Relegated again, for the second time in three years, and, as post-mortems go, I thought Alex Neil’s “four point” analysis of the season’s failings pretty well nailed it.
Now, of course, we have to move on quickly. We need a new CEO and to start planning for 2016-17.
Short-term focus is imperative; however, beyond that, there seems to be a nagging questioning as to whether the Canaries have hit their “footballing glass ceiling”; an over-achieving small club, or a medium club capable of completing regularly within the Premier League.
The club’s DNA is currently entwined with a self-funding model, a seemingly old fashioned – to some at least – plan of simply spending what we can afford. Many are questioning, as commendable though that is, whether it is actually now sufficient to survive in the Premier League beyond the odd season or three?
Whatever your view, it raises two recurring themes, which seem to be “in vogue” throughout football at the moment: club ownership and additional investment.
Let’s get a couple things straight before we start.
Firstly – and it is, hopefully, stating the bleeding obvious – there can be no questioning that the owners are anything other than genuine fans of Norwich City Football Club.
Secondly, the majority shareholders, including Michael Foulger, did not acquire their shares in the club with the intention of selling them at some point in the future for a profit. Their involvement isn’t driven by some investment driven logic – more the opposite in fact.
Delia and Michael, after purchasing Geoffrey Watling’s shares, have made unsecured personal loans to the club, subsequently converted debt into equity and also underwritten the club’s new shares offering, back in the early 2000’s.
Similarly, Michael Foulger, having underwritten the much maligned season-ticket rebate scheme in 2009 with a personal loan subsequently converted the debt into new shares. Michael too, simply did not want his money back.
As a consequence – and probably more by accident than design – Delia and the two Michael’s currently own approximately 69 per cent of the 600,000 plus Ordinary shares within the Club.
Which leads on to another common misconception; that acquiring shares in any football club is an investment. Put simply, it’s not because the shares aren’t actively traded on any stock market. They’re therefore, illiquid and, furthermore, they don’t convey any income through the payment of dividends. How do you put a value on such shares? Well, perhaps that’s a whole different debate.
So, where do we go from here?
A change of ownership is one option advocated by some, but that doesn’t necessarily mean a sell up by the existing majority shareholders.
On the contrary, since 2011 the club has had the option to issue up to 1,000,000 new ordinary shares. Not only would that result in a significant cash injection – more than enough for a replacement City Stand – there would probably be a few zeros left over to acquire a few intangible assets; new players.
I guess the $64,000 question remains whether there is the appetite within the Fine City for someone without an NR postcode? No xenophobic issues, of course.
In legal speak the lawyers refer to it as KYC – know your client. A process that involves having to complete due diligence and obtaining a clear understanding of who has the beneficial ownership of companies and shares registered overseas.
It’s a whole new ball game where anonymity is often key for wealthy individuals. One involving complex overseas corporate structures and registered offices often in overseas tax havens. Panama or the British Virgin Islands anyone?
Too simplistic? Yes, of course it is, but it highlights just some of the difficulties associated with completing due diligence prior to seeking additional investment and the possible consequences of selling a significant shareholding within the club.
There are no easy answers to this conundrum.
It is, of course, possible to raise significant additional cash through new sponsorship agreements and commercial partnering agreements. Global branding campaigns and stadium naming rights could also follow, which, although not conveying any change of ownership issues, may not be to everyone’s taste.
But it’s certainly an area to be seriously considered.
A third alternative for additional investment – which is often associated with a change of ownership – is loans. Usually known as soft debt, as owners are often reluctant to take due interest charges or enforce repayment schedules of capital when they fall due. Clearly, such loan arrangements are largely dependent on the resources of the owners.
However, it’s an option which is also fraught with difficulties as there seems a common tendency throughout football to have a complete disregard to the levels of indebtedness a football club can realistically support.
Bolton Wanderers, for example, despite eleven consecutive seasons in the Premier League, recently managed to accumulate debt in excess of £170 million; a figure which was many multiples of its annual turnover. The club was on the point of collapse and the only way to facilitate a sale to new owners was via a significant debt write-off.
Again, it’s an extreme example but many Championship clubs are currently operating with significant indebtedness way beyond levels they can self-finance; their existence dependent upon their wealthy benefactor’s continued financial support.
None of the above is intended to suggest reasons for maintaining the status quo; more a (superficial) overview of where the Canaries currently stand, some of the possible options available and the advantages, plus possible disadvantages, of the alternatives.
There are no easy choices. Football clubs are fundamentally community assets but, realistically, they operate as multi-million pound businesses.
The Premier League is never going to be a level playing field, however much money individual clubs can be generated through outside investment, sponsorship and loan agreements. There will always be someone “bigger than you”.
Perhaps all this talk of quick fixes through ownership changes and additional investment, is just that; talk. For the moment, personally, I’d much rather focus on getting our own house in order, sorting out our recruitment policy, making our coaching set up “best in class”, invest in Colney and, when we can, Carrow Road.
If last Wednesday night highlighted one thing, when the realisation of another relegation was pending, it was: “we are Norwich; we do things differently.”
Maybe, just maybe, we should ignore the herd and carry on doing what we’re doing.
What do you think?