More weasel words from Mike Ashley – Does ‘every last penny’ include £40m transfer surplus?
You can’t move this Thursday morning for headlines quoting Mike Ashley and his ‘Rafa Benitez….can have every last penny..to build for next season’.
The full quote in the statement Newcastle United released last (Wednesday 10 May) night reading:
“I’ve confirmed to Rafa (Benitez) and Lee (Charnley) that they can have every last penny that the club generates through promotion, player sales and other means in order to build for next season.”
‘Every last penny’ sounds pretty good and no wonder the media are falling over themselves to use it in their headlines.
However, what does it actually/really mean?
Is it the profit from last season or is it the expected profit from the coming season?
Or is it all of the money that will flow into the club ‘through promotion’, including all of the estimated money that will come next season from the Premier League TV deals?
Most people take it that ‘every last penny’ can be used by Rafa to buy players but when you look at it again, it doesn’t even say that.
Maybe Mike Ashley does mean that but judged on past performance, whatever he says usually ends up being a lot different in reality to what you were led to believe at the time.
Indeed, is he really just saying that the revenue that comes into the club, can then all be used to pay the usual wages and other costs, with whatever is left over able to be spent on players?
One part of his statement is worthy of closer inspection, when he says ‘they can have every last penny that the club generates through….player sales’.
It is a fair bet, and no surprise, that 99% Newcastle fans and neutrals would take that as meaning, if Rafa Benitez sells players this summer for combined transfer fees of £30m, then automatically it will lead to £30m being added to his transfer budget this summer.
However, if we look at the official NUFC accounts for the 2015/16 season that were released last month (April 2017), it gets a little more cloudy.
Extra information was provided about what had happened in the transfer market after that accounting period (up to the end of June 2016) had ended.
Newcastle United announce headlines of 2015/16 accounts on 6 April 2017:
“Outgoing transfers will ultimately generate a significant net player trading surplus for the summer 2016 transfer window but, due to the cash profile of the deals, this will result in a net cash outlay in 2016-17.”
Then full Newcastle United accounts became available to view on 11 April 2017:
Extract from Newcastle United accounts for period up to 30 June 2016:
‘Subsequent to the balance sheet date the club has generated a net surplus of around £40m in respect of changes to the playing squad, a substantial proportion of the player sales are on deferred terms and will be received over the next 3-4 years, with the result that in the year ending 30 June 2017 there will be a net cash outlay with respect to these transfers.’
So the bottom line is that in his one full season at the club, Rafa Benitez has collectively sold players for around £40m more than the ones he has bought.
However, for whatever reasons, Mike Ashley has Newcastle United operating differently (no surprise there!) to your average club when it comes to when transfers are paid up.
Ashley has Newcastle paying up front the full fee when signing players, yet when selling he is happy for NUFC to be paid in instalments over a period of time. Hence why for example Tottenham are paying for Moussa Sissoko in five separate £6m instalments spread over five years.
This policy then leads to what is described in the accounts above – so in summer 2016 Rafa roughly bought players for £50m and agreed for others to be sold for £90m but that instead of £40m profit instantly ending up in Newcastle’s back, the figures actually show that Newcastle paid out more cash in that transfer window than they received. So presumably the full £50m left NUFC’s bank account and half or less of the £90m reached Newcastle’s account last summer.
So when Mike Ashley talks of Rafa Benitez getting ‘every last penny’ that is generated through ‘player sales’, is it the full figure they are sold for, or whatever instalments that fall due in any particular period?
If that £40m profit/surplus Rafa generated last season is actually only going to be actually £10m or so to spend this summer, then the whole policy means that it is actually not to Rafa’s benefit to sell anybody who might be of use next season.
For example, Florian Thauvin is leaving for around £10m this summer, but if that was spread over five seasons then Rafa might only see £2m of that paid now and added to his summer transfer budget.
Newcastle fans will be looking for Newcastle/Rafa to trade up on players but there is little immediate incentive to do so if what I have outlined above is the case.
The Manager could agreed £50m player sales and then maybe only get £10m of it to spend straight away.
Like so much of what the club do, statements are released but never properly put under scrutiny.
Nobody from the club, Ashley or Charnley will ever clarify exactly what this ‘every last penny’ declaration actually means.
These things are never challenged by the media who do have access the club, no doubt afraid of the consequences of asking awkward questions.
The only positive I can see is that instalment payments must be due this summer on those transfer fees agreed for the likes of Sissoko, Wijnaldum and others, so maybe/hopefully they will form part of what Rafa Benitez has to spend overall. However, even if that is true, this policy of pay up front but sell in instalments still looks as though it will leave Rafa far shorter on transfer funds than most Newcastle fans will be expecting.
It is great news that Rafa Benitez has indicated that he is staying but that is a very different story to trying to claim that everything is now running as it should be at Newcastle United.
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