‘Nobody asks the pertinent questions” was one of the accusations that Sam Jermy’s well-marshalled MFW column threw at those of us who don’t think there’s any sort of crisis at Norwich City.
Well, I pose apposite queries all the time, but not everyone wants to hear the accurate answers.
Question 1: Norwich City are free of external debt. Is that a good thing?
Answer: Yes, but we didn’t have any choice.
Relegation to the third tier in 2009 left the club we all care about on the verge of penury. We had repayments due on debts of £23m and didn’t have the funds to pay them. Chairman Alan Bowkett used his nous and personal relationships with bankers to negotiate a repayments ‘holiday’ — a miracle during the global banking crisis.
To strike the deal that saved us he had to promise that, if NCFC got to the Premier League, they’d pay back all the money they owed in two seasons.
We went up, repaid the £23m as promised, and became free of external debt.
Question 2:
Why do Norwich keep declaring small profits?
Answer:
The short answer is that ambition is pointless if you are pot-less.
The longer answer begins with that £23m. In season’s 2011-12 (Lambert) and 2012-13 (Hughton), Norwich had to pay back the £23m back, so of course we had to make operating profits.
The story of season 2013-14 was different. Sam Jermy quotes The Guardian’s David Conn, who wrote (I paraphrase) that making an operating profit of £9m wasn’t good business, because we were relegated.
Instead of falling for that glib Conn trick, though, let’s look at what we were told by our own annual report and at the annual meeting. That profit (actually £9.5m before tax) was the fund set aside for the bonuses that would have been owed to the players if we’d stayed up in May 2014.
If City had remained in the Premier League, the board would have spent pretty much every available penny on the playing budget (transfers and wages).
The following season, 2014-15, we made a loss (more of that later).
We haven’t yet seen the accounts for 2015-16, but we know that, despite what Sam and others assume, the Norwich City business model is to spend every bean on trying to get and keep good players. The accounts show it time and time again.
Question 3:
Why don’t we spend more though?
Answer:
You can’t spend money you haven’t got. Football clubs cannot borrow money to spend on players. Nobody will lend for that.
Question 4:
Why are we suddenly skint?
Answer:
We’re not. But, as Alex Neil said before the Cardiff match, there’s not a stash of unused money lying around. We are not as well-placed as we were when we were relegated in May 14.
But the anomaly is not that we’re a bit short of readies now. It is that we didn’t struggle for dosh in May 14.
Relegation from the Premier League is usually devastating. Look at Fulham and Cardiff, who went down with us that summer.
Cardiff sold 25 players, released seven and sent another 12 out on loan. That’s 44 all together. The sales brought in £28.7m. They spent a mere £6m recruiting just 18 replacements.
Fulham let 16 players go on free transfers: men including Steve Sidwell, Brede Hangeland and Kieran Richardson departed without a single penny coming in. The London club’s strategy was simply to get well-paid players off the payroll.
Yet, in that summer of 2014, Norwich sold seven and bought 16. They spent £2.7m more on the new men than they got for the ones who left. They offered handsome incentives to keep players at Carrow Road and entice others to join them.
And so, in that 2014-15 season, which ended with the stirring Wembley triumph, Norwich made an operating loss. In a year, we’d gone from £9.5 profit to a loss of £8.5m. We’d blown it all on getting back up.
Question 5:
Why do we have such wretched transfer windows?
Answer:
We don’t generally. Not in terms of spending money, at least.
Once we’d paid back that £23m, it was obvious (to those prepared to look) that we were having a splurge. And, in July 2013, we committed ourselves to a club record deal. Unfortunately, Ricky Van Wolfswinkel only very briefly looked worth £9.69m (which is what I believe the fee and wages amounted to).
Gary Hooper, snatched from under the noses of QPR for a £5.5m fee, fared not a lot better, but add in Leroy Fer, Nathan Redmond and Martin Olsson, and nobody with a fair mind could say there was a lack of ambition that summer.
The RVW mistake was costly, though, and Ewan Chester, the director of recruitment, was sacked almost as soon as relegation was confirmed.
