The biggest news for Norwich fans over the last week has to have been the announcement of the proposed transfer of majority ownership of the club from Delia Smith and Michael Wynn Jones to Mark Attanasio’s Norfolk Holdings Group
I’ll leave the assessment of what this means for the club to others but I’m here to talk about the financial implications.
I’ve been a City supporter since childhood and an accountant up until my recent retirement. I’m not the only supporter with a financial background but as someone who follows the finances of the football world avidly I can throw a bit of light on the matter.
To talk about the challenges Delia and Michael have faced since 1996 we have to consider where we were.
Under the ownership of Robert Chase we didn’t really see what was happening in terms of finances. We may have occasionally heard that the club was reporting a loss or a profit but never really saw the detail.
But some kind of crisis caused the Chase era to end. It doesn’t sound like the club was worthless or even making significant losses but from what I gather, there was a lack of cash meaning that the club could no longer pay its bills.
Chase had used a large amount of club funds to buy prime development land at a time when the property market was still waiting to recover from the crash at the start of the 1990s. So, good long-term investments but not if you have a sudden drop in income due to relegation.
An everyday comparison would be like using your savings for a deposit on a house, taking on a large mortgage and then losing your job. You might have wealth but you can’t afford food.
This is the situation Delia and Michael inherited and maybe any reflection of their time as owners should consider that they started from a position of weakness. They injected cash to sort out the initial shortage and made some sound decisions to make progress.
For a start, they appointed people to make decisions unlike the owner/CEO model under Chase. The average attendance increased – which helped with the income – and we also saw a large share issue, which meant that many of us became shareholders, and some of the land purchased by Chase was sold for a profit.
As a result, the finances of the club stabilised and we returned to the Premier League.
Although we were relegated after just one season, surely the riches we gained in that one year would mean we would be financially stable and competitive in the Championship? The answer was no and a further relegation to League One saw the danger of administration loom.
Fortunately we recovered on and off the pitch but this opened my eyes to the reality the club faced. The bottom line was we could not afford failure. Delia and Michael had given the club interest free loans in order to improve commercial income but they were unable to risk their own money to prop up the club.
By the start of the Webber/Farke era it was apparent that the club needed Premier League income, parachute money or transfer sales in order to avoid eight-figure annual losses. The 2018-19 season saw a loss of over £30m and even after allowing for promotion-based payments and wages for Steven Naismith and others, we would have roughly made a £15m loss.
We had no miracle cure. We needed promotion to survive.
Compare this to Ipswich who had Marcus Evans. For all his perceived failings, he pumped in millions every year to keep them from dropping further down the league. We had no such luxury.
It can be argued that this urgency caused swift and correct decisions but all the time we were relying on avoiding bad luck on the pitch
Even the good times came with their own problems. Although the TV payments in the Premier League helped us to make a profit, they didn’t arrive in our bank account on day one. To buy players we had to borrow because we still lacked cash. A further thing to consider is that virtually all of the club’s income has been ploughed into the playing side. We have not spent a significant sum on Carrow Road for over a decade, despite being capable of filling a larger stadium
Football has moved on and self-funding just isn’t viable in the Championship. At some point, the yo-yo existence was going to stop.
So what happens now?
Well, Norfolk Holdings have already supported the club to the tune of almost £100m, and the consequences of not having had that are unthinkable.
They have deep enough pockets to see us through a lean period for as long as they wish to do so, and the threat of immediate financial meltdown has eased. But we now face a new issue – FFP or Profitability and Sustainability Rules (PSR).
These limit the annual losses that a club can make in a three-year period. Our former managing director, Steve Stone, once stated that we don’t have to worry about these rules because we can’t afford to make losses of any size. However, we now have to consider them and possibly some decisions have been made in light of these rules.
Our losses for 2021-22 and 2022-23 were significant, so we still can’t afford failure. It just doesn’t cause such a large crisis.
Expenditure on infrastructure, training facilities and youth development are exempt from PSR and it’s possible that Norfolk Holdings could invest in these areas and see the losses reduce thanks to more ticket sales from an expanded stadium, or profit on trading on academy products.
Mark Attanasio has stated that the club needs to be in the Premier League for it to carry on in its current form and he needs Premier League status to see a return on his investment.
Let’s hope he is successful.
An interesting and informative review, John. Thank you, although I am aware of most of it, having lived through the Chase era to the current day.
There have been lots of calls for infrastructure improvements, particularly in terms of increasing ground capacity. When the City Stand was rebuilt after the fire, there was a suggestion that it could have been two-tier, with the upper tier cantilevered out over Carrow Road, but that either the council or Highways England (whatever they were called at the time) vetoed it, because the road was very busy, being the ring road at the time. The ring road has now been moved further towards Riverside, and I believe that possibly the club now owns Carrow Road, so there’s a possible infrastructure improvement which could also increase income from attendance.
Hi John
It’s like a roulette wheel continuing spinning standstill and all is lost.
