The £35 million conundrum.

toonsy

Money money money...
You may or may not be aware, but as a result of the transfer window Newcastle find themselves sitting on a hefty wedge of cash.

Now unfortunately I wasn’t privvy to any part of the deal for Andy Carroll, so I don’t know how the payment will be structured, but from piecing together certain bits of information, my original thought of it being a structured payment over a certain amount of time seems to have been a bit premature.

From what has been said by Alan Pardew, and from the revelation that most of the fee that Chelsea paid Liverpool for the services of Fernando Torres was paid up front, combined with Mike Ashley’s sheer tight-fistedness, I’m wondering whether or not we have been paid in full for Andy Carroll, or at least nearly in full.

Pardew claims that all of the money will be spent on the team, although it will have to finance any fee plus any wages that the new players require. This is fair enough, although I stupidly assumed that we might actually get all the cash to spend on what really is a limited squad. It’s something we will have to wait to see what happens, and I’ll reserve full judgement on it until the end of the summer. Mind you, I don’t have a very positive feeling about if I’m being honest.

Maybe it’s just me, but I can’t trust the board. I do agree with some things that they are trying to achieve, like trying to stabilise the finances of the club, but when it comes to spending money there always seems to be something that crops up, or a deal that couldn’t quite happen, or a relegation, or a sale and so on.

I don’t quite trust what Alan Pardew says yet either. Please don’t misconstrue that as I actually think he has come across really well since he arrived at Newcastle, but he hasn’t been here long enough to earn my faith and trust.

This is why I remain sceptical over our proposed summer investment. That plus one other reason…..

Think back three years ago, when Kevin Keegan was here. This was when things were looking up and our money problems weren’t as obvious as they are now. I distinctly remember us fans being promised ‘record-breaking transfers’ and ‘exciting times with real investment’. As a result people flocked to take advantage of the new three year season ticket deal that was being offered at the time.

Here we are three years later, and with this three year deal due to run out in the summer it makes me wonder whether or not this promise of the £35 million investment will actually materialise? Maybe I’m being cynical, or paranoid even, but the fact that season ticket renewals are not far off, combined with what has happened before makes me that way.

If the spending does go ahead then fair enough, fair play, the squad is strengthened and it makes sense blah blah blah. I’m not confident though, especially when you consider this Newcastle United ‘won’t be taken for a ride’. It’s a shame really, as now it has been made publicly aware that we are apparently looking to spend in the summer, all clubs will be looking to take us for a ride.

Time will tell I guess.

About toonsy

A lifelong Newcastle fan and current webmaster of this very 'blog who has the sole aim of creating a place by Newcastle United fans, for Newcastle United fans.

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73 thoughts on “The £35 million conundrum.”

  1. What we also have to ask…..is how much were we expecting him to spend if we HADN’T recieved the Carroll fee? Say we were going to spend £15 million in the window…isn’t this now a huge saving for Mike Ashley regardless of how much we spend? If he was going to commit 15 million (just plucked that of thin air by the way) then surely he should now spend 50 million?

    It is all, of course, complete speculation and anyone’s guess….I suppose only time will really tell.

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  2. i think chelski paid upfront for torres,so you would think that the bindippers would just pass the money on to us,well id hope so,but it wouldnt suprise me if ashley fked that up too..

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  3. This whole thing was probably another kick in the teeth too soon after CH’s sacking.

    People cant be optimistic about the future when they see another smack in the face around the corner. (and they dont even know where it will come from)

    Players may now form that view – when everything in the garden appeared rosy – the Directors take another swipe at the club – each blow being tougher to take as its an accumulation – and they have lost their General (CH) who would have kept them tight in adversity.

    JB and JE’s new contracts being signed will give us an indication of what the feeling is.

    Im still very resentful of Carroll for not going and saying it was for the money – instead of him creating the bad feeling by everyone looking to find fault and eventually aiming it at the club as he has cleared off.

    Lets hope its not a case of deja vu

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  4. This window has, compared to last year, set us back, this result and may be the one against Arsenal will too, but the players and fans can hopefully stick to it. We still have a good squad, if not a bit bloody light in a few places, Ashley will surely give Pardew enough cash to sort out many of those problems, plus with a few of the younger boys making further steps forward.

