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?
We need to open the window to our glass ceiling. Or invest in the next transfer window.
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That’s not a superficial overview it is an accurate one:-) Tony Spearing, I believe, is key to who we get in on the pitch. I’ve had the privilege of enjoying a few beers in his company a couple of times (he was a key part of ending the Baggies’ yo-yoing at the time) and was thoroughly impressed. Delia and MWJ are – like all of us – not getting any younger. While I can understand their appointment of Young Tom, which they have every right to do, it does not bode well in terms of any future buy-out or investment so to me it looks like the status quo is the aim. So with that in mind, let’s try and get the best CEO available who is prepared to work under the obvious restraints. A fervent plea to end with: please, pretty please, get someone on the Board who knows about football itself. Without that we could be in serious trouble.You guys will have plenty to write about over the Summer,believe me!
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A very interesting article, thank you! I don’t believe that we have hit our glass ceiling, as Alex Neil’s accurate “4 things” assessment highlights – we could improve in several areas with the current levels of investment, recruitment being the most pertinent to this season’s lack of success. So our glass ceiling is higher than we have achieved, and the focus on everyone at the club should be to put those things right. If the offer of additional investment comes our way, however, I do think we need to consider it very carefully – how sustainable is our current set up?
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Is it just a strange coincidence that the club from Norfolk is the one that keeps things ‘in the family’?
Only kidding (I’m from Nelson’s County). I like the fact that ‘we do things differently’ and have managed to punch, arguably, above our weight for the past five seasons at least.
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Warren Buffet has a saying – when the tide goes out you see who has been swimming naked. In Football’s case that was Leeds, Forest, Blackburn, Portsmouth, Bolton, QPR, Charlton, Villa and 7 years ago it was us. Whatever the question is, I believe the answer for Norwich City should always include the phase ‘whilst spending within our means’.
You’re quite right Gary in saying there is always someone bigger than us (although I’d add that they’ll will always be someone else with more money than sense as well – yes you Bournemouth). We are never going to out spend anybody but what we need to do is spend our money smarter than anybody else (like Leicester & Southampton have).
But there’s another reason why playing the financial long game is in our best interests. Yes the TV deal is bigger than ever before, but everyone in the PL is getting broadly the same amount so there’s no competitive advantage. A quick trip around the current world economy starts to question the PL’s oligarch-based model, the fall in oil prices means both the Arabic and Russian owners have had a collapse of incomes and the stagnant US economy must have had an effect on the core incomes of US owners (hence why the likes of Randy Lerner has been looking to sell for ages). A lot of clubs in the PL are not the financial powerhouses they first appear when they are seen for what they are – big toys for oligarchs.
It wasn’t out spending the competition that turned Stoke, WBA, Swansea & Palace into sustainable Premier League sides, it was hungry players, good managers and clever tactics. Norwich need to learn their lessons and start fighting smarter.
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An interesting read.
From a non-Norwich supporter, I’m a Watford fan, I would say that Norwich haven’t hit a glass ceiling and there is nothing to stop them coming back up and having a successful campaign in the Premier League. Watford didn’t spend huge amounts of money by Premier League standards (I think the figure knocked about was £20m over 3 years to get Premier League football). Norwich are probably a bigger club than Watford. I think that the difference is (1) Watford’s owners a ruthless bunch and will sack managers / move players on if they aren’t performing (2) They don’t care where the talent comes from – if they are good enough and they can afford them then they are in.
It’s not everybody’s cup of tea but Norwich aren’t far away from regular Premier League football.
Good luck next year. Hope to see you back in 2017/18.
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I was of the understanding from previous published accounts that the majority of the Delia & the Michael’s debts had been paid back, except for one small loan (in footballing standards that is) of about 2m. This article suggests that’s the case and the 2m was planned to be ‘eradicated’, although I don’t have a source that says it happened.
I have no problem with this, they deserve to see their money. In fact it’s healthy for the club not to be too indebted to any person or persons.
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Gary – maybe our ceiling is made of rubber? Might explain why we keep bouncing up and down.
All the evidence seems to be we are swimming against the tide with a mega-rich (overseas) owner/consortium being needed to sustain in the PL.
