Considering it’s been a week without football in the world of the Canary, there have been no shortage of talking points.
In fact, the pages of MFW have been alive with debate following the announcement that a meeting has been called for October 2 during which shareholders whose names are not Michael Wynn-Jones, Delia Smith, and Mark Attanasio will be asked to vote on something pivotal to the club’s future.
By now most of you will have at least a rough idea of the thrust of said vote but in case you haven’t, basically the plan is that the new share issue, which will be taken up by the Attanasio group, will result in them owning 40 percent of the club – the exact same amount as Delia and Michael once their existing stake has been commensurately diluted.
The tricky bit comes in the shape of the Takeover Code, which is designed to (and I quote), ‘ensure fair disclosure about the change in shareholding and control in a company’. When it refers to a company it means a PLC, of which Norwich City is one.
The code dictates that because Attansio is going to be acquiring more than 30 per cent of Norwich City he is duty-bound to offer to buy out the remaining 20 percent of shares at the same rate he has purchased the magic 195,012 – i.e. £25 a pop.
And so when the club and those in the know were telling us that we needed to be patient and that transactions of this ilk take lots of time, due diligence, and bureaucracy to complete, they were it seems attempting to cut a deal with the Takeover Panel that would preclude the need for the 20 per cent to be given that option.
As it transpired, the Panel’s offered solution was for the 20 per cent to be asked to vote on waiving their legal right, which is tricky because, let’s face it, in these daunting financial times it’s only natural that some may be tempted.
And before someone reminds me, I suspect that 99 percent of those who have bought small shareholdings have done so out of love for their football club rather than the desire to make a quick buck, but times change and for some of us right now they are hellishly difficult.
For the record, I don’t own any shares.
I do however suspect the club’s whips will be in action and those tempted to vote against the waiver will be reminded of the consequences for the club, which is fair enough. That part of the equation needs to be understood by those being asked to vote, which doesn’t, of course, include Delia, Michael, and Mark.
The fact they are excluded from the vote, for obvious reasons, is clearly what makes it a little precarious.
But it’s the club’s perilous financial position that makes all of the above quite so pressing and is why it all has to happen sooner rather than later.
To put it into context, in addition to the ongoing debts that the club is incurring as it wrestles with the lingering financial effects of the pandemic and struggles to meet day-to-day costs, around a year ago it took out two loans.
One was for £22.6 million and was leveraged against transfer funds that the club was due from players sold – like Emi Buendia – where fees are paid in instalments over an agreed period of time. City needed the money upfront and so this was seen as a way to achieve that, albeit of course when those sums are received they are already accounted for.
But in the circumstances needs must – and at least that future income was agreed and guaranteed. The original timescale, barring any renegotiations that have occurred since, was for the £22.6 million to be repaid in full by September 2024.
The other loan taken out over the summer of 2023 was for £43.9 million and appears less clear-cut and far more of a risk. This one, as I understand it, was leveraged against future parachute payments and forecast TV revenues and is repayable in full by March 2024 – in just six months’ time.
This one is tricky because the suggestion is some of that TV revenue was based on Premier League levels, which as we know is far removed from the Sky Sports and TV income of a Championship club.
And we didn’t get promoted.
All of which is why I read with interest, our Connor’s excellent piece in the week in which he outlines exactly what Attanasio is bringing to the table.
It had already been revealed that he has been able to source some favourable interest rates for City’s borrowing – part of the reason for him acquiring the 195,012 shares for a more advantageous rate per share than originally discussed – but Connor revealed that in addition to paying circa £5 million for the new share allocation, he will also be bringing £28 million to the table for “debt repayment”.
That bit was news to me but perhaps ties in with the repayment of the ‘parachute’ money loan due for repayment next March.
I may be putting two and two together and making five, so I trust that those who have a better grasp of this than I will correct me in the comments below.
But what all of this does spell out is that without some major financial intervention, the brown stuff and the fan are six months at the most away from colliding.
As much as we all wanted it to work, Delia and Michael’s dream of running a self-funded ship has long since smashed into the rocks. I’m not sure it was ever possible, however worthy the ideal.
As supporters, there are generally two things we want from our football club – for it to be secure and for it to be successful. If it can’t be the latter, then at least it can be the former.
And in fairness, in Norwich City terms we’ve had some success over the last decade and a bit. But even under self-funding, we’ve never been secure, and only ever one disastrous season away from the brink.
That things have improved on the pitch is a good thing, and Stuart Webber has proved yet again he’s a more efficient operator in the transfer market when forced to wheel and deal rather than spend tens of millions, but the fact we spent virtually nothing in fees over the summer and raked in sizeable sums for Messrs Rashica, Aarons and Omobamidele was an early sign that all was not well on the balance sheet.
Andy Delf penned a lovely piece in the week, eloquently explaining why he will vote in favour of the waiver while also spelling out the undoubted virtues of being owned by Michael and Delia, but I wonder if sooner rather than later we are going to have to acknowledge that Mark Attanasio is more-than-worthy of the stripes and that a three-year holding pattern, given our perilous financial position, is excessive.
We know he’s not going to spend lavishly but we do know he has financial acumen and access to funds far removed from what we currently recognise as normal.
We’ve teetered along the financial tightrope for long enough now. The time for radical change is already here.