Doing a Leeds !

[usedtobeshearer]

Proof?
It's all speculation from all sides.
I can't claim facts on any of this no more than you can to the contrary.
All we can go on is what we are fed.

The situation was, Sir John Hall could not sustain the club and decked out, selling his shares. Shepherd could not sustain the club so also decked out and all made a nice healthy profit, it seems.

It's all about what you believe to be the potential reality.
It's all been documented since Ashley took over, with all kinds of stories coming out about this that and the other.

Stop asking for proof yourself then, b3ll3nd!

This is an ancient argument. We went through these arguments with Wilf 10 years ago. It's time we just ignored him everytime he tries to repeat his ****e point of view. It's all getting boring.

Let's stick to football. He doesn't have an opinion on that (other than we are going to win every game) because there's too much risk of agreeing with somebody.

[usedtobeshearer]

The OP was...is there any proof we would have done a Leeds...answer is...NO. even Wilf agreed in his last post.

Sorted.

[ex_pat_magpie]

The OP was...is there any proof we would have done a Leeds...answer is...NO. even Wilf agreed in his last post.

Sorted.

Is there any proof that Ghost might one day have the guts to back up his dubious opinions with facts rather than his usual wild and inaccurate speculation.

[usedtobeshearer]

Is there any proof that Ghost might one day have the guts to back up his dubious opinions with facts rather than his usual wild and inaccurate speculation.

Don't be silly.

[ex_pat_magpie]

Don't be silly.

Just speculation with out facts on my part so neither Ghost nor I could prove whether or not he might at one day in the near or far future be tempted to support his wild and strange pontifications with deadly facts and surprise us all.

[ex_pat_magpie]

Ghost. Where is the proof that the earth is flat.

Many people have sailed around the globe for centuries without falling over the edge.


Come on don't leave us in suspense. Tell us what you know that we don't all know.

[Andy1981_2]

Sorry to be late to the party on this debate...

A few caveats before I chip in:

1. I've posted about this before, so apologies for those who actually read it first time around.
2. I'm not a forensic accountant, and as a business owner I'm well aware that stuff can be buried in the details of accounts

OK... the question is whether or not we were about to do a Leeds i.e. drop down the divisions as a result of financial mismanagement.

For me, the only way we can address the question is to look at the financial position of the club at the time, and to look at what happened subsequently to the financial picture for football. We can't know what Shepherd and Hall would have done had they continued to be in charge, so let's not speculate.

For evidence of the financial picture of the club, any of us can pull up the books for the club. I'm going to look at only the recent picture i.e. 4 years up to and including the sale of the club.

2004 Accounts

This was a 'bad year' for us. Turnover fell from £96.4m to £90.2m. We made a pre-tax profit of £4.2m (down from £4.4m). Seems like the sale of Jonathan Woodgate kind of propped us up a bit, and we made a player trading profit of £0.3m. Debt looks like it was around £59,224,000.

2005 Accounts

Turnover continued to fall, 'cos we were ****e and finished 14th. 2004 turnover was £87m. We did, however, offload more player liabilities and made a player trading profit of £13.5m. Overall revenues (catering, match-day, etc.) were actually increasing generally-speaking here. Pre-tax profit of £4.5m. We were in the semi-final of an FA Cup in this season... remember those days? Debt seems to have risen to £62,118,000.

2006 Accounts

Revenue continues to fall as our Champions League and UEFA cup days fall further behind us. Now at £83.1m. We posted an operational loss of £6.2m this season, and a retained loss of £12m. Commercial revenue increases due to new sponsorship deals with Northern Rock and Adidas, though a large part of this sponsorship deal is paid up front meaning it doesn't count in the following years' books. We signed Michael Owen in this set of accounts, like a bunch of dicks. They changed their accounting format in this year, but it looks like the debt rises to £67,686,000, with some things not previously rolled into the debt getting added in (because of posting losses). Overdraft, we can see, sits at £5,528,000 and interest bearing loans at £10,867,000. The bulk of the debt seems to be in deferred income.

2007 Accounts i.e. the first year of accounts posted AFTER the acquisition of the club by Ashley. More detail here, since it's all a bit harder to work through and it's an interesting year!

This is the year things really tank for us financially, as well as changing in terms of how the accounts are done (they shift the reporting period to line up with player contract expiry dates, for example... this made the accounting period longer, ultimately increasing the losses reported). First of all, the £45m loaned to the club by the previous owners is rolled up into one big bill, rather than the sort of soft loan we'd be getting. Mike Ashley, essentially, pays that bill and the club now have a debt to him instead. However, to 'bring the overdraft back within the agreed limits', Ashley actually loans the club £75m (which is odd if the overdraft amount reported in the previous set of accounts was accurate). However, there's a big change to how this sort of 'senior loan note' works for the accounts, since it looks like they shift to putting these loans as 'amounts due within 12 months', which means you end up counting this in your costs in a totally different way.

Revenue actually rises this year, since we'd qualified for the UEFA cup in the previous set of accounts (knocked out by AZ Alkmaar on away goals), and we post revenues of £87.1m. We retain losses of £32.5m, up from the £12m the previous year. We did, however, get over £6m as an insurance payment because of Michael Owen getting injured. Who insured him in the first place remains uncertain, but it'll likely be whoever insured all those mortgages just before the 2008 financial crisis. There were costs of about £6.1m just on items relating to the takeover itself, which is a lot! That was changing the manager, payments to the old owners/directors, and an aborted financing project contracted by the previous owners. The new financing deal we did get, however, was more expensive - they note higher interest rates.

The bank overdraft increases from £5,528,000 to £10,863,000. Interest bearing loans and other borrowings leaps to £61,675,000, most of which will be money owed to Ashley. Total debt hits £131,165,000.

....

So, all of that being said... in my non-(financial-)expert analysis, it looks like Ashley simply moved some stuff around in the accounts, and that the overall financial picture didn't shift considerably. If Hall and Shepherd were covering up anything nasty, it was actually loans from them, which is why they walked away with a bit of cash in their pockets upon the sale of the club. Ashley hasn't actually loaned the club a significant amount of money since he acquired it, and there's no reason to think that Hall and Shepherd couldn't have raised the £20-30m he did following relegation (assuming we would have been relegated regardless of the owner) if that was required. This seems particularly true since we got a more generous overdraft agreement subsequently. We haven't 'done a Leeds' under Ashley, so we wouldn't have done one under Hall and Shepherd if they'd ran the club in a remotely similar fashion. One could argue that their better understanding of the industry might have avoided some of Ashley's costly mistakes, and all of this would have been during a period where TV revenue leapt from £1bn per season to £5bn per season for Premier League clubs. Even if they'd been terrible stewards of the club, this 500% increase would likely have kept us in business.

[Jammy89]

Well said and from my also non financial understanding that looks a fair conclusion.

Not that Ghost will accept any of it mind.

[toptoon]

Cheers Andy - good post.

[ex_pat_magpie]

Well said and from my also non financial understanding that looks a fair conclusion.

Not that Ghost will accept any of it mind.

No doubt we will get speculations and opinions from Ghost disputing all of those well put together figures. He just cannot help himself.