Our model may seem antiquated by comparison and may be on its last legs but boy has it been a fun ride (most of the time) under Delia & Co. She will walk away sometime soon probably and then who knows what will follow.
There may be glory times to come – or this may be as good as it gets. Whatever, I support this club because it’s my home club and not because it’s part of the ‘prawn sandwich’ brigade in the PL. Give me a meat pie anytime.
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Sorry, this article: http://www.bbc.com/sport/football/24466994
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“The Secret Football Writer” has apparently claimed on Twitter that Norwich are “in financial crisis, and have ordered a fire sale, putting all the playing staff up for transfer”. I didn’t realise that that lot south of the border had that much imagination (or even that they could write!).
It’s amazing what rubbishy gets promulgated on social media these days.
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Thank you all your your various comments, which are much appreciated.
@2 El Dingo – the Spearing appointment is very interesting not least because he’s highly spoken of because of the job he did at WBA.
@3 Kate – whilst I feell, like you, the self funding model will always have its limitations, I’m inclined to agree that maybe we’ve not always spent our monies wisely.
@4 Ben K – all amusing comments aside, having met Tom, he’s another genuine fan. Personally, think we should give the lad a chance and not just dismiss him, as some have, simply because of his surname.
@5 Kobe Canary. Love that Warren Buffet quote. I’m not going to grump at Bournemouth, just because they got lucky with their owners. If it highlights one thing it’s that the current FFP rules are still a complete nonsense.
@6 – Rob Sheldon – thanks for your input. Really surprised, from the outside looking in, that your owners sacked your manager. Hope it works out OK.
@7 Dave B – my D&M loans comments really referred to the 1995 – 2002 period. More recent loans are being repaid gradually.
@8 Cosmo P – fair comments. Still think we need to get our house in order first. I’m guessing if we keep bouncing between the divisions, there’s unlikely to be an immediate call for change. The problem will be if we have several seasons in the Championship and the parachute payments dry up!
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Very good overview, Gary.
How far should we draw conclusions from the season just finished? Our ownership situation didn’t stop us putting in large bids for central defenders in the summer – if one of them had come through, we’d likely be celebrating our survival in the Premier League and looking forward to spending the new millions.
Clearly, though, in the absence of a super-rich owner you have to get everything right – and we didn’t. Success is possible but fragile.
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Our glass ceiling is probably mid-Premiership, however it would require us to ‘get it right’ off the pitch.This would include the manager (which I believe we do), the facilities and the scouting/recruitment in place to achieve it.
If you look at Southampton and Swansea, they got promoted at a similar time to us and didn’t spend ridiculous amounts when they first came up. They bought wisely, sold them on for huge fees and re-invested (Lovren, Bony etc).
Everton are another, probably the best, example of how to do it.
It is clear after our recent attempts in the premier league, that something isn’t quite right. The summer was a disaster and it didn’t give Neil much of a chance.
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I still question the club’s desire to operate at the top tier. They have never shown the commitment and if wasn’t for Paul Lambert, they would of never of made the PL in recent years.
We have two seasons to get back up, otherwise we could be waiting along time.
The club needs a balance of experience and youth. Players past their best are generally not worth keeping, because if we do grace the PL again, all the evidence suggests that Norwich City will not spend, so we need players on the way up, not on the way down to give the club a run for its money.
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@12 Stewart – Not sure it was down to our ownership that we put in those bids last summer, more the fact we were in the Premier League. All other things being equal, the financial situation will be completely different in two seasons time if we don’t get promoted and the parachute payments have disappeared.
@13 Rich – mid-Championship puts us around 30th – 32nd in the scheme of things. Sounds a worst case scenario to me. Surely we should be mid 20’s but pushing for mid teens if we can get our act together?
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Darren (14), it’s “would have”, not would of, for goodness’ sake!
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City can make it back into the PL. 1. However, they need to expand Carrow Road, not only to expand their income base but also to project that they are a bigger club. This is what stops good players from coming to Norwich. 2. Alex Neal was a poor choice for PL football. He just doesn’t have the experience and the old ra-ra screaming coach tactic just cut it anymore. He’s a good Championship level coach who is satisfied to have that level players playing for him, but in the PL he fell short. Let’s face it, City played horrible football this year and I’m amazed they scrambled 34 points together.
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