Has Mike Ashley stumbled upon the way forward?

Posted on May 27th, 2010 | 82 Comments |

Could he be ahead of the game?
Could he be ahead of the game?
All this talk of plans and statements, all these definitions of what capital outlay actually means, whether we’ll have money, no money or whatever has been done to death now.

But through all that, has Mike Ashley stumbled upon something. Has be bumbled his way onto the right path to a secure a sustainable and, heaven forbid, prosperous future?

The guys and gals at UEFA are meeting today and tomorrow to put the final pieces of their ‘Financial Fair Play’ document together. The aim is to force clubs to be more sustainable and to live within their means, and to put an end to the year-on-year losses incurred by clubs. It also seeks to put an end to mega-rich benefactors pumping money into clubs in the shape of loans. Under the new rules, owners will be allowed to put money in, but only for long-term projects such as new stadiums or training grounds, and that money can’t be in the shape of a loan but must be made up of permanent shares instead. So has Mike Ashley stumbled upon the way forward at a time when other clubs are struggling financially?

Not all clubs are struggling financially, with Tottenham Hotspur perhaps being the best example of how to run a club. It is expected that three-quarters of Premier League clubs are going to have to cut their cloth to fit these new rules. Aston Villa made a loss of £46 million in their last set of accounts, Sunderland lost £26 million, Liverpool £55 million, whilst Manchester United only manage to make a profit by selling Cristiano Ronaldo.

That is not to say that losses still can’t be incurred, but certainly they wont be allowed at the levels we see above. From 2012/2013, losses must be limited to £38 million in any rolling three year period, failure to limit those losses will mean entry into European competition will be refused.

So could we have a head-start on the rest of the teams, and will we be in good stead in the future? I would say yes, on both accounts. Firstly we have a headstart on these new rules, albeit our head-start was brought about by having to cut our wages and outgoings due to relegation.

Then there is this ‘break even’ business that Mke Ashley has heaped on us, that will form the basis of the new rules and is someting we are doing right now, however annoying it my be.

Finally, forcing clubs to live within their means would be ideal for us in the future. Our income is far greater than a lot of Premier League clubs, and that will give us a head-start on all but about five clubs in England.

There is bound to be a way around these new rules though, the sceptic in me is wondering just why club owners and chairmen from around Europe have given this new initiative their unanimous backing. That is something we will only know when the rules come into play, or at least when the new rules are released.

One thing is certain in these rules though, and that is in years to come we could benefit greatly form this as teams are forced to cut their cloth accordingly at a time where we have already been forced to.

It’s just surviving next season that we need to worry about first.

NUFCBlog Author: toonsy toonsy has written 643 articles on this blog.

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82 Responses

  1. How has Ashley stumbled upon the way forward if owners have to ‘give’ their clubs money? He’s only loaned us money so we would be one of the biggest casualties of this (Not that a ban from European competition will effect us).

    So Real Madrid, Man Utd, Liverpool or Barcalona and not to mention the Italian clubs wouldn’t be able to play in the Champions League because their all in debt and they all make losses.

    They won’t do it as they won’t make any money without these teams. TV revenue would drop through the floor.

  2. Not really. He’s doing this out of necessity and it’s by no means guaranteed to pay off. In fact, it could go horribly wrong.

    But it’s certainly not a brilliant new idea and has always been the ideal scenario for most scrupulous owners, I imagine.

  3. stuart@3 it isn’t necessarily related to being in debt. it’s purely about posting losses e.g. man utd could still be in 750 million debt in 3 years time but assuming they can afford their interest payments, spend within their means and don’t incur any losses they’re ok. obviously the amount of interest your paying on your debt will be a big factor to all clubs. thankfully the money ashley has pumped into newcastle is interest free – apparently.

  4. “the sceptic in me is wondering just why club owners and chairmen from around Europe have given this new initiative their unanimous backing.”

    i suspect they’ve backed it as it’s better than the alternative option of spending caps. that would’ve really produced a level playing field which, of course, isn’t in the big clubs’ interests.

  5. Malchick – I reckon there are some glaring loopholes in these new rules. Just a hunch, and I bet the chairmen saw it and were like.

    Ok ;) we’ll ‘grudgingly’ ;) accept :D

  6. I think the article makes a good point, both in terms of our ‘head start’ on this fiscal path, and the impact on the other clubs, which should serve to level the playing field.

