in the premiership, attract the revenues it brings, at minimal expenditure, or go down and increase gates again.......

 

He's a chancer. He is gambling on us not going down, but if we do, he realises there is a positive side. Either way, all he wants is an annual profit for himself, and one way or another, he'll find a way to get it if it's possible.

 

People have disagreed with this, and gave me flak, but I stand by what I have said for years. This is his intention, depending on how long it takes him to sell. But don't anybody make the mistake of thinking things will be much better under someone else. It could be a long, hard road back towards the top positions in the premiership, and even doing that will take a good board/owner, with the ambitions, and the right managerial appointments to make it happen.

Edited September 1, 2011 by LeazesMag

[Guest alex]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

If I've read it right, he (potentially) set up a company (SJH) to buy the club, then loaned the company in question the money in order to buy NUFC. SJH then directly owns the club but owes MA the money. By reducing costs and turning a profit NUFC / SJH can then repay Ashley the money over a period of time. The net result being that (if it goes to plan) MA will get back all the money he paid out to buy the club, in effect getting it for nowt. It's not so much selling off assets (although Carroll would fit into that) it's more that the overall operating costs are less than the money coming in over a long enough period of time.

[Tom 13807]

He doesn't really care if the club makes a profit in the lower league, or in the premiership, although he may have realised that the myth of 50,000 Geordies at every game is precisely that - a myth, a myth that he bought into, like many people across the country.

 

It wasn't a myth before Ashley arrived.

[ewerk 26173]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

If I've read it right, he (potentially) set up a company (SJH) to buy the club, then loaned the company in question the money in order to buy NUFC. SJH then directly owns the club but owes MA the money. By reducing costs and turning a profit NUFC / SJH can then repay Ashley the money over a period of time. The net result being that (if it goes to plan) MA will get back all the money he paid out to buy the club, in effect getting it for nowt. It's not so much selling off assets (although Carroll would fit into that) it's more that the overall operating costs are less than the money coming in over a long enough period of time.

 

Aye, that's how I see it. But to think that he hopes to recover the full £138m is fanciful. In fact the only way he'll recover any significant amount of that loaned is if the club is sold.

[LeazesMag 0]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

 

sort of, yes

[ChezGiven 0]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

If I've read it right, he (potentially) set up a company (SJH) to buy the club, then loaned the company in question the money in order to buy NUFC. SJH then directly owns the club but owes MA the money. By reducing costs and turning a profit NUFC / SJH can then repay Ashley the money over a period of time. The net result being that (if it goes to plan) MA will get back all the money he paid out to buy the club, in effect getting it for nowt. It's not so much selling off assets (although Carroll would fit into that) it's more that the overall operating costs are less than the money coming in over a long enough period of time.

Thats it, if he can pay back the loan he made to SJH over a number of years from the club, he essentially gets the club for free (minus lost interest perhaps). So when it comes to selling up, the price he receives is the profit he makes overall on his time as owner of the club.

[LeazesMag 0]

He doesn't really care if the club makes a profit in the lower league, or in the premiership, although he may have realised that the myth of 50,000 Geordies at every game is precisely that - a myth, a myth that he bought into, like many people across the country.

 

It wasn't a myth before Ashley arrived.

 

it was, tbh. We were getting nowhere near those crowds the last time we had a shite owner/board who sold our best players too.

 

They only come because they are attracted to the club by its own actions.

Edited September 1, 2011 by LeazesMag

[Kid Dynamite 5883]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

If I've read it right, he (potentially) set up a company (SJH) to buy the club, then loaned the company in question the money in order to buy NUFC. SJH then directly owns the club but owes MA the money. By reducing costs and turning a profit NUFC / SJH can then repay Ashley the money over a period of time. The net result being that (if it goes to plan) MA will get back all the money he paid out to buy the club, in effect getting it for nowt. It's not so much selling off assets (although Carroll would fit into that) it's more that the overall operating costs are less than the money coming in over a long enough period of time.

 

SJH being the name of a company or are we talking about Sir John Hall still owning the club ?

