Do Newcastle United actually have £35m to spend?

Posted on July 1st, 2011 | 38 Comments |

Money, money, money, money.  MONEY!
How will that £35m be spent?
The transfer market is a strange and sometimes scary place, with confusion abound by exactly how much money we apparently have, others have the knowledge only provided by Football Manager and FIFA and you’d be surprised how correct that actually is. The long and short is, we have never had £35m to spend – never.

There’s a lot of confusion around exactly what we have to spend since the sale of local lad and full time thug Andy Carroll to Liverpool for £35m with £30 of that being handed over in cold, hard cash – just how we like it. Alan Pardew himself stated that the money was to be reinvested in the squad and even went as far as to say that he wanted it solely for players but unfortunately, that isn’t how it works.

At the start of the season, the manager and the chairman sits down and discusses season targets, contracts, incoming players, outgoing players and everything else you’d come to associate with a professional football club. They then decide on how much money they will need for the season; primarily both transfer windows. Anybody in the game will tell you that a manager has two budgets for a season: one for transfers, and one for wages.

Agent fees, signing on fees and other expenditures will fall under the transfer budget and that will need to be significantly larger than the wage budget which is still likely to be a few million pounds strong. Now the key phrase here is “agent fees”. The people everybody could probably do without, the horrible little mercenaries who look for the best deal for their player but also for themselves – and it’s often extortionate.

When a player is reported to be bought for £2.5m, we’ve actually probably played closer to twice that based on agent fees, signing on fees and, depending on whether we’re fronting other costs, travel, hotels and everything that goes with relocation – this gets especially expensive when you start signing players from abroad. There’s also the rarely reported ‘signing off fee’ which is where a player effectively tries to get one last payday from their now former club. The less said about that the better.

Since the sale of Andy Carroll, we have signed John Carver on a permanent basis, Tioté on an improved 4.5 year deal, sold Kevin Nolan, reportedly given Danny Simpson and improved contract, signed Sylvain Marveaux, Demba Ba and Yohan Cabaye, all of which on 5 year contracts, with exception to Ba who is contracted to us for 3 years, and they’re all likely to be on 40 to 50k per week.

None of us know how the board and the manager are handling contracts but we can make a good estimation that Newcastle United will be taking a years worth of wages for each player and putting it aside. I’m also going to assume that this is only for new players or players on new contracts.

Once you have split that lump sum up into chunks for the sake of transfers and wages, we realise that we don’t necessarily have that much money for £20m signings. Yes, a marquee signing would be nice but is it really practical and good for us in the long run? We have seen overspending at our club before and it almost ruined the club along with the drop in fees and finances that relegation brought.

Nobody knows how that money will be reinvested, but it’s not as simple as taking £35m and spending it all on transfers and agent fees. There were rumours that Mike Ashley was going to bankroll us to the tune of £15m, giving us a huge £50m of pocket money, but it seems more likely that money was to cover wages for the coming campaign – and I’d like that to be true. More money for playing staff!

“But Thump! What about the money they make from seat sales, season tickets, rent (for the businesses housed in SJP) and food, drink and match day programmes? What about that?”

That money will go directly back into respective areas. Money from tickets will go into the coffers of SJP maintenance (hopefully for a new PA system), likewise with rent money. Food and drink goes back into food and drink with finances made from match day programmes being given back to the printers and graphic designers as well as writers on the books at SJP. Lest we forget the security, stewards, website costs and the other thousand things I’m not remembering. All of this is considered overhead.

Newcastle United is not just a football club – it’s a business and it must be ran as that. Yes it’s easy for us to forget there’s more to the club than just the football but it’s a fact we must remember and embrace.

We must also remember that each player comes with a wage demand and that will inevitably be coming out of that £35m. I won’t do the math but I’m sure you get a good picture of how that impacts our actual net spend during the transfer window.

On a more positive note, we have so far signed three players on a free with a reported £4.5m for Marveaux with the outgoing Kevin Nolan for the same fee meaning our net spend is primarily on wages – meaning the better part of our transfer budget is still ready for spending. I believe we will have a marquee signing for a sizeable fee but who that will be is anybodies guess.

Of course, Kevin Nolan’s leaving us resulted in his wages being freed up to be spread elsewhere and with the likes of Xisco and Alan Smith rumoured to be on their way, that’s £120k a week in free wages to go to players who, in all fairness, probably deserve it more.

