Pros for buying SAFC vs NUFC

[Grumpy Old Man]

Pure rubbish. The tv deal is up for negotiation again,to begin in 2019. There's now talk of Silicon Valley getting involved. So the deal is going to go right up again.
Already the overseas deal has beem negotiated in maybe 10 or 12 of the 70odd regions, and it's already up to almost half of the current one.
The NFL deal in comparison is worth £40bn a year with a market mainly concentrated in North America. The PL already reaches 200 countries and the tech companies want a slice. The current tv broadcasters won't loosen their grip easily.

And, like all the deals before it, 90% of the increase will end up in the hands of players and agents. Outside the really big boys, clubs operate at the absolute margins of profitability. Your falling for the Deloitte "Rich List" delusion - that turnover is all that matters. It doesn't matter how much your turnover is - if you spend more than that you'll end up in the clarts.

 

[What A Waster]

And, like all the deals before it, 90% of the increase will end up in the hands of players and agents. Outside the really big boys, clubs operate at the absolute margins of profitability. Your falling for the Deloitte "Rich List" delusion - that turnover is all that matters. It doesn't matter how much your turnover is - if you spend more than that you'll end up in the clarts.

PL wages to turn over figures are available, don't think anybody is at 90%.

 

[Sima]

£400m to get you into the Europa League spots

Absolute fantasy, I must have missed Swansea or Bradford's massive spending to get there a few years back.

 

[Grumpy Old Man]

PL wages to turn over figures are available, don't think anybody is at 90%.

Look at profits, and profit percentages. Outside the big 4, they're woeful. Also, bear in mind that few clubs have negative transfer spend - as in more coming in than going out. Most of that is spent on overseas players, and benefits no-one in English football. The point I'm making is that increases in TV deals have not, in the past, resulted in clubs becoming any richer. All that happens is that there's an inflationary transfer and wages spiral that leaves no-one better off.

£400m to get you into the Europa League spots

Absolute fantasy, I must have missed Swansea or Bradford's massive spending to get there a few years back.

That was then - realistically, how much do you think you'd need s spend to get there on a regular basis - one offs don't count.

 

[What A Waster]

PL wages to turn over figures are available, don't think anybody is at 90%.

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Here you can see that Villa who finished bottom were at 85%, as were Swansea on 85%, Palace 79%,Stoke 79%, Sunderland 78% and WBA 76%

These figures include the 2013-16 tv deal. 16-19 deal was worth about £40m more to clubs. So wages to turn over will have dropped.

 

[Grumpy Old Man]

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Here you can see that Villa who finished bottom were at 85%, as were Swansea on 85%, Palace 79%,Stoke 79%, Sunderland 78% and WBA 76%

These figures include the 2013-16 tv deal. 16-19 deal was worth about £40m more to clubs. So wages to turn over will have dropped.

Only if wages stay the same

You really believe that?

 

[What A Waster]

You must be logged on to see external links

Here you can see that Villa who finished bottom were at 85%, as were Swansea on 85%, Palace 79%,Stoke 79%, Sunderland 78% and WBA 76%

These figures include the 2013-16 tv deal. 16-19 deal was worth about £40m more to clubs. So wages to turn over will have dropped.

Pasted the wrong link.

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[Baghdad McBadLad]

What is Short or Bain actually doing to try and sell the club to an owner who understands footy in general?

 

[What A Waster]

Only if wages stay the same

You really believe that?

Wages will climb, but they won't climb by 50% in line with the televsion deal. Players are under contracts signed before the revenue from the new deals came in.
A whole wage bill doesn't just ramp up by 50% once a tv new deal is signed does it

 

[Grumpy Old Man]

What is Short or Bain actually doing to try and sell the club to an owner who understands footy in general?

I refer you to Len Shackleton's autobiography, specifically the chapter entitled "The Average Football Director's Knowledge of Football", for an accurate assessment of the chances of anyone identifying such an individual.

 

[The Fish]

You're missing my point. I'm talking about how, for an investor-type buyer, there's potentially less financial commitment needed to be put into us to realise a profit of say, £100m, than would be needed to put into you to yield the same profit.

