If you’re ever minded to ask the question, when, for a football club, is the best time to hold an AGM, being top of the league, with ‘that lot’ 23 places below you, together with a relatively healthy set of financials in your back pocket, that’s probably just about perfect – if Heineken did AGM’s…
The mood music throughout the Canaries AGM was, understandably, positive. Finding something to complain about rather difficult – unless, of course, you’re overly concerned at our current throw-in routines.
However, a degree of credit should also be given to the Club – the initial tone being set as directors and executives mingled and chatted with fans beforehand. Would it have happened if the AGM had been held during the first International break – probably not, but that’s a discussion for another day.
The formal AGM business, which lasted just a few minutes, was followed several presentations; a financial summary, a Club headlines analysis and a Club Vision & Values review by Delia and Michael. Growth, resilience, integrity, pride, belonging and commitment being the six core values, all while striving to be an established Premier League Club, driven by a proud, passionate football community.
Openness and transparency were the buzzwords throughout.
An extensive Q&A session followed the presentations and, post AGM, the opportunities for interviews, not only by the local media, but also for both Connor and Nick (Along Come Norwich) with Stuart Webber, Ben Kensell and Ed Balls all making themselves available for further scrutiny.
I’ll avoid repetition, instead taking a few moments to reflect further, not only on the headline numbers announced when the current accounts were released a few weeks back, but to also look at the additional forecasts given for the current season. Hard numbers – not a ‘fag packet’ in sight!
Initially, it’s hard to look beyond the significance drop in income; the reported £63.7m for 2017/18, is forecast to drop by an eye-watering £34.8m to just £28.9m for this financial year. It’s also worth recalling that revenues touched £98m just two seasons ago in the Premier League. Put another way, that’s just shy of a £70m lost in revenues from the top line in just three years.
The primary underlying reason is blindly obvious, as broadcasting revenues, including the final parachute payment instalments, fell to £39.6m last season and are predicted to reduce to the Championship norm of circa £7.5m for the current season.
City’s relegation, back in 2016, meant they missed out the current, bumper TV deal. The huge differential between Premier League TV cash, currently £95m pa for finishing last, and the more modest Championship monies. This is clearly a football wide issue for all clubs relegated from the Premier League – not just Norwich.
The reductions in other revenue streams; gate receipts, commercial & media, plus catering income, are forecast to drop by circa £2.7m over the next year, as you’d expect probably in the Championship.
Unsurprisingly, given the significant drop in income, operating costs have also been subject to much scrutiny. They’ve already fallen from £73.9m in 2016/17 to £68.8m last season and forecast to drop by a further £18.6m to £50.2m during the current season.
The primary operating cost remains, what was described as, “the Football Department”. It’s fair to emphasise this also includes Colney and academy costs. It’s seen costs of £49.6m for last season, projected to reduce to £33.1m this season, albeit the figure also includes a provision for the ongoing building work at Colney.
Other operating costs are also subject to downward pressure – totalling £21.4m, for 2016-17, down to £17.1m for this season (hopefully without needing to include any provisions for severance payments).
What’s absolutely clear is that revenues have reduced at a much faster rate, following relegation, than operating costs have, which is unsurprising, given that players contracts are typically fixed for three years or more. Even the existence of the much-vaunted relegation clauses, do not cover the corresponding revenue reductions.
As a consequence, player trading has been essential to cover the revenue reductions, with a £24.1m credit required. However, this is forecast to be a £1.4m liability for the current season. This results in a significant forecast loss -£21.3m by the end of the financial year and, more importantly, the cash surplus, reported at £16.1m in June 2018, turning into a -£5.0m deficit by year end. This is, apparently, well within the Club’s current banking facility.
The message has been delivered in fairly stark terms, the healthy financial summary, as at June 2018, will be transformed twelve months later without the combination of further cost reductions, increased player sales or promotion back to the Premier League.
Naturally, it goes without saying what the preferred option for all will be.