    We have just got to get through these few games, this season, and keep the faith. As long as the players can be kept together and onside, which may now be a problem, and with a few good additions in the summer we are still going in the direction. We are not a top 4-5 side and aren’t likely to be anytime soon. That takes long-term building and slow investment (Arsenal) or more generally some serious, serious wedge. The top 4 at this point in time and liverpool have either got serious money and/or have had serious TV money and champions League money for years.

    We are not in that bracket but there is no reason why we can’t be right below them next season, and if Ashley really doesn’t spend big next summer, then it really could and should be curtains for him. We should be alright, but there has to be, as Toonsy says, some doubt. 😉

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  6. It is quoted by all in the club that Ashley has not taken a penny out of the club, and so far that appears to be true from the accounts we have seen. Previous owners have seen the club as a way to fund their lifestyle, Ashley appears to be working on the he’ll take the profit from a future sale.

    On that basis he needs to a) eliminate debt and b) develop a successful team. If he continues to remain in the “benefactor” ❓ role then all the money will naturally be “re-invested in the club”. That may mean “re-investment in the team”, hopefully it does. Normally wages are about the same as the purchase price, so expect 3 or 4 £5m players to strengthen the squad in the summer.

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  7. BWC – I think it will now be a case of “actions speak louder than words” all trust may have been eroded in the board to support the team – when they have been giving their all on the pitch.

    They may either form the view – you aint worth the effort – or they may form the view “we wont sign anything until we see you supporting us”

    I agree with the direction we were heading – but we have landed two huge self inflicted injuries on the team – one they could cope with – but can they cope with two (Particularly when the Captain of the team goes on Liverpool TV to gleefully tell them what a great player they are getting)

    Doesnt make for a happy house IMO

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  8. Prem – I agree with your view BUT he can not keep smashing everyone with blunderbuss after blunderbuss of decisions (Hitman – That was Blunderbuss – not Blunderbigredbus 😆 😆 )

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  9. I think this situation will possibly put us back into that dreaded relegation candidates bracket! And if thats the case and we dont finish mid table or worse get relegated I dont see much if any of the £35m getting re-invested! In fact there might be a price on all our players heeds!

    Just cant see us getting many goals, need to take a chance on Ranger and give him a run of games.

    But I agree with everything you have said, its almost calculated by Ashley.

    Another small issue we failed to remember was the “parachute” payments… Are they still in effect?

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  10. how much more ***** can us fans take,its one thing after another with this bloke running the club..
    how can we move forward when ashley holds us back..
    look at the bindippers they ousted the 2 yanks,now there on the up

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  11. I wrote on an earlier thread that Liverpool were in the driving seat waiting for 1 of 3 to crack, and eventually one did. Who? my guess would be AC on the basis that MA is shrewd poker player.

    These blunderbuss decisions seem to me to be projections from disillusioned fans, any decision he makes is apperently simply wrong. He is a ruthless businessman who makes decisions for what he sees is his vision of the club. Houghton & Carroll may well be correct. Listen to what Dalgliesh said about Torres.

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  12. I agree Stardust. I actually just saw some of Nolan’s comments for the first time, not cool at all. But they have just got to get through this period, then the players should bloody well see the context of that sale, it was a **** load of money, the player gave a mis-placed ultimatum, and at the end of the day the same questions/problem would probably have arisen at every transfer window going forward if he had stayed.

    They should see we have a good squad which can be relatively easily added to. They shouldn’t be fu-king feeling sorry for themselves, Carroll chose to go, even if Ashley et al were happy in the end. And as I say it would have time and again been a repeated problem if he had stayed.

    Forster, Taylor, Williamson, Colloccinni, Enrique, Simpson, Tiote, Barton, HBA, Gosling, Gutierez, Nolan, Guthrie is decent core, a few young players, plus 4 or 5 new players.

    But will it happen, let’s bloody hope so. We really do need two or three really good signings, pace, skill and character. I hope we get them or Hitman might well be right.

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  13. My mate at work is a Killie fan and he reckons Connor Sammon to Wigan is a steal at less than a million. He reckons he is fast as lightening and he I top scorer in SPL (not that it means that much!)