His successor, a man I already knew, was Barry Simmonds, whose best work in the summer of 2014 was keeping the squad together before adding Championship specialists like Lewis Grabban and Gary O’Neil — and then, as the window was shutting, grafting a grafter into the forward line: Cameron Jerome.
But Simmonds was sacked in March 2015. In July, when much of the transfer work for the 2015-16 season should have been done, Lee Darnborough was appointed Head of Scouting, but that’s not the same as leading the recruitment department.
It was that summer 2015 window which nobody can pretend was anything other than disappointing. Robbie Brady and Matt Jarvis looked quality acquisitions, but we needed shoring up at the back.
And the Steven Naismith deal, which fell through that summer only to be completed in January 2016, tells a story.
When Norwich signed a Redmond from Birmingham, or a Hooper from Celtic, we were able to offer the sort of money that didn’t need a lot of thinking about. But Naismith was at Everton, already on a multi-million pound contract, and Norwich couldn’t offer him a life-changing deal. His wife and children were settled on Merseyside and liked being able to get “home” to Scotland relatively easily.
So in January, McNally pushed the boat out to get Naismith, and offered him terms so good that Premier League Sunderland couldn’t match them this summer. Timm Klose and Ivo Punto won’t have come cheaply either. It was only in March, two months after the window, that Tony Spearing arrived as Head of Recruitment.
Question 6:
What went wrong in this summer’s transfer window?
Answer:
Most relegated clubs throughout the Premier League era have had to sell players, and get high-earners off their wage bills before signing anyone new. For instance, Matt Holland’s reluctance to leave Ipswich when they were relegated in 2002 was a major factor in their going into administration.
Norwich didn’t have to shed many in 2014, but that situation was a rarity. This time, we were in the position in which most clubs find themselves: we needed to get fees in and players off the wage bill in order to sign (and be able to pay) new recruits.
Our situation changed during the window. Players that were expected to leave chose not to. If we’d given them “frees” we’d have had to pay up their contracts.
But keeping Brady, Klose, Tettey and Rudd (for whom their were offers) should be regarded as part of this window’s business. Keeping Naismith might prove its value as well.
Question 7:
Why haven’t we attracted “investors”?
Answer:
Let me tell you a hither-to undisclosed story. At about the time Bowkett was renegotiating with those to whom Norwich owed money in 2009, I was trying to interest David Sullivan in buying our club.
He and David Gold were selling Birmingham and had not yet struck a deal for West Ham. Of course, Norwich wasn’t mine to sell, but I knew Sullivan well enough to exchange emails with him, so I asked him if he’d be interested.
His first question was: “How much money do they owe?” Our email-chat ended very quickly. He wasn’t prepared to even consider stumping up £23m and have nothing to show for it other than a couple of happy bank managers. Besides, he said, he didn’t want to drive to Norwich twice a week.
In 2010 chairman Bowkett asked Keith Harris to see if there were any potential buyers for Norwich City. He helped broker the sale of Fulham to Shahid Khan and Aston Villa to Randy Lerner. I spoke to him while he was conducting the search for a Norwich buyer. He said the club’s location was a problem but that the bigger problem was that men like Lerner were, um, learning that English football is a bottomless money-pit. Harris was unable to find anyone, anywhere, who wanted to buy Norwich City.
So the Gospel truth is that Delia Smith and Michael Wynn Jones have only ever received one firm bid from someone wanting to buy the club: Peter Cullum, in November 2007, when the team was near the foot of the second tier. The Norfolk-born businessman offered £20 million to become majority shareholder. He was insisting the money should be spent on new players.
That didn’t stack up. If you spend £20m on transfers, what about the club’s debts, and how do you finance the wages of the new players? How do you restock the playing squad each year? The club needed structured, continued investment, not a one-off gamble on a handful of new players.
And, in fact, there was not £20m on the table. Cullum offered £5m up front, in an attempt to stay in the second tier in that troubled season. If City did stay up, there would be another £15m available. If they were relegated, he would want his £5m back — and that would have plunged City into administration. Not for the first or last time, Delia and Michael took the course that ensured the club stayed alive.