With Alan Pardew working his magic in the transfer market and Graham Carr doing his outstanding work, I’m sure you’ll all agree that we’ve had a good window so far and with it officially opening today, we’re in good stead.

All of that aside we can’t escape the £35m point – we have a sizeable chunk of cash that is, quite literally, doing nothing but increasing in interest. Why is it not being spent? I’m all for not paying over the odds but the fans and players have been screaming for a big name signing. I’m not talking Ronaldo or Messi but a player we can get truly excited about; somebody we all recognise. Sturridge, N’Zog – I can go through the list of Premier League players and give a good list of players I’d love to see in the black and white.

Of course, this may all be irrelevant in the next couple of weeks. All we can do is sit tight and wait to see who is coming through the door – Pardew, and Ashley, will be judged on September 1st.

In Carr we trust.

NUFCBlog Author: Thump Some say his bones are black and white but that is yet to be medically proven. Currently writes for a few different publications and likes to assert his imaginary authority on nobody in particular. Beware: eats children. Thump has written 36 articles on this blog.

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38 Responses

  1. ‘Kin typical. Just as I’m getting ready to publish this I find out Anal Oliver has put out the same bloody thing.

    I am angry.

    Edit: Best typo ever.

  2. Thump. An excellent and simply written post. Trouble is, you’ll never convince the ones who are obsessed with the idea that £35m has or will go unused and end up in the owner’s back pocket!

  3. Thump says:
    July 1, 2011 at 7:21 pm

    “‘Kin typical. Just as I’m getting ready to publish this I find out Anal Oliver has put out the same bloody thing.”

    Thump, if you are really writing the same things as Anal Oliver, the only thing I can do is advise you to seek help as you must be living in a fantasy world and hearing strange voices in your head.

  4. “How will that £35m be spent?”

    It doesn’t look like £35 million in that photo Thump, it looks more like the money that’s left over once all those player contracts have been taken out of the Andy Carroll fee.

  5. I Have a theory. There never was 35 million in the pot. I think it’s the same 25 quid we got for Alan Suddick thats been floating around for the last 30 years.

  6. You’ve forgotten to include the 50 million in revenue from Sky etc. If you can’t see what Ashley’s plan is then you deserve to be taken for mugs, it’s so obvious what he’s up to but you can’t see the wood for the trees. I truly hope I’m wrong and will be the first to post back on here and admit it but Ashley’s puppet show rolls on.

  7. Great blog Thump, well done.

    I’m no Ashley lover, blame him 100% for the mess of chronic decisions that sent us spiralling towards relegation, but I’m getting so tired of ignorant comments on the blogs with people (kids?) completely unaware of business realities or the severity of the mess Fat Fred put the club in.

    With even just the £100m debt FF left NUFC, the club would be paying £10-20m A SEASON just to service that debt, without reducing it at all. Fat Freddie mortgaged us to the hilt and then pre-spent future income streams to boot (EMO)and had he still been in charge when the financial crisis hit there is no doubt NUFC would have done a Portsmouth. Thankfully we had Fat Ash in charge and his deeper pockets could absorb the debt load so we didn’t go bust. I’m not thanking him for that, just pointing out the reality that so many seem unaware of.

  8. Also why do people keep going on about getting an EXTRA £30-50m from Sky for going back to the Prem? Total nutella if you can’t realise that we LOST that money getting relegated, kept most overheads and player wages and that Sky money isn’t a bonus, it just brings the club’s cashflow back to what it was. Certainly there’s NO extra to be spent!

  9. If Ashley, as some presume, is just pocketing the transfer cash, sky revenue etc. to line his pockets, why did he outlay some £250m in the first place? he was worth a billion or more before hand, i haven’t heard of anyone getting rich buying football clubs. I’m not saying he’s perfect but do you really think £35m is going to radically change the lifestyle of a billionaire not to mention he would still be severely out of pocket if he had squirreled the money away anyway.

  10. Even with the relegation money Ashley had to put $25 million of his own into the club to make sure it bounced right back up. If you look at who was relegated last year, not a one of them came close to returning to the prem. For that alone, it is absurd to slag MA off because of his spending activities. He, and his staff may have made blunders in operations and player selection, but it was he who got the checkbook out of HIS pocket to make amends.

  11. Good points well made,but you seem to be forgetting the millions in tv revenue and for finishing in a mid table position.Sol Campbell is also off the wage bill.Furthermore other teams seem to be able to reinvest the vast majority of transfer revenue on player transfer fees, the Torres and Henderson monies didn’t exactly gather dust in the accounts of Sunderland and Liverpool.Not spending money may work but It’s a big gamble that could easily go wrong.