    We only need to beat 3 other teams next year. These new rules could well account for that on their own, forcing rival teams to cut their outgoings without the luxury we had: a millionaire keeping things going out of his own pocket until it takes effect.

    Pains me to say it, but this is the one thing Ashley’s done right; shame he had to nearly destroy the entire club to do it! Still, he’s definitely improving, and if he sacks the moronic spactard who writes his press releases he’ll move a bit further into the realms of competency…

  7. aye toonsy, sponsorship seems the most obvious loophole for these rich benefactor clubs. surely uefa have that all under control though, eh?

  8. doubt it HITMAN,fifa runs the lot,barred from any comp ect ,wheres there cash comeing from

  9. malchick says:
    May 27, 2010 at 3:20 pm

    Man Utd would have been running at a loss without selling Ronaldo. This year unless they sell another player they’ll be in the same boat as the rest.

    It’s all bullshit. I wish we were on a level playing field but we aren’t and never will be.

    If Sheik Mansour wanted to buy Ronaldo for £150m he could just have one of his companies sponsor Man City. That’s legitimate revenue and it would increase their turnover so to allow them to spend big.

  10. icedog says:
    May 27, 2010 at 3:49 pm
    doubt it HITMAN,fifa runs the lot,barred from any comp ect ,wheres there cash comeing from

    If all the big clubs got together and decided they wanted to start their own league, FIFA could do nothing. They might say it’s illigitimate but so what? Do you think TV companies would be bothered? Nah, they’d be all over them.

    It’s all about money, money, money!

  11. Possibly Stu, but they can take penalties that go further than anything a break away league can do.

    The PL only managed it as it had the FA by the balls. FIFA is a different kettle of fish, they can go much harsher with penalties.

    No ground licence
    Players banned for representing their country

    There is loads they can, and will, do.

    Surely they will have looked at the sponsorship loophole?

  12. stuart, why do you think it’s all bullshit? it’s in all the news. it’s been agreed. they’re meeting tomorrow to finalise it.

    there’ll be rules in place to prevent that kind of sponsorship happening. it’s glaringly obvious.

  13. Malchick – The party never ends for some mate. They can’t see wood for trees and don’t realise that something has to be done about it all.

  14. i doubt the fans of any club would want a breakaway league. domestic leagues are the bread and butter. they couldn’t even get game 39 off the ground coz of the backlash.

  15. STUART,t.v. companies all ready have 3-5 yr contracts with F.A. etc think they will pay again ,dont think so like

  16. Malchick – Aye, surley this breakaway league would have 1 or 2 German clubs?

    You know, them fan owned clubs. How would them fans who have fought for cheap ticket prices feel if they had to travel thousands of miles every other week?

  17. icedog says:
    May 27, 2010 at 4:00 pm
    STUART,t.v. companies all ready have 3-5 yr contracts with F.A. etc think they will pay again ,dont think so like

    If people keep paying their Sky subscription, course they’ll pay again. Football in the US will get every more popular. ESPN could just be the start of it from over there.

    malchick says:
    May 27, 2010 at 3:57 pm

    So what they gonna do? Apply a turnover cap?

    I agree, it’s gone too far. But it will take a while before there’s a level playing field.

    I’m only interested in NUFC. We might be in a brilliant position in five years time after our austerity. But we could also be in a complete mess in the Championship or worse.

  18. Sure the present owners of the biggest European clubs are going to listen to a few jumped up bureaucrats and an ex player, on how to run their businesses ?
    That`s probably the quickest way for the group of 18# to break away from EUAFA & FIFA and start their own super league.
    Dont believe everything you read or hear, in the end money talks and bullshit walks, believe it !

  19. well they seem to manage to work it in american sports (actually, i’ve no idea, but heard they have spending caps etc).

    domestic leagues are in a right financial mess throughout europe. it’s in the clubs’ best interests. doubt any of them are happy about the losses.

  20. the only club in europe i can think who might possibly be unhappy by these new rules is man city. even abramovich has said he wants to run things more efficiently. can’t see this leading to a push for a breakaway league in all honesty.

  21. stuart u do talk a LOT OF SHIT MATE.sorry that is the way forward the rules dont mean u have to be in debt. the rules are going to be the way the german league is run.barca real madrid and united make profit each year so get your facts right. the rules will only allow clubs with profit to play in the champs league not clubs spending over the 50% in wages thats why barca and real madrid are buying big b4 the rules come in so they are head of the rules so by the time it comes in affect they would need nobody becasue they have got ever1 they wont for the next 4-5 years so what ever profit they make they will then be able to use that! so we will be in a stronger positon then 90% of the clubs in the prem becasue ashley has started this 1 year ago so we can buy how ever we wont with are big profit becasue if are wage bill which will be the same or less this year we will make 30MIl profit easily this year he will [pay off if anything needs paying then if he puts the rest to players good. but we need to stay up and be steady then we could do anything with are support the best in england bar non.