May be Mick not so close as he makes out , all this information and more is available on the net .
there you have it, mick is the official club spokesman the garden is rosy we are debt free so lets not worry about ambition.this club will never be an established prem team despite what delia and michael have done but also remember its the supporters that keep the club going.
Brilliant article like all of your others that you write for this website.
Very informative
It’s such a shame that you don’t write articles more often for MFW!
Two Chris’s?my take on it is this. I wouldn’t expect too much cutting edge or a word of criticism from mr Dennis. He is very onside with the owners.
Sounds reasonable to me. In any business you can’t spend what you haven’t got. Short term gambles seem brave at the time but l’d rather have people in charge who are in it for the long term. Investors are quick to get out when the going gets tough. Money is important but not the be all and end all.
All of this is spot on and kills all the negativity from some.
Thanks Mick, but I doubt that a few facts will alter some people’s negative opinions unfortunately. But then we live in a society that promotes spending on credit (buy now worry later), and on building up public figures only to knock them down.
I’d far rather have Delia and Michael’s ambition than someone like Marcus Evans, even if that mean’t we could wave fivers around for a few months to demonstrate the depth of their pockets and the club’s “ambition”…
Good piece, well written and a huge thank you for reminding us how Delia, Micheal and others have strove to keep us going.
We should never forget their commitment and hard work or underestimate the time and funds they have invested.
Football though has moved on though, quicker than we as a club have dare I suggest.
The one thing that strikes me about this piece was at the end.
Struggling to find a buyer.
Could it be said that the one thing we haven’t done anywhere near well enough is marketed ourselves, whilst English football is arguably at it’s financial peak?
Using the David Sullivan example of how unattractive we are is also a little misleading. He and David Gold are lifelong West Ham fans and there would have had to be a remarkable turn of events for them to avert their attention to us.
I do not believe the thought of traveling twice a week to the fine city was the reason.
Also, dare i throw around in the name of Bournemouth, 151km from London with a ground holding a mere 11k+, brink of extinction now with millions of investment, able to afford 80k pw for a player. We are 159km, could fill a ground 3 times that and struggle to find investment, seemingly not interesting enough.
Again i suggest we have not marketed ourselves to the global masses, made us look attractive or, judging by the feeling of the masses, we haven’t even tried to.
The word i keep seeing, keeps being mentioned is parochial and i’m finding it difficult to disagree.
Who on earth would want Marcus Evans? That’s no yardstick by which to measure anybody.
Confirmed much of what I had mostly heard before. There I’d such frustration with the state we find ourselves but as Mr Dennis shows, so very much to be relieved about. We have owners deeply committed to the club, we are run realistically and sensibly, when others go bankrupt, as they will, we will tut at their stupidity. Because it is plain stupid to gamble the entire club on staying in the premier league one more year. We need to get up, I desperately want us to go up but in years and decades to come I want a Norwich City I can be proud of. That is not achieved by spending every penny on a bunch of mercenaries and journey men looking for one last pay day.
OTBC
Mick well written and informative, most of us including myself don’t have enough understanding of “big business” even though people will argue that its not much different to “small business”. I can only applaud DS & MWJ for their steadfast commitment to the cause, i’m sure if a trusted investor was sourced they would step away and allow the club to move on. My only argument is that the club should be a little more vocal with the supporters thus alleviating the venom which has been produced during the last transfer window, AN has not helped himself by stating he “wanted two strikers” & won’t “send anyone out on loan” knowing the financial situation. I, like yourself hope the Steven Naismith situation turns itself from negative to positive, there is clearly a personal problem here due to such a lack of form from him, it needs addressing urgently because otherwise he will become the scapegoat for any problem arising and will suffer the venom from the terraces.
3pt results will bring the fans and club together once more and with promotion a much more positive financial situation where the club can compete on a more even keel.