I'm saying you could buy us for £150m, spend £100m getting us to lower half PL, and you have an investment worth about £400m (going off Ashley's valuation of you now). That's a £150m profit on a £250m investment. To get you to the next level, they'd have to buy you for £400m, and may be spend as much again to get you to Europa League level. The club might then be worth, say £1bn. That's a £200m profit, but you've had to commit £800m to get it. Assuming, of course, either investment works; as we both know, football is very far from a means of guaranteed success. However, for an investor-led buyer, buying us would seem to require less upfront capital. For a buyer for whom that's not a relevant factor, then, at the moment, you're closer to playing with the big boys, and thus the more attractive prospect.

By the way, the only rewards the PL gives you is a better share valuation, and, for a certain kind of owner, a chance to bask in a warm, fuzzy glow of reflected glory. Any extra income you might get is swallowed up by additional wages, etc.

Ah I get it, sorry. I wasn't thinking about a buy to sell owner, I was thinking about a vanity project. The kind of money that's being talked about, I think you're right, we wouldn't attract buy-to-sell owners. It's like buying a house that needs a bit of work with a view to adding value to it and reselling it in the future for a profit. Versus buying a house that's pretty much good to go, and only adding a bit of value to it. There's a profit ceiling?

I do think a Premier League club can be competitive and turn a profit even with the additional wages. It depends on the TV and commercial revenue surely? For all his many, many faults, Ashley has reduced costs, reduced wages and so on, however given his standing in the world of business, our commercial revenue is appalling. Should a new owner work on that side of the money pot our profitability should spike?

fwiw, I don't think it would cost £400m to get Newcastle to a Europa League level from where we are now. With the manager we have I think we could achieve that for significantly less. And if that investment is over 3 seasons, any transfer costs could be offset by player sales and tv/commercial revenue?

 

[Grumpy Old Man]

Wages will climb, but they won't climb by 50% in line with the televsion deal. Players are under contracts signed before the revenue from the new deals came in.
A whole wage bill doesn't just ramp up by 50% once a tv new deal is signed does it

They might if you buy Neymar

Seriously, the point I'm making is that the history of TV deals suggests that very little of any increase in income stays with the clubs receiving it. We've already seen that with the way transfer fees have gone crazy, and, while Neymar is an extreme example, wages on new contracts do seem to be considerably higher than before. There's more money sloshing around, but clubs, in general, won't be much more profitable on the back of it.

 

[What A Waster]

They might if you buy Neymar

Seriously, the point I'm making is that the history of TV deals suggests that very little of any increase in income stays with the clubs receiving it. We've already seen that with the way transfer fees have gone crazy, and, while Neymar is an extreme example, wages on new contracts do seem to be considerably higher than before. There's more money sloshing around, but clubs, in general, won't be much more profitable on the back of it.

Gotta say, I'm glad the players earn the money they do. Rather them get it than shareholders. Whilst tickets could be cheaper and tv subscriptions cheaper, buying tickets and paying for sky is optional, so we are part of the problem.
We want to see the players not the chairmen, so the players earning most out of it is fine by me

 

[Grumpy Old Man]

Ah I get it, sorry. I wasn't thinking about a buy to sell owner, I was thinking about a vanity project. The kind of money that's being talked about, I think you're right, we wouldn't attract buy-to-sell owners. It's like buying a house that needs a bit of work with a view to adding value to it and reselling it in the future for a profit. Versus buying a house that's pretty much good to go, and only adding a bit of value to it. There's a profit ceiling?

I do think a Premier League club can be competitive and turn a profit even with the additional wages. It depends on the TV and commercial revenue surely? For all his many, many faults, Ashley has reduced costs, reduced wages and so on, however given his standing in the world of business, our commercial revenue is appalling. Should a new owner work on that side of the money pot our profitability should spike?

fwiw, I don't think it would cost £400m to get Newcastle to a Europa League level from where we are now. With the manager we have I think we could achieve that for significantly less. And if that investment is over 3 seasons, any transfer costs could be offset by player sales and tv/commercial revenue?