  12. Newcastle is now run as a business (at long last) and I suppose like any business it would have prepared a budget at the start of its financial year.

    Included in the budget would have been an amount set aside for transfers. This amount would have come out of revenue generated by the club that the club would have predicted with some degree of certainty like ticket sales, merchandize, sponsorship etc. What they almost certainly couldn’t have predicted was getting £35m for the sale of one player.

    I suspect that the £35m goes back into the club to keep the club going with a proportion of it being added to the existing budget for future players as well as improved contracts for existing players.

    It is naive to think, as many do on these bloggs, that the club ring fences the £35m and only uses it to buy players and that the transfer value is the only cost involved in a player transfer, as the article quite rightly points out.

  13. Your right the money is there to spend. But will the c**t spend it i will reserve judgement until the 1st of september. I dont hold much hope with pardwho saying 1 or 2 more players in and naylor for 1mil is one of them???

  14. Like I said the other night kk was right ma will not & never will spend that ac cash on players,, more like the casino’s, its a sad fact that nufc r now a selling club & I still say Jose & tiote will b sold on deadline day, & ma will pocket that aswell, nufc is just a means ov supporting his gambling habbit & £50 notes 2 wipe his fat f***in arse with

  15. jimbobnufc @ 13

    The club may pay corporation tax depending upon its financial results.

    If the club made a profit there is nothing stopping it from paying dividends. In this case, there is only one shareholder. He would be liable to Income Tax.

    BTW, as I understand it, there is no VAT on buying players as it’s about one club breaking a contract with another club. However, there is VAT when dealing with agents under certain conditions.

    Very boring.

  16. Wages are taken from the running costs of the club!!!!!!!!!!!!!!!!!!! Sky, gate receipts and merchandising cover wages. If Carroll was not sold for e35 million would we not have paid player wages and played the reserves. If Carroll was not sold would we not have bought any players!!! Stop being mugs!! Fat man is a not going to spend any of the e35 million but is just trying to recoup the money he ploughed into the club trying to clear the debt. Prob e10 million from sale of best/barton/enrique if not more and will prob spend that!!!!

  17. I’m all 4 clearing debt, but as 4 ma & ap were the 1,s that came out saying, we r going 2 buy a world class international player (big money) ?? But as usual it was all bullsh*t now I’m not saying that who we,ve got in arnt class but there not big money, we only want wat they said

  18. @nezza@14: we cant compare NUFC to other teams. Most don’t have half the debt we do (Mackems) and the ones that do have WAY more revenue to cover the interest payments (Liverpool). Many clubs are taking a BIG risk in the hope that it pays off, where we should have learnt that lesson from FF. Note there IS a football finance tsunami coming at some stage in the next 3-7 years, many will be swallowed up by this. We won’t. Many clubs, inc some big ones, will come to regret the spending gambles they are taking now.

    @Billy@19: Mate the club’s income alone does STILL NOT cover the wage bill as we are still waiting for future income spent by FF to be exhausted. Also the wages do not come out of running costs, they ARE running costs!

  19. Will be interesting to see how Liverpool cope with their daft spending as if they don’t get into CL in next few years, they will struggle financially. They already have 7th highest wage bill in world football and look just like we did before we fell after Bobby.

  20. If Ashley et al want us to believe what they say why don’t they publish the accounts. If they have nothing to hide whats the problem in doing that as do 1000s of companies every year?

    However, we will not find out what is going on for a couple of years unless someone would leak the accounts to the press.

  21. The fault for all this speculation, argument and counter argument, lies at the door of the owner, full stop. He lies to the fans, he continually undermines his own manager and he refuses to communicate anything with any clarity, instead we get a faceless, generic statement with plenty room for different interpretations. Meanwhile, the puppet he’s installed as manager, continues to wax lyrical about how we’re going to bring in quality and creativity. Like most things in life, you want decent quality you have to pay for it. You can use all the financial soundbites you like, such as ‘ring fencing’ and ‘revenue streams’, to convince yourself that the latest free transfers are big bucks signings ‘in real terms’ but you don’t have to be a financial wizard to spot a spiv.

  22. The answer to this headline is.. NO! At the end of August there’s gonna be a shit load of protests for wanting that bumhole out of our club. I bought a season ticket thinking I would be watching a much improved team with names such as N’Zogbia and Sturridge scoring goals for us to celebrate. But it turns out we’ll just be relying on Ba to fire them in regulary. If he does spend on players I hope he expects 50,000+ people screamin ‘get out of our club’.. Once again! Stupid fat useless piece of sh!t.