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  14. The board have been shortsighted by allowing Cazza to leave.
    Fans seem divided over the sale however I believe any profit made on his huge transfer fee will be eroded by the slump in season ticket sales. Many fans are coming to the end of their 3 yr ticket deal and how many times have we heard your friends and colleagues say they aren’t renewing this time.
    The club could have taken this opportunity to show their intent by rejecting all offers and rejecting Cazza’s transfer request.
    That would have shown the fans they intend to build the team around our best young players and convince Carroll he was wanted and he would be rewarded for his performances.
    This would have dismissed the suspicion we all had about Ashleys business plan of bringing in young talent and selling them on for a profit.
    Then again, we now have it confirmed and are in no doubt this is his plan and we only have ourselves to blame if think anything different in the future.
    I will still be renewing my contract when the season tickets come out but in the vain hope that I will still be here and Ashley has moved on.

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  15. You talk a lot of sense BSno9, I still think even with that policy we can do well, as long as the majority of that money is then put back in. In the great scheme of things I know you make the point it would have been better value to keep Carroll and pay him more, but that does have a knock on effect and I do think the way Carroll has hit the scene we were going to get bids every window. We just aren’t the Top 4, we need to generate money while still staying competitive. As it stands now we should be able to start next season aiming for 7th and then see what happens, we have got to be realistic about that, if we are not even looking likely for that then serious questions have to be asked about the direction. We can’t let a Russian’s billions fu-k up what most have generally agreed is quite a good direction that we’re going in.

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  16. When I say as it stands now, I mean with what we’ve got now plus the money we can now spend.

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  21. hitman – free tansfers !!!! what a f@cking embarressment.

    this billionaire owner of ours has no shame

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  23. aye roy theres sum crackin frees oot there ,and oot of contract ,thats why there free and oot of contract 😀

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  27. roy 🙂 ….I’ll write to the fatman, I’m sure he’ll reimburse me, nae questions asked 😀

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  29. “batty
    Posted February 3, 2011 at 12:45 PM
    wheres stu that miserable c unt normaly cheers me up ”

    He is probably in an isle is Tesco’s shagging a melon 😆

    Offski outy

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  32. ide like too chop carroll straight in the throat just too stop him breathing for a couple of minutes 😡

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  36. The former Newcastle City Council leader said: “I think [selling Andy Carroll] is a terrible move for the club. I’m a season ticket holder and like the other 50,000 masochists who turn up at the ground every week I’m very unhappy about it.

    “I’m not suggesting we have a Mubarak-type demonstration outside the ground on Saturday, but perhaps something like it.

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  37. The Egyptian government have come up with a plan to try and stop the riots in Cairo, they want the protesters to get in their cars honk the horn and chill out……
    They’re calling it Toot-n-calm-doon 😉 😆

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  40. not a bad link from someone on Ed’s:
    ‘The last time Newcastle made a profit was back in 2005 – and that was a very small one of £620,000. Since then, the club has registered pre-tax losses of £12 million in 2006, £34 million in 2007, £20 million in 2008 and £15 million in 2009. Unfortunately, we don’t yet have the 2010 accounts, but the loss will certainly be even larger following relegation to the Championship.’

    http://swissramble.blogspot.com/2010/12/newcastle-uniteds-finances-in-black-and.html

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  44. Particularly relevant: ‘Of course, like many other clubs, Newcastle’s TV revenue pales in comparison to the Sky Four, who have boosted their income with Champions League qualification. This was worth an average of £30 million for the four English clubs last year, not including additional gate receipts or uplifts in sponsorship agreements. To place this into context, in 2003/04, the year after Newcastle last reached the Champions League, their total revenue was only £2 million lower than Liverpool’s, but the clubs are now separated by almost £100 million.’ 🙁

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  46. For those who haven’t ever read any of this, and I certainly hadn’t, this really does give nearly all of Ashley’s decisions some serious context:

    ‘Details of transfer activity over the last decade show the changing approach quite clearly. In the six years since the turn of the millennium Newcastle had net spend of £82 million, but in the last four years there has been a surplus of £18 million. Even when the new board sanctioned higher spending of £30 million in 2008/09, this was matched by sales of £32 million. That is an almost perfect example of balancing the books, whereby the manager has to sell before he can buy.’