Since the late 1990’s we’ve been told money was being spent on the feasible of a new City Stand and ground approvements then a couple of months later the news breaks that the study has come back as to expensive and as we know it was even with the best will in the world never going to get cheap.
Rumours were that Robert Chase had options on land close to Colney that he wanted to build a completely new stadium and build housing to help pay for it on Carrow Rd.
Norfolk Group has an investor in real estate now on board maybe he might see ways to increase City’s value to the group and increase ground capacity at the same time or just might go back to the Chase plan.
We’ve had the lack of investment now we need targeted investment to grow the infrastructure and playing side.
A couple of sobering articles that amplify our business model of £30m annual net costs sustained by selling players. The trouble is we need that every year. I reckon with Sara £20m, Idah £9m, Tzolis £3m and soon Rowe for what £10m (total that just about balances with £12m spent on incomings permanent and loan signing. Next year? Who knows.
One thing I see clearly is. we need to try and reduce our fixed overhead by running a leaner meaner non player club. I would be looking to get the £30m down to say £24m i.e. reduce in annual recurring non playing costs by 20%.. You can all go figure where that £24m comes from in terms of player sales but I would say goodbye Sargent and at least one other. None of our defenders that’s for sure!! .
To add to my previous post: players sold in 2024 for £42m (by my estimates) include Idah and Rowe who cost us nothing whereas Sara and Tzolis cost approx £18m previously. So while it balances cash (annual costs £30m, buying players in £12m, selling players out £42m) the picture is slightly skewed by the NCFC accounting year of July to June and players being traded for a profit or loss as the case may be.
But cash is king and NCFC costs net £30m/pa just to run every year.. I wonder what Attanasio’s plans are for the future. Due to FFP rules he can’t just spend his riches (net worth $700m, Wikipedia) or can he?
Building a new stand is not the way forward. Ambitious clubs don’t do that anymore. Who has a rectangular stadium these days at the top level? The obvious answer is to sell the club’s prime real estate in the centre of the city and build a new all-singing all-dancing (and I mean that literally as it should be a conference centre, gig venue, etc etc) on an out-of-city location with easy access to good road and rail infrastructure and public transport to and from the stadium to the city. A large car park to support drivers and the other stadium purposes (whether leisure, entertainment, retail, hotel, etc). Brighton did it 15 years ago and have never looked back. Cut the ties to Carrow Road and create a new field fit for legends.
Careful AOTA47 … I once wrote a column on here suggesting something similar and still have the bruises 🙂
Sadly football has moved into franchise territory. We can choose to be a nice little family club and gently waft down the divisions like a falling dying autumn leaf while clubs like Wrexham climb their fantasy beanstalk and eclipse us in three to five years – or we can choose to make a fight of it and look to expand our profile and world fanbase as we should have done in the late 80s/early 90s (except the fans didn’t like it) and in our last two humiliating embarrassing disastrous ‘attempts’ (ha-ha-chuffin-ha) in the Premier League which could have opened new markets and revenue streams, but instead made us the laughing stock of world football. Important decisions. What do we want to be?
Wrexham will find their own level soon enough, their Hollywood ownership isn’t going to see them storm the Premier League and become Champions League contenders-they may settle as a decent Championship team with top 6-8 aspirations but they’ll be joining a nearing full to capacity club if and when they do so as there are at least 14-16 clubs in the current Championship who see that, reasonably, as a goal-plus a few who are currently in League One.
You often hear that our travails of the last few seasons have supposedly made us the ‘laughing stock’ of football, world or otherwise-but that is not the case, most general fans, certainly those of the bigger clubs don’t have eyes for anything other than what their clubs are doing, good or bad, whilst most neutrals, if they do have a view of us at all, will say we are a ‘well ran club’ that ‘plays decent football’ before giving Delia the obligatory mention.
That’s as far as is goes. No neutral fan is invested enough in Norwich City, or any other club, to form an opinion more than the obvious, no more than any of us are that bothered about what goes on at most other clubs either.
.
That was Robert Chases plan
And a good one. The last club leader with vision.
“Agitated off the A47” ? Mmm, Halvergate is “off the A47” – is there a connection here somewhere???
As an away supporter I don’t have skin in the game here. It’s a good idea if done well.
My hometown club of Oxford United did this. The ground was 3/4 modern, with a hotel, conference center, plus other entertainment amenities. The only trouble was that the owner sold off the valuable land of the old stadium, built the new one, but kept it in his name, not the club’s.
So Oxford (now with new owners) are now looking to make another stadium. In short, we’d need to keep the Attanasio’s honest in how they achieved it.
Agreed. We no longer inhabit the parochial and dysfunctional UK 1970s (although an awful lot of things don’t feel too dissimilar recently, sadly) and to progress in the near to medium future we need to expand on the multi-revenue model and find a customer-accessible way of achieving it and small city-centre stadiums with a tiny footprint with little room for expansion is not the future.
It won’t be popular but yes, we need the ‘New Nest’…