  22. So, weeks after THAT announcement, the penny’s finally dropped? There have been a few on this site who’ve flagged up the liklihood of the new FIFA rule – it’s been trailed for months!

    I don’t belive that MA’s stumbled into this I do believe he’s seen the writing on the wall and is both setting the club on the road to a regime of sensible financial managment which will comply with the self-sufficiency rule by 2013 or thereabouts.

    Though sometimes a wee bit clumsly, MA’s certainly not stupid and should be given some credit for his astuteness when it comes to business – like many on this site, I wouldn’t mind being a quid behind him!!

    Another advantage for him and the anti-MA brigade is that the less debt there is loaded onto the club, thne the better the chance of MA selling it – if he ever would want to do so.

    The next year or two aint gonna be easy and we must adopt a mind set that puts finishing the season at fourth from bottom will be success – ie not getting relegation. The longer we saty in the prem, the healthier the club will be – providided we don’t regress to the show-=boat signings of the past.

    As far as owners not being allowed to load clubs with debt (ie loans), they’ll be expected to inject cash into their clubs in the form of equity (shares). That means that if their club becomes worthless, then their shares are proportionatley worth less.

    There will of course be loopholes so big a bus could be driven through them – that’s the way rules like this are passed – leaving escape routes for the big financial hitters.

    Wake up guys and gals – come into the real world.

  23. The thought of gaining the tv rights for a European super league would have the tv companies and sponsors salivating.
    And right now there`s more interest in club games than international games, plus players will go wherever they are best paid, if you dont believe it look at the number of foriegners in the EPL.
    As for the threat`s of preventing clubs and players from certain tournaments and International games, you think they really care, playing in a super league with the big bucks would take care of that.
    And face it the owners control what happens to football not some petty regulatory body like a EUAFA or FIFA.
    It`s about money not sport, gedit !

  24. fukin hell toonsy u will be campaigning for a statue too be built of the fat c@nt oot side st james park next

  25. 29 Chuck says:
    May 27, 2010 at 4:33 pm

    Id imagine Fifa/ufea/fa would have in their contracts with tv stations they wouldnt be able to show a rival football org games while having a contract with them , would protecting themselves against a break away league

  26. man city everton villa will never make a profit. city what are they going to do. thier wage bill will be close to 150-200 mil they good never get any money back will be run at a loss. they are in a real mess and the owners will walk.

  27. There aint though is there? I mean if we can extend the East Stand because the Leazes Terrace, then how are we going to fit a statue of Ashley there? :lol:

  28. asim says:
    May 27, 2010 at 4:25 pm

    I must admit I stopped reading after the word Stuart.

    Goodbye, boring.

  29. Johno Toon says:
    May 27, 2010 at 4:41 pm

    Sky have a contract with EPL, SPL and La Liga.

  30. sorry chuck only english players are greedy. the argies spain and brazil players will rather die then not play for the country. money doesnt come into it with them.

  31. But they would also have a contact with ufea for the champions league , Im only assuming this so if im wrong im wrong , but id imagine ufea would of said to sky if you want to broadcast our competions you cannot show another rival tournament such as abreak away super league,

    As i said i could be wrong

  32. So essentially you can still buy 200m worth of players as long as the club itself can afford the wages.
    This essentially stops a very rich owner taking a small club and pumping lots of transfer monety in because that clubs turnover would never sustain the wages.
    Not sure i agree with that.The way to stop a Portsmouth happening is as soon as a club stops paying its PAYE-thats always the 1st sign they are in trouble-the Premier lge should get in there fast and stop all future transfers into the club.

  33. who cares let them breakaway!it will never happen but if it does newcastle for the champs league how about that.

  34. I think that, over time, these new rules will restore the natural order.

    So clubs like Man Utd, Arsenal, even Newcastle to a point, who have built there infrastructure as they have had the success (relative), will naturally float back to the top.

    What it stops is people buying clubs as playthings. After all, the PL is made up of 18 clubs and 2 rich mans toys.

  35. samthecat no they can only buy players with what pofit they make and sell if they make 30mil they can only spend that on wages and players.