[Guest alex]

Can we leave that debate out of this thread, please? :clapping:

[ewerk 26173]

St. James' Holdings.

[Guest alex]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

If I've read it right, he (potentially) set up a company (SJH) to buy the club, then loaned the company in question the money in order to buy NUFC. SJH then directly owns the club but owes MA the money. By reducing costs and turning a profit NUFC / SJH can then repay Ashley the money over a period of time. The net result being that (if it goes to plan) MA will get back all the money he paid out to buy the club, in effect getting it for nowt. It's not so much selling off assets (although Carroll would fit into that) it's more that the overall operating costs are less than the money coming in over a long enough period of time.

 

SJH being the name of a company or are we talking about Sir John Hall still owning the club ?

Sorry, it's St. James' Holdings (iirc) not Sir John Hall.

[Ayatollah Hermione 12736]

He doesn't really care if the club makes a profit in the lower league, or in the premiership, although he may have realised that the myth of 50,000 Geordies at every game is precisely that - a myth, a myth that he bought into, like many people across the country.

 

It wasn't a myth before Ashley arrived.

 

it was, tbh. We were getting nowhere near those crowds the last time we had a shite owner/board who sold our best players too.

 

They only come because they are attracted to the club by its own actions.

 

Blah blah blah, I agree whole heartedly

 

DON'T

[Tom 13807]

226 Guests by the way.

[ewerk 26173]

I don't see what's wrong with MASH lending £138m to a subsidiary to purchase the club. Isn't that also how Abramovich did it? The £138m had to come from somewhere so it was either a loan or capital added. I don't think it's a big deal.

[LeazesMag 0]

I got most of that ( I think), but for the non-accountant types i.e. Me, does this mean in essence he got us for nowt?

If it was covert, is that legal?

Also, if true, does this mean we can look forward to many more transfer windows like the last until his pockets are replenished?

 

And how many cunt points should I add to his tally?

For the first question, thats what i'm trying to work out. Secondly, it was legal but it was sold to the public very differently as an outright purchase (how can he pay himself back the purchase price??). Third question, i dont know. Fourth question, if true you can multiply the current cunt points by the tally the Man U fans have for the Glazers.

 

Just more lies ?

[Kid Dynamite 5883]

Anyway, Am I getting this right, he borrowed the money to buy us, and now he is selling off assets to get that money back? Meaning in 5 years or whatever the club will be effectively free for him and he can still make £100+mil when he sells uo?

If I've read it right, he (potentially) set up a company (SJH) to buy the club, then loaned the company in question the money in order to buy NUFC. SJH then directly owns the club but owes MA the money. By reducing costs and turning a profit NUFC / SJH can then repay Ashley the money over a period of time. The net result being that (if it goes to plan) MA will get back all the money he paid out to buy the club, in effect getting it for nowt. It's not so much selling off assets (although Carroll would fit into that) it's more that the overall operating costs are less than the money coming in over a long enough period of time.

 

SJH being the name of a company or are we talking about Sir John Hall still owning the club ?

Sorry, it's St. James' Holdings (iirc) not Sir John Hall.

 

I understand now. I do a similar thing with pinball machines being the entrepreneur that I am. I buy one for £1000, sell it for £1500. Buy another for £1500 and sell it for £2000. Making £1000 for nowt

[Craig 6287]

226 Guests by the way.

 

Hardly surprising when half a dozen of us have tweeted the link and one of the journos has replied back to it.

[LeazesMag 0]

He doesn't really care if the club makes a profit in the lower league, or in the premiership, although he may have realised that the myth of 50,000 Geordies at every game is precisely that - a myth, a myth that he bought into, like many people across the country.

 

It wasn't a myth before Ashley arrived.

 

it was, tbh. We were getting nowhere near those crowds the last time we had a shite owner/board who sold our best players too.

 

They only come because they are attracted to the club by its own actions.

 

Blah blah blah, I agree whole heartedly

 

DON'T

 

Ok, I'm not an accountant either, and Chez's post is quite interesting, but you don't need to be an accountant to have seen Mike Ashley's original intentions for the football club.