• The first stage of the forum upgrades has now been completed but they remain in a degraded state and are still being worked on. Normal posting/reading should now be possible.
    Please read this thread for more details.
    New user registrations are currently disabled.

MP takes on Newcastle United owner Mike Ashley over his 'exploitation' of the club

Status
Not open for further replies.
Grumpy Old Man said:
Cash flow is what it says it is - money in less money out during the accounting period. A provision is recognising an expense (or probable expense) in one accounting period, when the associated cash flow will take place in a future one. The book entries are to create a wage expense, and a creditor (the provision) to recognise the obligation to meet that expense in the future. It's what's know as "accruals accounting", which basically means putting costs into the accounting period to which they belong.
Click to expand...

That expense isn’t 100% concrete however, players could be sold. Where does that fit in? Both the money generated by the sale and the reduction of this provision due to the wage not being due.

Is this commonplace with other clubs?
 

Sima said:
That expense isn’t 100% concrete however, players could be sold. Where does that fit in? Both the money generated by the sale and the reduction of this provision due to the wage not being due.

Is this commonplace with other clubs?
Click to expand...

That's why it's disclosed as a provision. It's something frequently used by companies where bad news relating to old events is coming somewhere down the line, but can't be quantified exactly. Under accounting rules, you have to provide something, so you use a best estimate. Pretty much all trading companies, for example, will carry provisions for bad debts and unsaleable stock. You also have to, for example, provide in full for the cost of planned redundancies, although the exact costs won't be quantifiable at this stage. Once Newcastle had identified that there were future obligations arising from these onerous contracts, the rules demand that the costs have to be provided for, at least to the extent of the best available estimates. If the provision turns out to be overestimated, the excess will be released to profit later. On the other hand, if they've been underestimated, there could be more losses taken in the future.

They're not too common within football, but they're far from unique. What happens more frequently is that clubs will make provisions against the remaining contract value for players who won't command a fee, and are surplus to requirements. Sunderland wrote off some in 2016/17, and ought to have written down a whole lot more in 2016/17.

The general rule in accounting is that you should recognise losses in full as soon as you become aware they'll happen.

As an aside, provisions are a fruitful source for creative accounting - if you have profits in one year which are embarrassingly large, it can be useful to find something you cam justify a provision for to the auditors to get the profit down a bit. Lo and behold, a year or two later, you suddenly find you don't need the provision any more - usually when you could do with a bit more profit.
 
Tin Soldier said:
:lol::lol: Oh dear there's no way they'll give up their Greggs pasties. If they're that conciencious they'll continue to contribute. If Rafa goes they can always say the reason they have not gone like they said they would was because they wanted to make sure the food banks stayed full
Click to expand...

What a load of bollocks - how many of us buy a rose from a gagdy outside of Tesco or donate to a charity bucket? We do it because it is convenient . Making it inconvenient is going to make it less successful. If people didn't walk round selling poppies would you go to a store to buy one?

Pick on any other part of the idiotic woman's petition but she is spot on here. It would affect the food banks.
 
Wansbeck Viking said:
You must be logged on to see external links


He’s holding back the whole city!!!!
Click to expand...

You must be logged on to see external links


:lol: The funny thing is, they actually believe this shit. 10th place not good enough. Were they complaining when he bought Shelvey and Townsend? Or when he reinvested £50 plus million in the championship? They're a bunch of nutters. They're only happy when they're unhappy.
 
chunkylover53 said:
Do you think a petishyun raised by an MP is a good idea?
Click to expand...
Not sure yet.

The petition should be jumped on by fans of any club who want the FA to be more rigorous in their scrutiny of owners, old and new. It's likely it won't be, because of the partisan nature of football.
 
The Fish said:
Not sure yet.

The petition should be jumped on by fans of any club who want the FA to be more rigorous in their scrutiny of owners, old and new. It's likely it won't be, because of the partisan nature of football.
Click to expand...
What has he done that is so wrong? He isn’t about to bankrupt you because of spending beyond your means like so many clubs

I get you want him to spend more, but he’s displaying financial prudence.
 
The Fish said:
Not sure yet.

The petition should be jumped on by fans of any club who want the FA to be more rigorous in their scrutiny of owners, old and new. It's likely it won't be, because of the partisan nature of football.
Click to expand...

:lol: A normal person would look at it, see you finished 10th last season in the PL, look at your financial accounts and wonder...what is the problem?
 
What A Waster said:
I want Newcastle to finish first. Where i think they should be is nowhere near that.
But it would be nice to try and improve year on year. Better to try and fail than not try.
Finished 10th last season, lost about a dozen games by 1 goal. Drew a few as well. Had the 8th best defence in the league though. So that to me would suggest maybe improving the side with a high quality striker, which is anything around £20m+ these days, and if we improved in front of goal then there's a chance we could have a go at trying to get into Europe, or at least try to be the best we can be.
Not strengthening at all and delaying moves in the market for the 3rd window in a row is restrictive and imo deliberately regressive.
Click to expand...

Thick as mince :lol:
 
Grumpy Old Man said:
That's why it's disclosed as a provision. It's something frequently used by companies where bad news relating to old events is coming somewhere down the line, but can't be quantified exactly. Under accounting rules, you have to provide something, so you use a best estimate. Pretty much all trading companies, for example, will carry provisions for bad debts and unsaleable stock. You also have to, for example, provide in full for the cost of planned redundancies, although the exact costs won't be quantifiable at this stage. Once Newcastle had identified that there were future obligations arising from these onerous contracts, the rules demand that the costs have to be provided for, at least to the extent of the best available estimates. If the provision turns out to be overestimated, the excess will be released to profit later. On the other hand, if they've been underestimated, there could be more losses taken in the future.

They're not too common within football, but they're far from unique. What happens more frequently is that clubs will make provisions against the remaining contract value for players who won't command a fee, and are surplus to requirements. Sunderland wrote off some in 2016/17, and ought to have written down a whole lot more in 2016/17.

The general rule in accounting is that you should recognise losses in full as soon as you become aware they'll happen.

As an aside, provisions are a fruitful source for creative accounting - if you have profits in one year which are embarrassingly large, it can be useful to find something you cam justify a provision for to the auditors to get the profit down a bit. Lo and behold, a year or two later, you suddenly find you don't need the provision any more - usually when you could do with a bit more profit.
Click to expand...

Bingo.
 
Status
Not open for further replies.
Back
Top