What would your purchasing priorities be (aprt from industrial quantities of your preferred alcohol) and who would you sell?

-- Anonymous, February 26, 2002

Answers

Sales : Quinn, McClen, Marca, Gavilan, Bassedas, Griffin

Purchases : Left back, right back, central midfielder, mobile version of Alan Shearer

Seems to be okay cover elsewhere, although probably not at the required standard, yet

-- Anonymous, February 26, 2002

decent cash on a hard left back. Wayne Bridge would be nice. i would test out lazio for mendieta (crazy idea i know) but more realistically Carrick might be tempted...also i'd get in the 3 blackburn guys if they drop Dunn Duff and Jansen.

-- Anonymous, February 26, 2002

Assuming you aren't about to sell SJP, how do you propose to obtain the funds given you are 109 million quid in debt?

Not being facecious (sp?), just genuinely interested...

ML³

-- Anonymous, February 26, 2002

A debt is not a problem so long as the repayments are managed. Like, I can be £100,000 in debt but so long as I can pay my mortgage every month I can still get a nice car.

-- Anonymous, February 26, 2002

ML, our debt rises every time a Makem comes on here. By the time Roly re-appears, we'll be in worse shit than Real Madrid were a few months back.

-- Anonymous, February 26, 2002

.....borrow it from Bob Murray: he doesn't seem to need it!

I'm as incredulous as you at times about the Toon's finances, ML. However, if we were to qualify for the CL, just watch what happens.

-- Anonymous, February 26, 2002

Clarky, where are these £100 million+ figures coming from all of a sudden? Are people including Cameron Hall's debts, too?

I mean, our debts ARE to be repaid over a period of time, they aren't due Monday week.

-- Anonymous, February 26, 2002

Dougal, I'm not a finance bod like Roly, I just read it in the Independent article that someone posted up on the RTG board:

http://sport.independent.co.uk/football/comment/story.jsp?story=120040

Makes fascinating reading.

Sure you do need to borrow a bit to make a club successful, but 109 million is scary stuff. What happens when the club can't afford the repayments?

-- Anonymous, February 26, 2002

I read that weeks ago, ML, but seriously, I don't think our debts are quite that high. You have to bear in mind that do have some revenue, too!

-- Anonymous, February 26, 2002

When it says "– the website was last updated in 1997" do they mean dot cock?

-- Anonymous, February 26, 2002

BTW, we are buying Hubner, Litmanen and Fener....according to the papers.

-- Anonymous, February 26, 2002

It's ridiculous scaremongering with this £100 million figure. To my knowledge almost all our debt is in the form of bonds that we sold to investors, repayable ONLY from gate receipts over an extended period and at the bondholders risk if we default (ie they can't sell other assets of the club if they want repayment). This effectively ring- fences the debt so income from the Champions League, player sales etc. CANNOT be used to pay off debt and in theory should be reinvested. If there is a concern, it's that surplus cash is all siphoned off as dividends to Shepherd and Cameron Hall.

-- Anonymous, February 26, 2002

The Makems are obsessed with NUFC's finances. Most of them are talking about something they know nothing about. It's just wishful thinking on their part that we are in danger of going out of business. They want to worry about their own team.

-- Anonymous, February 27, 2002

According to the last Annual Report, as at 31 July 2001 long-term debt was £83m. However, we also reported "creditors due to be paid within one year" of a further £26 m. This is where it gets a little complicated as in assessing the real situation you need to also consider the position with short-term debtors, ie. £16.4m.

In simplistic terms, you could say long term debt is £83m plus 'net' short term debts of some £10m - as at 31 July 2001.

A further complication is that the restructured arrangements with NTL were consummated after the 2001 Accounts were finalised. From memory, this took ca.£24m of debt - in the form of the long-term loan from NTL - and converted it to a special class of equity. This action reduced the long-term debt by £24m and significantly strengthened the Balance Sheet.

So, unless we have taken on any additional debt to service the acquisition of Robert, Bellamy and JJ (highly probable), the adjusted long-term debt position would be around £60m.

Considering the incoming transfers mentioned, my instinct is that the real long-term debt position is likely to be around £70m.

Hope this incomplete analysis is helpful.

-- Anonymous, February 27, 2002

Any idea how our debt is vis-á-vis that of other PL teams? Sure, it looks big, but how big is it put into perspective?

-- Anonymous, February 27, 2002

As for my spending requirements ....

Champions League games would give us 3 matches with home gate receipts of 50,000+ * £25, say, = £4m.

TV revenue is estimated to be £1m per game = £3m.

You also get £500k per point. Lets say we get 6 points and go out after the first phase, that makes £3m.

Merchadising, advertising, corporate sponsoship will all be up, no real feel for this but I wouldn't be surprised if it was £1m.

This makes £11m.

On the players out side of things I'd expect my sales to raise £6m, that takes us up to £17m.

