Among 36 pages of numbers and words, one phrase stands out. It is on line 11 in page two of Norwich City PLC’s annual report. “The Club’s future strategy is to strive to be an established Premier League club.”
Other parts of the document are not suitable for those of a nervous disposition. The accounts pages detail the devastation wreaked by COVID-19 and a blooming huge wage bill last season – a third bigger than in any previous Premier League campaign.
But I used a highlighter pen on that phrase on page two. It represents a sea change. The previously stated aim of being in the top 26 in the land – not dropping below the play-off places in the Championship – has been significantly upgraded.
We can delay debating what it means, and worry about how realistic it is, on another day. For now, let’s just marvel.
Despite another relegation – this one uniquely dismal – and despite the pandemic forcing the club’s finance department to remodel what the future might look like almost daily, the club’s board and executive committee have targeted becoming part of the EPL establishment.
The charge of “no ambishun” is now, officially, a load of ole squit.
So let’s deal with the other frequent accusations and questions.
1) Where’s the money gorn? Look at all the loot City got just for being in the Premier League. Look at all the transfer fees City have been paid. Look at how little they spent on transfers. Where’s the money?
It’s mostly gone on wages, as it always does. Here are the figures.
In the 18-19 season, wages and staff costs were £54m on a turnover (total income) of only £33m.
Yep. In our promotion season the wage bill was 162 per cent of our turnover. It was the first season with no parachute money from the Premier League, so turnover fell by almost half. But we had to pay promotion bonuses (hooray!). We still had folk like Stephen Naismith on our books and had to pay them the promotion bonuses (boo!). City made a loss of £38m that season.
In the 2019-20 season in the Prem, wages and staff costs were £89m. That was 32 per cent higher than the record set in the 2015-16 season in the top division. It was also 75 per cent of our turnover. Added to all the other operating costs that meant that very nearly all the money really had gone. The club made a profit (before tax) of just £2m.
2) How much does Delia Smith salt away for herself?
Supporter Duncan Edwards satirises that question by Tweeting about the money being in her “#hambag” but such is the alarming ignorance out there that a lot of fans agree with the joke without realising it’s a joke.
I’ve had people insisting to me that “things can be hidden by accountants” – but independent auditors have to report all financial transactions involving the club and its directors.
The 2019-20 accounts demonstrate this transparency. They report that the club paid some money to NC Internet. That is the company, owned by Delia and Michael Wynn Jones, which operates Deliaonline. In 2019-20 the club bought services from that company worth £45,000 and owed the company another £9,000.
I’ve no idea what any of that was about. I don’t talk to Delia about money. But I know that Deliaonline employs people. So, presumably, if Deliaonline does anything for the club, it charges the club accordingly so as to pay its staff from the correct pot.
Elsewhere the accounts show that no directors were paid any salaries, that Delia and MWJ spent £5,000 at the club on goods and services, that vice-chairman Michael Foulger spent £1000 in the same way at the club.
Foulger has £4,400 worth of “preference shares” and Delia and MWJ have £3,025 between them. That is basically money loaned to the club. Preference shares don’t confer any extra voting rights, but interest can be paid on them.
It is possible that Delia and MWJ accept dividends on their £327,000 worth of ordinary shares. I’ve never asked them. But no dividends will be paid to any shareholders (including me) while the pandemic is continuing and the total that would be payable to all of us is only £63,000.
The final piece of financial information about Delia and MWJ is that they loaned the club £250,000 in 2018-19 and it had not been repaid at the time the 2019-20 accounts were prepared.
So the true story of the last two seasons is very different to the one constructed by those in the national media who don’t bother to investigate.
It is this: Norwich City ran up big losses as they barnstormed to the Football League title. Delia and Michael stumped up a quarter of a million quid to help with cash flow.
Then, once in the Premier League, the club balanced the books after the promotion splurge, paid back £5m to those of us who’d bought bonds finance the rebuilding of the Colney training and academy facility, plus £500,000 in interest (thanks!), chipped in towards the Community Sports Foundation’s new hub, The Nest and spent just about every remaining pound trying to stay up.
To be scrupulously fair to the “no ambishun” critics, it is true that, without COVID-19, City would have made more than that £2m profit. The initial aim was to be £20m in the black. But, as the season unfolded, the projected profit was cut to £14m — then the pandemic reduced it to £2m.
It could be argued that City shouldn’t have been planning to make a profit in the Premier League; £14m to £20m could have bought a fit centre-back or two.
But … wages. You’d have to pay the new player(s) out of that £14m or £20m so you’d have much less for the transfer fee(s).
And really, in the context of how far short City fell of Premier League survival, aiming for a £20m profit in case of relegation is surely – I hesitate to use the word because it triggers some fans – prudent.
What we can say for certain is that another season of accumulating losses on top of the £38m promotion splurge would have brought an existential crisis for Norwich City upon relegation – even without Covid.
The Corona crisis is where the cold language and limited remit of the annual report are not adequate. They cannot convey the amount of work that has been done exploring what the impact will be as football continues without spectators, when broadcast revenue and sponsorship deals cannot be taken for granted.
New Finance Director Anthony Richens took up his duties just before COVID-19 struck. He might be cursing his own timing, but he was able to tell the auditors that: “In all reasonable scenarios we believe the club is in a strong position.”
In a landscape where football clubs whose details I know are contemplating not being able to survive this season, that statement is a beacon of hope and sanity.
And elsewhere in the annual report there are signs of more hope. The report is fulsome in its praise of the Foundation’s work, not just in going ahead with The Nest at such a challenging time, but in helping the club respond to Covid.
I can vouch for the fact that the relationship between the club and the Foundation (its stand-alone charitable partner) has never been better. It is a proper partnership, and the work the club and Foundation did together in the first lockdown – delivering care packages, checking up on the welfare of the vulnerable, devising new, on-line activities and so-on – will now continue to develop in Lockdown 2.
And, whenever a new normal arrives, the Foundation will be at the forefront of Norwich City’s efforts to tackle mental and physical health problems, isolation, unemployment and lack of opportunities in Norfolk.
The club we care about in the fine city is a good club, run and owned by good people. And now it has set a course for being established in the Premier League.