Interestingly, you’re generally lambasted for your point of view…then you write something that fits in the positive regressive left mold and it becomes gospel. Funny that. Anyone with a modicum of sense knows most of this, but the location element just makes your argument look silly. It’s a pathetic excuse and only true of national investors who already have deep roots and preferences. A foreign investor simply doesn’t care where they are getting a slice of premier league action, just as long as they do. I bet London based American businessman Ellis Short was thrilled to ‘drive up to Sunderland twice a week’. I can imagine you typing that as far as you could possibly be from the keyboard with one finger wincing in embarrassment. If Bournemouth can attract a Russian billionaire, then we must be able to get more than one bite if that is what is truly being sought. But it’s not, and that’s the truth. Whether or not it will do us any good is for another debate, but the truth is Delia and co don’t want to and will not sell unless pushed hard and their harness snipped. Anyone who believes otherwise is myopic at best.
I blame Sky sports, I know they fund a lot in football but, the hype they create on the lastday of the window, also creates unachievable expectations in supporters. I think we have done very well this window and the past few seasons also, other than the few dudds.
Being debt free is a good thing for any business, because we no long pay interest on the debt, which is dead money, you get nothing for it.
So, from reading this, it seems the owners, board and majority of fans are quite content to see us become pedestrian plodders and spend the rest of our days in the championship.
As long as we can more or less ‘break even’
So why does this news not fill me with glee?
I think with the McNally era at an end, we should really stop comparing ourselves to the club we were in League One. It was a great achievement, but it was half a decade ago that we have long since put that situation right. It’s part of our history and no longer relevant to planning for our future.
We find ourselves in the Championship, debt free and with one of the best squads in the division. That is now our base, starting point. Not League One and administration. Our aim remains to establish ourselves as a PL club – the same aim we had this time five years ago. What does it take to achieve that aim from where we are? What are other clubs a doing to get up and stay up? What is different? We have a good ground, one of the best fan bases, improving training facilities.
My view is we don’t have owners who can inject that extra bit of cash to push deals over the line, and our recruitment team has, ever since the end of Lambert’s reign, failed to bring in the requisite quality.
Get a decent scouting network and recruitment team in place and pulling in the same direction. Be looking for new owners because Delia and Michael won’t be around forever. Don’t tell the fans the club is not open to new investment.
Jon (14) – If the owners are “quite content to spend the rest of our days in the Championship”, they’ve gone a pretty funny way about it.
Appointing McNally and letting him run the show, including the sacking of Gunn, Adams and others Delia & Michael felt affection for; refusing repayment of their money so that we could have the maximum playing budget; constantly seeking ways they could back the ambitions of their managers.
Perhaps you’re thinking of the owner of Ipswich?
Great article and valid arguments / facts by Mick, who I respect as a very balanced (ex) writer. As Mick points out, it’s not right to look at profit in an isolated period; these are just periods in time and do not reflect trading after the period, indeed accounts do not need to be published for 9 months after the period ends so they are largely outdated by design. A far better measure is cash, which can not be manipulated in the same way profit can (for example, operating loss was actually £22m in 2015, not £8.5m, if £13.9m player sales are excluded). Anyone who looks at the clubs accounts online can see this for themselves. In 2012 we had £16.5m of cash, in 2013 we had £11.6m, in 2014 we had £6.8m and in 2015 we had £1.9m so the club is very clearly investing. It’s therefore highly likely AN was entirely accurate when he said every spare penny was spent on players this window and that we needed to sell to buy more. As a financier, I can’t help thinking the opposite to fellow fans, and wonder if we may have spent to much. We spent big after relegation before, and that strategy did not go well at all!
“You can’t spend money you haven’t got.”
In Lambert’s tenure, season upon season he bought players that strengthened the squad. Not all were winners, but frequently he purchased players that joined the team and immediately made us better.
That was when we were in debt.
We’re now in the black yet suggesting buying a few players that immediately strengthen the team is an alien concept that warrants condescending lectures. Somehow buying players and sending them out on loan is good business. Failing to strengthen a proven weak defense is good business. Starting the season with only one striker you’re willing to play is good business.
I look at the team that started the first game of 2012 season and I’d easily take that bunch of players, a team we purchased when “we had no money to spend”, than the team we have today.
