Monday, October 17, 2011

Balancing act

According to comments in Sunday's programme, the club are reportedly on course to break even this financial year. Significantly, this break-even point is to be reached before player sales are taken into account.

Having previously generated losses in the region of £35 million for the financial years 2008-09 and 2009-10, reports suggest that in 2010-11 our loss has come down to below £5 million and that we hope to turn the corner this year.

Bearing in mind that those figures tally in with the relegation season (that'll be wages to Little Saint Mick, Captain Pasty, etc.), the Championship season (that'll be the loss of TV revenue) and last season (that'll be wages for the likes of ASBO, Kevin Nolan and Jose Enrique) it represents the fruition of our careful (some might say tight-fisted) approach to running the club.

To be fair to Jabba and Llambiarse, while in playing terms they have continually followed each good decision with a howlingly bad one, off the field their understanding of the need to balance the books and clear the mess which they inherited from Fat Fred and Dirty Doug is finally bearing fruit, which is commendable.

The impact of our breaking even appears extensive. Firstly it ensures we're in line to meet all the FIFA Fair Play requirements when they kick in. Secondly it means that money generated from player sales should no longer be required to service debts but instead can be used to strengthen the playing squad and improve facilities. But thirdly (and perhaps most significantly) it also makes us a far more attractive prospect to investors seeking to take the club off Jabba's hands (assuming he's still interested in selling).

The one caveat to all this is that the club is presumably still carrying the interest-free loans which Jabba has provided and which he will presumably, at some stage, want repaying. However, at least we are presumably clearing other debts (e.g. any outstanding bank loans) and as such we look to be moving in the right direction.

Financially, if we can continue to operate in this manner then in the medium term we should hopefully see an upturn in fortunes, as without massive debts to service we will get to a stage where money spent in the club shop, on season tickets, etc. actually has a bearing on our player recruitment and hopefully our fortunes on the pitch. The optimist in me is terribly excited by this.

Jabba and Llambiarse may still have big question marks hanging over them (and the broken promises of a additional striker in the summer illustrates why that is the case) but at least their tight hold on the purse strings appears to be paying some dividends (figuratively speaking), and for that credit where it is due.

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Anonymous Anonymous said...

I share your disdain at having to admit Ashley seems to have done something positive by balancing the books while still having a competetive squad.

I just wish I was as optimistic as you regarding the money spent in the club shop and on tickets actually bearing fruit as squad improvements.

We shall see.

7:55 pm  
Anonymous Anonymous said...

This shows that people need to do what they do best - Ashley is a money manager, not a person manager (the revolving door of gaffers), nor a public statesman (the poisonous relationship with the fans), nor a football manager (the numerous $h|te decisions), etc, etc.
He may own the bricks and mortar, the contracts, the name of the club, but he doesn't own the spirit of the club, the love for the club, the future of the club...
I don't think he realised what a limited part of the club he was actually buying, and that's why he has struggled - he bought the power (& the problems) but not the respect and love he obvious craves.

3:09 am  
Blogger Paul said...

That's the problem with my relationship with Newcastle, I'm strung along by a belief that tomorrow it'll be ok. 32 years of heartache and counting on that front.

Also not sure why blogger decided to credit Ben with that post, it was me, he's way too pessimistic to have written some of that.

8:56 am  
Blogger Ben said...

I don't know about that, Paul - I'm inclined to give the pair of them some credit too.

Anonymous: Excellent point. Ashley is clearly capable of doing well as long as he sticks closely to what he knows. That said, the whole situation with the money from the sales of Rocky, Nolan and Enrique still sticks in the throat (if we're on course to break even without it being taken into account, then surely we should be prepared to spend at least some of it?) and it's easier to be optimistic and generous when all is rosy.

12:44 pm  

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