  36. the video clip is in German,but i guess u can interpret it by those pictures. :lol:

  37. Do you not think FIFA have thought of all this? If it was a set of rules applied to thousands of companies it’d be different – but to 20? You CAN tie them down.

    Anyway – I want to see them try. To be honest, while it’s nice to be back in the top division, I absolutely hate everything about it right now and desperately hope Platini succeeds.

  38. And me Whumpie. The Premier League is the place to be, but not for footballing reasons unfortunately.

  39. i am happy for mike ashley to make a profit out of nufc, of course i would even say that he should make make a profit. what i dont like is his bullshit. i will be the first to admit… i am no accountant lads…. but am i wrong when i say we made a loss of about 28 million or was it 38 million this last season. We have now gone up and it is worth 60 million extra. That is automatically 22 million profit straight away and that is basing losses on 38 million. we can then add to that profit our new sponsorship deal with NR as previous money from them was used to buy owen. So we can add a few more million a year to that minimum of 28 million i mentioned before. so straight away we are into over 30 million a year profit from right NOW! then we can defo add a few more million as player wages have systematically dropped over the last year too. Then two new club sponsors added in. A new kit sponsor. We will be looking at a realistic 40 million profit this season alone… why is ashley quoting this five year wank to ‘break even’?????

  40. Asim – It’s true though. If a club can only live within their means, then as our means can be much bigger than the likes of about 5 clubs, it’s natural that we will float get back up there over time.

  41. Craig – Perhaps somme of that income is already earmarked to be spent?

    We also have a hefty overdraft that needs clearing, so I imagine that will get paid off aswell.

  42. dont get man city and the managers who bid for some guy from wolfsburg for 40 mil they dont need strikers they need good defenders that tels me tevez or adabuyar are leaving.will they loan them to us for nothing ha ha them to score goals but this guy wont make a defirence becasue goals they dont lack.

  43. toonsy man, stop it…. you have to admit i have a mega point, now its you that is clutching at straws as the figures i have pulled out are factual. the facts are they said we lost 28/38 million this year, promo is worth 60 million a season more… then all the other bits a mentioned a facts too. Do you conceed we are making around 40 million a year from now onwards profit?? this profit can be spent all on reducing shit and paying back ashleys loan i know and agree with you. profit is profit though… how he decides to spend that profit is something else… would you not agree dude???

  44. Well, Craig. Looking at our income last time we were in the Prem, it was only £86 million.

    I think that paints a more accurate picture than your rough sums.

  45. Stu – Indeed, especially if we aren’t going to be waxing cash everywhere, then it has to be spent carefully and correctly

    It’s fine splashing £10 mill on one player, but if he gets injured then it’s no good. It’s finding the balance between the right amount of players in, with the right quality, and at the right price.

  46. i agree mate withu as i have said that myself! its how he spends it or he keeps it. that money he put int2 are club he would never get back anyway.unless we make profit each year. like he says after the second statment he doesnt wont it back so in my eyes we are debt free anyway. but like we all say lies all the time we dont no were we are at each time they make a comment.

  47. its not rough sums toonsy…. you have a problem admitting i am correct by the looks of it. i am merley quoting the figures used by our owm club. unlike usual, i am not streatching it. they said we lost 28 or 38 million this last season. They then said that promo makes 60 million extra income aseason. WE then add our new NR deal, kit deal, shirinking wages, two other sponsor deals and it does not take a someone too clever to do the math. these are not my figures, its official shit. please just admit i have a point and that its one you can not explain away. …. go on, it wount kill you!!

  48. Show me thae artcle Craig, and I will blow it out of the water ;)

    We know how you like to twist things and leave bits out, you even admitted it just then ;)

  49. Asim 38#

    Only English players are greedy, the Argies,Spain and Brazil players would rather die than not play for the country….
    Yeah right Asim , thats why they are all over here playing in the european leagues because money does`nt matter , grow up !

  50. toonsy says:
    May 27, 2010 at 5:26 pm

    In Craigs defence, toonsy the club have made it clear in that statement what we lost in the last two seasons, I don’t think he’s a million miles off.

    The last time we were in the PL our turnover was £86, but we didn’t have an income from shirt sponsorship or an income from shirt manaufacturer. I also think the TV revenue has gone up since too.

    There’s a good chance we’ll be turning over nearer £100m this season.

    Not to mention the wage bill that’s been nearly halved.