  23. Oh to support a business!!

    I can’t wait until my two year old son is old enough, and we can go directly from watching a relagation scrap to the bank and look at NUFC’s massive bank balance.

    Ashley should be in charge of clearing the deficit, he’s conned as many of you as the current government. He manages to take at both ends and convinces half of you it’s good news for US! You have even put in your article that the money from food and drink sales will go on more food and drink! Are we to assume Ashley breaks even at 4 pound a pint!!!! Next he’ll be passing five loaves and two fishes at the kiosks.

    The man will keep a bit here, and another bit there until all his loan has been payed back. Then he’ll have a club worth five times what he payed. His other businesses will be worth more, from sponsorship of an internationally recognized football brand, (the only reason he bought the club), and we’ll be left with a Blackburn-esque club, filled with the next batch of french youngsters, and the ones that failed to materialise into 10 million pound transfers.

    Can’t wait!

  24. This is not about football it’s about finance !
    Had’nt realised we had so many wannabe CPA’s.
    I must say i’m more confused than i was prior to reading all the crap you guys wrote.
    Most of which is pure speculation, with little fact and even less knowledge of how accounting works.

    Face it Ashley is a bit of a flim flammer and it’s a case of buyer beware, what has taken place is the old bait and switch scam, where a retailer advertises a product, but when you show up, he claims they are sold out and try’s to sell you another product.

    It’s either gonna be, we tried but could,nt get that player (yeah because they wanted more than £4 or £5m.) and oh we said Taylor was’nt Toro’s backup, but he’s gonna have to be now, cause we could,nt get M,Bengue (again they wanted more than…)or Izaguirre same….

    I believe that both Joey and Nolan were targeted to go,(too much influence on the side) Joey’s going to screw them by running out his contract, Nolan got 50k a week for 5 years and security, Joey will pick up a nice salary as a free agent, Pardew , though he actually wanted rid of them, gave lip service to the contrary and now pretends he’s not bothered if Joey stays.

    Most aware fans know that Ashley is the puppet master and people like Llambias and Pardew have very little if any input, so now Steve Stone has been used as a spokesperson, hey the guy did’nt make a satement of the top of his head, it was a PR ploy, easily recognised.

    Yeah folks, it’s the thirty five million pound question !

  25. Beardsley’s ugly twin says:
    Oh to support a business!!

    Newcastle United Football Club IS a business! I don’t understand why this is so difficult to understand – we can simply not be ran unless it’s ran as a functional and profitable business. Remember, you do not want a football club to be in profit – you want it to break even. That way you have money for overhead, transfer wages and so on.

    You have even put in your article that the money from food and drink sales will go on more food and drink! Are we to assume Ashley breaks even at 4 pound a pint!!!!

    What about the wages for those who serve the food and drink? What about the food and drink that is wasted? I don’t know exactly how many bars there is in SJP but I know there’s a good many. I also know that when the stadium is sold out, 52,000 people don’t necessarily go and buy food and drink.

    As for ‘who is in charge of clearing the debt’, you’ll find that’s Ashley and his financial advisors. Every club has them and yes, a chunk of revenue will be made available and payable directly to the bank, likely to clear off interest and a bit extra so they can keep chipping away at the debt. And for the last time – Ashley is not pocketing transfer fees and Sky revenues. The loans he made are interest free and it’s common knowledge they’re to be paid back by the person who buys it (the club) from him – not the club itself!

    You all have such short, fickle memories. Four players have came in – Cabaye, Marveaux, Ba and Abeid. We’re also gaining Ben Arfa and Gosling. Colo4Captain isn’t even letting them kick a ball and is already complaining about signings. I could give a toss less if it was Ba or Shola knocking in the goals as long as it’s consistent performances with consistent goals.

    Just so we’re all clear and on the same page: the transfer window literally opened yesterday. What are you winging about? Four players in before the window even opens!

    @neiln: The problem isn’t him ‘lying’, the problem is with him simply not communicating. Isn’t that what Del Boy was brought in for?

    @Clint: Who are you talking to, mate?