If we finish 3rd say, then we'll get 10 places higher payment from the Premier League of 10*£380k at last year's rate = £3.8m.

Now we're up to £20.8m

Newcastle seem to have a depreciation on players that now allows an annual transfer pot of £10m-16m, lets say £12m. Now we're up to £32m.

Wayne Bridge would cost £6m, say. A right back could cost £3m. A central midfield with European experience could be £7m. A mobile forward to cover Bellamy/Shearer/Cort/Shola may be another £8m. Expense = £24m, and maybe there's even money left over at the end and reduce that debt that seems to be crippling our progress !!

Now how are Sunderland going to pay for a Niall Quinn replacement ??

-- Anonymous, February 27, 2002

Thats the problem with mags, Lynda, always generalising.

I am not interested in having a dig about finances. As far as I'm concerned, football is about winning things for the fans, not making profits. I'm just interested why NUFC can afford to keep shelling out for quality players in the 5-10 million quid bracket and SAFC don't/can't/won't.

But for any other mackem who wants to use it as ammo, it's no worse than banging on about free tickets.

ML³

-- Anonymous, February 27, 2002

Poor is a state of mind, being in debt is a temporary situation.From where i'm sitting Newcastle are in a temporary situation, Sunderland are in a state of mind.

-- Anonymous, February 27, 2002

"Newcastle seem to have a depreciation on players that now allows an annual transfer pot of £10m-16m, lets say £12m."

If players getting worse magicks up 16 million quid, you have already answered your own question Mr Scottish Play.

ML³

-- Anonymous, February 27, 2002

Swift, I'm not sure if this is what you mean, but I would agree that SAFC needs a new mindset if it's going to succeed: Silverware not Shareholders, Punters not Pounds...

I'm not sure about a debt being temporary, my mortgage runs for 25 years which doesn't seem very temporary to me.:o(

ML³

-- Anonymous, February 27, 2002

ML³

if you buy SK for £650k and spread the cost over three years of his contract it'll hit your bottom line at ~£200k per year. At the end of the three years he has depreciated value wise to nil and you can afford to spend another £650k on a a player without making much difference to the bottom line. You need the 'cash' to be ablepay for him but the hit to the bottom line would stay the same.

Same thing happens to NUFC. We buy Shearer for £15m and it hits the P&L for £5m a year. If we have the cash, and we don't mind having £5m hit to the books, then we can spend again after three years.

So a more current example is Dyer. Joins us for £6.5m in July 1999. Has a 4 year contract so club take a hit of £1.6m per year over the length of his contract. At the end of his contract two things can happen. He wishes to go and the club sell him for £20m say. Stacks of dosh to transfer kitty. Or, hopefully, he stays, but stops depreciating, his original £6.5m has been accounted for. We're three years into his contract so 3/4 of him should accounted for, or about £4.8m

What we can now do is decide that at our level of turnover we can afford to carry a £1.6m depreciation like that, particularly as Dyer's value has risen so much. Lets look around and what can we do ? Well lets buy Jenas, the next Kerion Dyer type on the scene. In three years time, Jenas will be 22, worth £20m and we can do it all again. It's a virtuous circle

This happens all over the team and you get to the point where yu can run at higher levels of tranfer traffic.

Now at Sunderland Reid looks for bargains, and can't break into the virtuous circle. For him to look to replace Phillips say the club has to step from having a £200k annual hit to maybe a £3m annual hit, as well as finding the cash to pay up. (Cash would be easy to find I suggest). Newcastel last three signings of Bellamy, Robert and Jenas come out at £21m+ which will hit us for £7m per year over the next three years. Could be viewed as a gamble but how much would we expect to get if we had to sell those players now, we'd definitely get our money back at worst case.

So, how do Sunderland replace Phillips, Quinn, Schwarz, they continue to struggle cos they aren't prepared to take the step required. Long may it last :0)

-- Anonymous, February 27, 2002

Thats the problem with mags, Lynda, always generalising.

LOL ML3!

-- Anonymous, February 27, 2002

Back to the original request.

What we seem to forget is that we're moving up the pyramid and we'll need better players.

When we were in the 1st division and got promoted there were some who wanted to give the players who got us promoted a chance at the top level. Best example was David Kelly, a guy who was pure class at 1st division level. Keegan though not and brought in an aged and decrepit Peter Beardselt instead.

One of our most solid players through the 90s was Robert Lee, when he was picked for his country he never let any one down but he really didn't excel or prove to be a good international class player.

We have to recognise that the players that get away with it at Premiership level, like say Elliot or Speed will not be good enough when we play in the CL and only play against the equivalent of the top 4 sides. There will be no games against Leicester or Derby or Bolton, every game is Arsenal or Liverpool or Man U. We need to have 11 performing players. Bobby has to be hard, and I think he will be

-- Anonymous, February 27, 2002

Personally, I'd go for a left back as a matter of urgency. Problem is, the World Cup will inflate prices.

-- Anonymous, February 27, 2002