    Sorry for the length of this next bit, but it is relevant to Toonsy’s article:

    ‘In spite of this, the club’s previous excesses have resulted in significant debt of £282 million, though only £150 million is held in the books of the football club with the remaining £132 million held in the holding company. The vast majority of this debt represents loans from Mike Ashley of £243 million, but there is also a bank overdraft of £36 million, which is a significant increase on the prior year balance of £1 million. Since the 2009 year-end, Ashley advanced a further £25.5 million to keep the club ticking over in the Championship, so his total investment in the club now stands at £268 million, represented by £132 million to buy the club, £70 million to repay loans and £66 million working capital.

    Because most of the loans are from the owner, instead of banks, some commentators have argued that the club is effectively debt-free, though it should be noted that Ashley’s loans are now repayable on demand, whereas they were previously only repayable on demand in the event of a change of control (ownership). That said, it is clear that it is better for the football club to borrow money from the owner, as these loans are unsecured, which means that Ashley has no guarantee of repayment, and non-interest bearing. This has been important to the club’s finances, as the net interest payable has been reduced by £5 million a year.

    More to the point, Ashley’s loans have been critical to the club’s survival, as it is far from clear that they would have managed to secure refinancing from the debt market.’ 😯

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  48. I doubt we’ll get him. Poor fecker probablty has the audacity to ask for more that £5.85 an hour 🙁

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  49. Any chance you can forward that to Pardew and Ashley CC. He could become our modern day Mirandinha

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  51. Last bit:

    ‘Despite his crass behaviour, there is no doubt that Mike Ashley has put his hand in his pocket to keep the club going. The unpalatable truth is that Newcastle United are heavily reliant on the support of their charmless owner. In the last two years, he has put in £111 million of new loans, initially to repay £70 million of expensive bank loans, but also providing £41 million of working capital on top of that (plus the £25.5 million subsequent to the books closing). Looking at the 2009 cash flow statement, his backing was required to help fund a £24 million loss from operating activities plus £17 million of net spend on new players, many of which were signed in previous periods, though most of the shortfall was financed by the increase in the overdraft.

    …In contrast to Ashley, the former owners did very nicely out of their investment in Newcastle United, thank you very much. In fact, they absolutely coined it with the Halls (Sir John and Douglas) receiving a total of £95 million over the years, while the Shepherds (Freddy and Bruce) had to make do with £55 million.

    And what was the result of these staggering payments? After years of rank bad management, they left the club in an appalling mess: a £30 million loss; £70 million of debt plus £27 million owing transfer fees; extremely limited borrowing capacity, as all assets and income streams had already been used to secure loans; and a bloated wage bill of aging mercenaries on generous long-term contracts.’

    On the basis of this, and going on gut reaction, I reckon he’s going to spend a good chunk of that cash on players we really need this summer, and slowly build further probably on the back of the odd huge wage departure. 😎

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  52. Provided we stay up we’ll spend money. Don’t expect a 35mil superstar or anything like that, but the squad will be strengthened, and on the players we’ve brought through recently, namely Arfa and Tiote it could work out well for us. I can’t bloody believe how unlucky we are though..Shola out for so long is so annoying, really think he could have led the line strongly in a 4-5-1, not sure who I’d pick now…if it changes.

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  54. CC – Aye, I’d offer myself to play football for a team like Juventus aswell. Unfortunately it doesn’t mean I’m any good at football. The same can be said about Luque 😛

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  55. Black&White China
    people don’t want to hear it mate, but it’s there in black and white.
    The previous owners left us in a complete mess, on the brink of administration whilst pocketing £150million of the clubs money, they’re thieves. He’s put £300 mill in and not took a penny out, the figures are all there, they’re public, but yet, some would still have Shepherd instead of Ashley.

    The scary thing is, the figures for the season we were relegated haven’t been released yet. Though we’ll have parachute payments and transfers to soften the blow, I think they’re going to make for ugly reading.

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  56. ILM – The figures for the season we got relegated were out last year (June I think).