FWIW they were: Ruddy, Martin, Bennet, Turner, Tierney, Pilkington, Howson, Johnson, Surman, Snodgrass, and Holt
It’s very disappointing that we’ve had four seasons of PL money and yet half of that team still play today. Where did all the money go? What a waste.
Bottom line: Delia has, and will, keep this club alive and never let it go bust. She has done the supporters proud; the only reason we find ourselves where we are (a PL yo-yo club) rather than as a Phoenix club playing at King’s Lynn’s level is because of her and MWJ. However, if the fans want to spend more, increase the wage bill, attempt to establish ourselves among the elite, and still be solvent, then we need an investor. The downside would be that the club would be at the whim of someone who cared not a jot about the club and is traditions (see Vincent Tan), promise much and deliver very little (see Randy Lerner), or get it hideously wrong (Mike Ashley). So, what do we want Norwich fans? Stick or twist? Sh*t or bust? The devil you know or the devil you don’t? The choice is yours… but think about the history of the club before rolling out the red carpet to Chinese investors or an American basketball fan.
One question – whatever happened to the potential ground expansion? Don’t get me wrong, I know that there are a few empty seats at most games, especially since relegation but, if we are ever to grow the ground, there needs to be money for that, both for the construction and to bridge the loss of income from initially knocking down the city stand. Has that all been put to one side to focus on the playing staff or is there a pot somewhere that we are consciously ‘building’ up?
Perhaps the ideal way to kill two birds with one stone is to get the stand ‘built’/’funded’ by sponsorship/investment. ‘The Hugh Jackman City Stand’ anyone? (Tongue firmly in cheek…)
Just thinking out loud but I’m curious what the economics of the proposed City Stand replacement are/were.
Question Why was Barry Simmons fired?
Question Why did it take so long to get a new head of recruitment?
If we are less well off now why did we spend 8 million on Pritchard after having bought Madison and Naismith and already have Hoolahan. I like Pritchard but we cannot get all these talented players into the team?
Ground expansion has correctly been consigned to bottom of the list of priorities in recent seasons. The Club have said spare cash should bé spent on players to improve chances of cementing a longer term membership of the Premier League. The income from a few extra thousand seats is peanuts compared to the benefits of a slice of the Premier League TV deal.
This article leaves as many questions open as it answers. It makes some very valid points, but equally many points are ignored or glossed over.
For me, we know the club has limited resources but it doesn’t manage those resources as well as they could or indeed should. When you get a club that its run by well-meaning amateurs, you get exactly that…
DaveB (18), much of that Prem money will have gone on wages, signing on fees and agents fees-all before going on actual spend.
Back of beer mat accounting…
The accounts for 2013/14 show a wage bill of £37 million. RVW was £8 million. Plus Redmond and six others.
Yes, 15 players left the club between May and Sept 2013-but 10 were released. So there is the possibility of pay offs to be negotiated as well.
The club has, and is, upgrading Colney-at tremendous expense-over the next few years. Better informed people than me are welcome to clarify but there was more than one story about players not signing for us because they didn’t rate the facilities on offer compared to what they were used to and expected-and players do care about these things.
We had to upgrade the ground (TV gantry, floodlights) for the beginning of last season again-and will likely need to do so whenever we are back in the Prem as the PL are always moving the goalposts for the TV companies and world media.
Massive costs all. And that’s before a penny is spent on incoming transfers.
The cost of running a football club is enormous, obscene even. The overall long term health of the game should be met with much more overall supporter ire than it is, as the model cannot be sustained as it is, no matter how wealthy the owners-and, if we were to get a benevolent billionaire take over, what if he/she was one of 25-30 operating in English football?
It still wouldn’t guarantee us a place in the Prem!
23 Darren – Good point. We have to spend our money more wisely than other Clubs to achieve and retain Premier League status. That requires better scouting/recruitment etc – one area that has been very very poor in recent seasons. Alex Neil’s judgement on which players to bring in has also been poor. There have been plenty of flops, and the squad is unbalanced.