    So I could do with knowing why were still in the sh1t…

  51. Craig – And? Your point being?

    By the way, that is an expected loss.

    So promotion is worth £60 million right? Lets take your inflated of £60 million, ok?

    Dont forget that we will be losing the money from this season, so it’s not £60 miilion EXTRA, it’s £60 million INSTEAD of the income we have made this season.

    So that is the £60 mill, plus all th bits you mention. We will probably bring £85 million in as income for next season, like the last time we were in the Prem. Our outgoings are lower I agree. Profit? I don’t think so.

  52. i dont think we are in the shit at all lads. anyone can see from the figures that we are back in the profit right now, and by alot too. its all relevant to how much ashley wants to cream off the profit to repay his own interest free loan or repay the 20 million to the bank. He is free to do either to the max of the profit we have made this coming season… around 4o million. but profit is profit is profit, anyway you cut it. put it another way, we can make 20 million profit this next year, ashley can pay off the loan in full to the bank and print a report at end of year showing zero profit as the bank took 20 million. whatever ashley pays back over and above the nominal service loan is up to him. If he pays back the 20 million he is paying it with PROFIT.

  53. sorry chuck u need to grow up if u think brazil and argie players had a choose of playing in a breakaway league then they cant play for their countries u are realy daft then these players would rather die like i said world cup or a breakaway league.

  54. no toonsy… you are wrong, its 60 million extra for this season in prem. not total. the loss is not estimated, its the exact amount printed on our own website. 60 million take away 32.5 million means instant profit this season of 27.5 million… then add on NR new deal, less wages, new kit deal, shirt sponser, telecom sponsor etc etc. we are looking at least 35+ million profit this season.

  55. asim says:
    May 27, 2010 at 5:50 pm

    You need to grow up – Literally!

    Anyone who writes without a breath and all in one paragraph must be about 5!

  56. Craig – Are you not forgetting the other costs of £35 million? Whatever other costs are, im assuming travel/police/maintainence etc.

    I dont think we are far off breaking even next year, but it certainly wont be £40 mill profit. Not even Arsenal managed that FFS!

    The only thing that will stop us is if some of theat income is earmarked for spending already, hence the 5 year break even thingy.

    You aren’t right, neither am I. The only way we will find out is throihg the accounts, but I would guess the amswer is somewhere between what I say and what you say.

  57. i am talking about football. u are talking about nothing go 2 facebook and find a friend.u are like your name plain.

  58. toonsy, lets just look at two figures only – we lost 32.5 million last year. we gbet an extra 60 per season in prem. these are true figures.

  59. Angelofdeath… What do they sing about the Danish national team?… My german aint that good im afraid.

  60. Craig – But I spent £10 today and will earn £3500 tomorrow.

    Those are true figures, and they look impressive.

    But if I spent £10 today, earnt £3500 tomorrow, then had £3500 going out to be spent on bills then it doesn’t look as rosy does it?

    It’s only when you take EVERYTHING into account that you get a full and true reflection of everything.

  61. Well it’s officil. This measure has been announce by UEFA, FIFA and Premier League

  62. Plus a little clause in their to stop market breaking “sponsorship” deals by club owners. Nice.

  63. Stu, Chuck, et al.

    You might have missed the fact that the MAJOR clubs themselves have endorsed the proposed UEFA regulations.

    I suggest you visit the site of European Club Association, check the list of members and the news article regarding the new regulation.

    Link to the article: http://www.ecaeurope.com/Default.aspx?id=1111422

  64. Craig you are barking up the wrong tree pal.

    We will make no where near 40mil, we might break even or even push 10 mil at best.

    Promotion is not worth an extra £60mil at all, the new sponsorship is far worse than the last one too. The 60mil figure banded around is the potential extra revenues that comes with being in the top flight, it doesn’t mean you just get a cheque banked for that amount.

  65. Might add that ECA is not a Mickey Mouse thing either and for reference I’ll post a nice quote:

    “The European Club Association (ECA) is the sole, independent body directly representing football clubs at European level. It replaces the G14 Group and the European Club Forum, both dissolved at the beginning of 2008.
    ECA was fully recognized by UEFA and FIFA in a formal memorandum of understanding, which was signed in January 2008.

    ECA represents 144 clubs, drawn from every one of the 53 National Associations within UEFA, right across Europe, and is steered by a fifteen-member Executive Board.
    The formation of ECA brings stability to the football family in Europe, clearing the way for all partners – leagues, regulators, players and clubs – to work together in building the future of football in Europe.”