  26. @ Thump – ‘The problem isn’t him ‘lying’’
    Really? I’d say being a proven liar is a huge problem if you’re running a business and want to gain customer confidence. As for bringing Del boy in, you’re avin a laaaarf mate, another proven liar that doesn’t communicate with the fans! That was a master stroke wasn’t it? Those of you trying to be big business advisors are banging on about servicing the debt etc, yet, like the owner you are forgetting the clubs main assett, its fans. If you can’t see a scam when it’s happening in front of your own eyes, don’t ever move to the Sahara desert, you’d be drained dry by a sand salesman!

  27. Just heard some great news which will make every toon fan happy Enrique will sign a new contract and a bonus simpson will sign 5 year deal!!!!

  28. I love the conspiracy theories that Ashley is out to screw the club over. So sad. I guess having an outlet makes some people feel better. Just because you have money does not mean it has to be spent. I’m sure there would be lots of happy people if we went out and bought a $35mill player but then a year later when he turns out to be a flop and we are paying massive wages all those same people will be pissed of we cant afford better and blaming the scouts etc.

  29. Today is the 2nd of July and the window will not close until 31st August,what is the point in making conclusions on MA intentions? the signings up to now are promesing, give them a chance, Rome was not built in one day.

  30. JR says:
    July 1, 2011 at 10:21 pm

    “If Ashley et al want us to believe what they say why don’t they publish the accounts. If they have nothing to hide whats the problem in doing that as do 1000s of companies every year?”

    They do publish the accounts annually JR, it is required by law and they can be obtained from Companies House for a small fee.

  31. Whats going on with so many blogs and websites this summer – like most fans I spend time everyday on some of the blogs ect to see whats going on – what rumours are flying about -and guage the general opinion and feeling of fans , and the one thing that is really “frustrating” me at the moment is the way fans are sticking up for Cashley and making excuses for him over the money from the sale of Andy Carroll – its unbeleviable the amount of crap thats being spoken about agents fees, signing on fees , wages etc, Cashley is sat in his casino somwhere with a great big wad of cash – saying absolutely nothing to us – so we are making his excuses up for him – this Andy carroll money represents a one off chance to buy 3/4/5 top class players and get us back into the upper echelons of the premier league , – where most of us think we belong , and we are not going to take that opportunity – and worst of all there are so many people out there at the moment sticking up for Cashley and his ” transfer policy”, the bottom line is wages etc are on-going costs that are ( now) more than met by the ongoing income of the club , – season ticket sales, gate reciepts, sponsorship money , plus all other relevant expenditure ( club shop , shearers, pie , pint & programme ect )not from the sale of our ” star” player, and the problem is we are to blame, like all other season ticket holders I turn up week in week out , even when we where in the champioship we still had the 4th biggest gates in the country – and thats the problem – Cashley knows no matter what he spends he is not going to get any more revenue in – the only way that will happen is if we qualify for the CHAMP LEAGUE & IMO he isnt prepared to gamble for that , so we will sit mid table 50k of us will turn out each week untill Cashley eventually gets a buyer – just think back – what happened to the money from Given , N’zogbia, Milner ect – dont get me wrong I hope I am way off the mark and in the next few weeks we bring in the likes of Sturridge ect and have a real go at climbing the table – however I just can’t see it happening – Cashley is running NUFC the same way he runs Sports Direct – and when was the last time anyone walked out of there thinking ” Ive paid a lot of money for this product – but it was worth it and will give me good value over the next few years” , thought not , like most fans I dont want to see a return to the shepard era of ” Headline” signings (EMO etc) , but we are now being run on the cheap till he can find himself a way out , – and all this crap from Pardew ( who aint doing a bad job to be honmest) is going to end up making him look a little bit silly. As Jonny Lydon ( AKA Rotten) once said ” ever get the feelin’ you’ve been had!!!

  32. @Charlie – “Just because you have money does not mean it has to be spent”.

    So why tell the fans that they WILL spend it then? Had they come out and said the AC money was to be used to service and/or reduce the club’s debt in order to keep the club going, I’m sure most on here would understand that. Had they said they were going to spend a little now, a little in the Jan transfer window and the rest on improving the training ground, again that would be understandable. But how else do you expect people to react when they’ve been made promises that are then not kept? Milner, Martins money to be used for squad strengthening anyone? He’s clawing back his investment before selling the club, it’s so obvious. Install a puppet manager who’s indebted to the owner, grateful of the job opportunity and therefore easily manipulated, given a shoestring budget with little or no say in who comes in or out and expected to take the flak when all the promised quality signings fail to materialise. The quicker he gets his money back, the quicker fat boy will sell up and bugger off.