No worries. As a vanity project, you're clearly a better prospect at the moment than we are; I don't think I've suggested differently. Looking at the Pl, the only people raking in big money are the ones in the CL most, if not every, year. You might be able to get to EL level for less than £400m, but, the way fees are going, I wouldn't say it was a given. There would be an offset, yes, but once you're there, you have to carry on buying to stay there. Commercial income? European football ought to bring bugger sponsorship deals, but in term of boxes, etx, geography is against us both. It's easier for a multi-national to entertain in London than the NE.

 

[Sima]

That was then - realistically, how much do you think you'd need s spend to get there on a regular basis - one offs don't count.

One off's don't count? Don't remember you mentioning that in your previous statement? Goalposts moved.

Regardless, you wouldn't have a £400m expenditure immediately. You'd possibly have it over a number of windows but this expenditure would be heavily supported by the TV revenue and other commercial incomes (one area which has been massively neglected for us in particular over the last ten years in favour of Sports Direct).

 

[The Fish]

No worries. As a vanity project, you're clearly a better prospect at the moment than we are; I don't think I've suggested differently. Looking at the Pl, the only people raking in big money are the ones in the CL most, if not every, year. You might be able to get to EL level for less than £400m, but, the way fees are going, I wouldn't say it was a given. There would be an offset, yes, but once you're there, you have to carry on buying to stay there. Commercial income? European football ought to bring bugger sponsorship deals, but in term of boxes, etx, geography is against us both. It's easier for a multi-national to entertain in London than the NE.

But as easy to entertain in Newcastle as it is in Manchester/Liverpool?

I'm not 100% but I think even in the 15/16 season with our large transfer spend (and subsequent spike in wages), we still turned a profit. With the new tv deal, bigger and better commercial partners (and advertising space not taken up by Ashley's tat-store branding) surely our profits would return to a position way behind Man Utd, Chelsea et al, but the best of the rest?

 

[What A Waster]

But as easy to entertain in Newcastle as it is in Manchester/Liverpool?

I'm not 100% but I think even in the 15/16 season with our large transfer spend (and subsequent spike in wages), we still turned a profit. With the new tv deal, bigger and better commercial partners (and advertising space not taken up by Ashley's tat-store branding) surely our profits would return to a position way behind Man Utd, Chelsea et al, but the best of the rest?

£3m profit according to the guardian link I posted a few posts up

 

[The Fish]

£3m profit according to the guardian link I posted a few posts up

Ah, cheers.

So we're all agreed that we're minted then?

 

[What A Waster]

Ah, cheers.

So we're all agreed that we're minted then?

Probably show a loss next year for 16/17 as it was reported Ashley pumped in £30m to subsidise costs. Most likely as a top up on the loan we already owe him.
17/18 with costs relatively low and still still in credit in transfer dealings (from the 3 windows with Benitez), and the first season of us on the current t.v. deal, I'd expect us to show a good profit. Gate receipts will be the highest in ashley's time here

 

[Grumpy Old Man]

But as easy to entertain in Newcastle as it is in Manchester/Liverpool?

I'm not 100% but I think even in the 15/16 season with our large transfer spend (and subsequent spike in wages), we still turned a profit. With the new tv deal, bigger and better commercial partners (and advertising space not taken up by Ashley's tat-store branding) surely our profits would return to a position way behind Man Utd, Chelsea et al, but the best of the rest?

2015/16 you made a profit of £4m (down from £36m the previous year), mainly from player trading (the way amortisation works, only a small amount of McLaren's spend went through the P&L that year- while net additions were £86m, only £28m was written off that year). Your 2016/17 figures are likely to be a real mess, however, although they will be helped by a stonking player profit. Interestingly, of all the clubs I've looked at, you're the only one to show future amortisation costs on the basis of current contracts. Much depends on how much of a lid Ashley has kept on your wage bill - if there are some hefty promotion uplifts in the players Benitez brought in, it might not be quite as rosy as you hope. At the operational level, ie before player trading, you're actually pretty well managed. One striking thing is that you appear to have less than half the number of non-playing staff we have. I'm struggling to see why we have so many people on the books compared to other teams - but that's another thread.