    The figures from the season in the fizzy is what we are waiting for 🙂

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  58. mikey boy – divent get your’sel upset m8 we knaa al aboot them man – stardust has rammed them doon wa gregory peck’s for the last 3 years – the trouble is it’s his own fault the fat *****.

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  59. all hail the saviour that is mike “the fat tw@t” ashley,where would we be with out you o great one…

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  60. ILM and Roy, both right, he’s definitely not all bad but has certainly fu-ked himself. But, that said there is enough in that data and his basic structural changes to believe that he will spend that money on the playing staff as it needs it. I also genuinely believe he is a supporter of football and wants to see our team do better.

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  61. Hitman, a good chance in administration. Then again we could have been bought by the Sultan of I Bloody Love Newcastle, with all debts paid and a team of world cup winners not giving Fergie and his old boys a look in. We can’t have everything, still reckon all is not that bad, even though Ashley has done his best to make all the wrong decisions on a public level.

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  62. and he will continue to make wrong decisions,the mans a fookin idiot..and its us that will suffer,we needed a few players in and what happens we let 3 go out and bring in a lad thats injured 🙄

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  64. 2 strikers,2 wingers,1 RB in summer transfer window.

    Do you lot think we still got enough to spend off from that 35million?

    1 striker+1winger must be BIG marquee signing. :mrgreen:

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  65. Hitman – Yes, but only because Ashley had to underwrite the losses so the accounts would be signed off. If they don’t get signed off then it’s the start of the end as the business is technically insolvent with no proof of being able to pay it’s way.

    What the Swiss ramble doesn’t mention is that the other debt, the one to the holding company, is actually what Ashley paid fir the club. Take that off and you have the “real” debt.

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  66. Can’t knock you Hitman, I can’t believe we have let players go out without replacements. Just don’t know about your last point, that’s the first time I’ve looked at those figures, need more time to process them. Still reckon we’re generally playing alright, got some good characters and quality, that can be built on more. Its really not all bad. Even though he or the people making decisions for him can’t help but fu-k it up.

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  67. andy we dont want you to leave,but there’s a nice helicopter waiting outside to take you to little dublin.
    it’s like the old saying: “i’ll drive him there myself” f**kin’ ashley went the full hog and literally flew him there himself unbelieveable.
    we were talking about getting a striker to play upfront with andy before the window even opened,now it’s closed we’ve got that manchurian candidate pardew scratching around for a free transfer,only at newcastle will this happen.

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  68. not been on here a few days, had to question what i thought about the club and where i thought we were “heading”.

    there is no doubting that we have a c@nt of an owner, but without him we could be in league 1 or worse, wiped off the face of the planet

    we may never know the real truth about why andy left but if he didnt want to go that much he wouldnt have signed, end of.

    in terms of where we are heading, this season i dont think we will finish as high as we would have but i am confident we will survive, which at the start of the season i would have taken like every other fan would.

    the summer is where we will see what the intentions of the club, players and manager are. we need to sign 5 or 6 quality players in various positions, to strengthen the first 11 and the squad.no doubt a few fringe players will leave and they too will have to be replaced so that we have a competitive squad.

    this needs to happen to take the club forward and maybe next season we can mount a serious challenge for the european places.

    in terms of players i will throw a few out there – arda turan (fallen off radar a bit), rodallega, im sure there are some young and exciting prospects in the french / belgian / dutch leagues we have never heard of. but then who had heard of tiote and who thought we would sign ben arfa for 5mill??!!

    newcastle united as long as they have our support will continue to be fantastic club, run by a tw@t that has saved us and at times seems hell bent on destroying us. players will come and go but the club and its fans will survive!!

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  69. “What is a club in any case? Not the building or the Directors or the people who are paid to represent it. It’s not the television contracts, get out clauses or the marketing departments or the Executive boxes. It’s the noise , the passion, the feeling of belonging, the pride in your city” – Sir Bobby Robson

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  71. touche hitman!!

    perhaps i shouldnt have used the term “club” in several instances above toonsy

    i wanted a rant after the weeks goings on

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  72. Rambo – Nah I didn’t post it because of what you wrote. I just posted it as a pick me up more than anything 🙂

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