City chiefs today laid out a compelling vision for the future of Norwich City Football Club – a ‘self-sustaining’ Premiership club housed in a 35,000-seater stadium.
In an announcing a ‘normalised’ operating profit of £500,000 for the financial year ending May 31, 2011 – before the riches of the Premiership started to kick in – the club’s chairman Alan Bowkett and chief executive David McNally also revealed that normal relations had now been resumed with their major lenders.
No longer was the club on financial life support and dependent on the good will of its bankers to avoid going into administration; indeed, said Bowkett, the Canaries were now cited as ‘an exemplar’ of how banks and football clubs can work together to deliver a stable and manageable football club amidst the financial madness that can be English football.
The fact that City had reduced their debt burden by a hefty £4 million over the last financial year – down to £16.8 million from the £20.9 million in 2009-2010 – had put a smile on the bankers’ faces.
And that’s before Norwich hit the dizzy heights of the Premiership – complete with an extra £37 million in TV revenue and a 20th stake in one of the world’s most lucrative sporting brands, the English Premier League.
“We’ve had some difficult times,” said Bowkett, in a rare media appearance. “But, I have to say, our lenders were extremely supportive of us.
“And now they’re using us as an exemplar of the way that they can work with football clubs rather than pulling the plug. We’re now at the situation where we are just a customer again.”
Today’s accounts, as ever, contained some gems – in particular, the previously hidden costs of promotion to the Premiership in the shape of a £4.4 million bonus pot shared between players and staff at Carrow Road.
The lion’s share of which went to the playing staff in a £2.5 million hand-out on the back of their back-to-back promotion triumphs.
Such ‘exceptional’ items took City’s actual operating loss after tax to £3.9 million – but with a ticket to the Premiership paid for in that figure.
“All in all, there was a £5 million cost associated with getting into the Premiership – and I’m delighted to have that kind of problem,” said Bowkett, by trade a company turnaround specialist.
His turnaround of Norwich City’s fortunes – in alliance with both McNally and manager Paul Lambert – has been nothing short of remarkable.
The drive now is to reduce the club’s net debt by another £6 million in the next financial year; to cement City’s place in the top flight for the next two years with funding available for a foray into the January transfer window; and, finally, once the numbers allow, to rebuild the City Stand with a view to creating a 35,000-seater arena with the addition of 8,000 extra seats.
Hit that figure and the pair believe that the club can then be ‘self-sustaining’ and will never again be one car park away from disappearing into administration.
Equally, City’s debt re-payments are now conducted at their pace and schedule – not at the whim of their lenders; they are back to having a standard mortgage again. Complete with the facility to over-pay on their monthly commitments and be debt-free sooner rather than later.
“This city deserves a self-sustaining football club,” said McNally.
The club chairman took today’s announcement to confirm that the £2.5 million worth of loan facility extended by the club’s former directors – Andrew and Sharon Turner – had been repaid in full on their return to the Premiership, while both men stressed again the value of The Premier League ‘brand’ now that the Canaries were members of one of football’s most exclusive clubs.
With said brand hungrily eyeing new marketing opportunities in both India and China, closer to home and City will be keeping a very interested eye on the on-going fight between the Premier League and one Portsmouth land-lady who beams all Pompey games live into her boozer off a Greek satellite decoder. It is a legal fight that threatens to run and run right up to the next round of TV rights deals in 2013.
It is clear upon which side of the fence the Canaries now sit in that debate – and that if they can raise the capacity of Carrow Road to 35,000, then they will hope that live ‘screenings’ of their games will be available primarily for those that have bought a ticket, not a pint.
Come next autumn’s accounts and the world will look a wholly different place again; ‘cash neutral’ is where Bowkett believes the club will find itself come the end of the 2011-12 financial year – driving down debt and interest payments whilst investing in the playing staff that Norwich will need to sustain their great Premiership adventure into the forseeable future.
Part of that success, however, was down to being open and frank with their lenders – giving them the choice of backing their hunch that Lambert was the man to deliver top flight football or else taking the keys to Carrow Road and doing what with it, exactly?
“I’m a firm believer that sunlight is the best disinfectant,” said Bowkett, as his team over-delivered on their commitments to their funders.
“We had to make some very unpalatable decisions, but we’re all friends again now. We have even invited them out to lunch…”