What has become abundantly clear over the last few weeks – if it wasn’t already – is that even for a club that is perpetually skint, the level of debt now on the balance sheet of Norwich City FC PLC is scarily high.
Football finances have, of course, changed beyond all recognition over the last three decades, but the numbers on said balance sheet are now far in excess of anything we have witnessed before. While the accountants will tell you a certain level of debt is considered healthy as it potentially enables the business to grow, this only applies if it is sustainable and affordable.
To put it in perspective, the debt as per the recently-released accounts, currently stands at £96m, compared to the debt that the banks deemed unsustainable in 1996 and which necessitated Delia and Michael’s takeover, which was reportedly less than £20m.
The only caveat I can offer is that the sales of Max Aarons, Andrew Omobamidele, and Milot Rashica occurred after the end of the financial year and so will, effectively, reduce the £96m by circa £20m.
But to use more modern parlance, when Marcus Evans sold Ipswich Town to Gamechanger 20, their level of debt – for which we mocked them mercilessly and which was owed exclusively to Evans – had reached £117m.
Luckily (for them), as part of the deal to sell to Gamechanger, Evans wrote off most of that debt – i.e. bore the brunt of it personally rather than demand full repayment from either the club or its new owners.
Good for them. Wahoo.
Of course, we’re unlikely to ever be in such a fortuitous position, especially as Delia and Michael have no immediate plan to sell their share of the football club. So £96m it is – a sphincter-twitching sum in anyone’s book.
If nothing else, that should bring an end to this ‘well-run-club’ mantra when speaking of the self-funding model and how carefully and delicately Delia and Michael have managed the club’s finances in their time in charge.
Well-run clubs don’t find themselves within a whisker of £100m of debt with no obvious plan to replay it other than relying on a gift from the gods in the form of another brief sojourn to the Premier League – which is clearly not happening here anytime soon.
We have, of course, Mark Attanasio waiting in the wings to take on a more influential role in the club – and I’ll get told off if I mention the three to seven-year mentoring period that Delia insists he needs – but nothing in the American’s history at the Brewers suggests he’s about to do a Marcus Evans and take on the debt burden on our behalf.
Why would he?
He may continue his role in helping us redistribute some of that debt at more favourable rates than we would readily be paying, but he’s not about to click on his banking app and transfer £96m anytime soon.
Simply not happening.
Until now, when the debt started to reach unsustainable levels there was always a player or two to sell to plug the financial black hole – most notably James Maddison, whose sale at the end of the 2017-18 season kept a very scary-looking wolf from the door.
But, while the cupboard isn’t completely bare, let’s not kid ourselves that the collective sales of Gabriel Sara, Jonathan Rowe and, maybe even, Angus Gunn will pull much of a hole in the £96m.
So, then what?
How the hell does a club that has dwindling crowds sustain that level of debt? Even full houses of 27,000+ wouldn’t have come close to providing ways of eating into that debt, so how do we manage when the empty seats at Carrow Road tell you that we’re not currently reaching anything that number?
And worse still … with season ticket renewals due in February and everything pointing to an increasingly disgruntled fan base not renewing en masse as it once did, the situation appears dire enough to give even the most loyal of loyalists the collywobbles.
If any of them would care to point to the flaws in all of the above and tell me I’m worrying unnecessarily, then, thank you. And as your reward, there’s an MFW column here waiting for you should you wish to take up the challenge.
Also, if there is anyone out there who can see an obvious plan to make this situation better, the same applies.
Norwich City are far from alone, of course, especially in the Championship. In a fine piece by Philip Buckingham that appeared on The Athletic back in April, he described it as ‘the division of financial strain and distress‘, and how the the majority of its 24 clubs are conditioned to accept loss-making.
Buckingham wrote, ‘Money spent on wages consistently — and comfortably — exceeds the collective revenue each year‘, so the position in which Norwich City finds itself is not usual in the Championship and is, in fact, par for the course. The problem we have is our club’s whole financial ethos has been based around it not returning to a position of unsustainability – something it has fundamentally failed to achieve.
To pre-empt those who will cite the pandemic as the reason for this financial mess, I agree. It clearly has contributed massively to it but, equally, its impact has been felt by all clubs, not just Norwich City.
I’d suggest that, with that in mind, some pre-emptive action by the owners would have been a good idea – and by that, I mean pro-actively seeking out the Attanasios of this world well before Michael Foulger decided to call time on his involvement in our football club.
But, they didn’t and we are where we are – which is in the financial poop.
As I said earlier, I’d love there to be an obvious route out of this muddle aside from limping along in a state of increasing ultra-austerity, but I’m struggling to see one.
Perhaps we’ll learn more at the AGM on November 30.
I’ll, of course, be told I’m a professional miserabilist and that MFW is now nothing more than a vehicle for Norwich City bashing – neither of which is true – but the above is merely a reflection on something that, as a City supporter, I find concerning.
In the short term, perhaps that old-fashioned concept of winning a few football matches will help lift the mood.
This wouldn’t be our Martin’s natural choice of band, but I think he’d approve of the sentiment: