What did we learn from the release of Norwich City's annual accounts?
PUBLISHED: 14:52 01 November 2017 | UPDATED: 14:52 01 November 2017
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Deputy sports editor Mark Armstrong looks at six things we learned from the release of Norwich City’s annual accounts as a bright light was shone on the consequences of dropping out the Premier League
The Premier League - it’s the only place to be.
Well, it’s the only place to be if you want to be profitable - that much was laid bare at the release of Norwich City’s annual accounts on Tuesday.
They demonstrated how City have had to absorb a £18.6m drop in broadcasting revenue, which resulted in a loss of £2.7m over the course of the year.
Savings have been made and it’s clear the longer City are out of the Premier League the more difficult it is going to be to get back there.
The parachute payments will be gone by the summer and if City aren’t back in the Premier League by that point then more “difficult decisions” are on the way.
Here are six things we learned from the release of the accounts.
Plugging the gap
City made a £2.1m profit from player trading but the reality is that if they don’t go up this season then this will be the most feasible way to make up the inevitable shortfall from the parachute payments ending. That means the likes of James Maddison, Alex Pritchard and Josh Murphy all become fair game next summer on the basis Norwich remain a Championship club.
City’s plight will not go unnoticed by Premier League sides either, offering the opportunity to drive down prices. That’s where sporting director Stuart Webber will be earning his money, creating an auction if City get to the stage where they must sell.
Norwich’s last parachute payment for this season is £31m – with that taken out of the budget that gap needs to be plugged. It’s not palatable but City will have to sell if they are to remain debt-free which is obviously a priority for the directors.
Managing director Steve Stone admitted there is no desire to see the club get back into debt. The only debt the club is carrying at the moment is £1.8m into an overdraft with Barclays Bank. It is no secret that the directors have been scarred from dropping down to League One – in the summer of 2009 only the negotiating skills of the club’s hierarchy kept the administrators away. “I don’t think anyone has an appetite to back to those times,” said Stone.
But fans will have to realise that keeping the club debt free comes at a price, namely selling star assets and shopping in the transfer market’s bargain bin.
Get the decisions right
Every penny is a prisoner… “We are not a club that plays fast and loose with money,” said chairman Ed Balls on Tuesday.
That means that every time Norwich City part with cash the question needs to be asked ‘do we need to spend this?’ or ‘can we get him cheaper?’
What they can’t afford to keep doing is paying out money in compensation. A total of £4.4m was paid out in severance costs – £712,000 went to former chief executive Jez Moxey and the bulk of the remainder went to Alex Neil and his coaching staff, although the exact amounts could not be revealed due to confidentiality clauses.
Not many tears were shed over any of these exits but City need to make sure that they get their key appointments right otherwise it’s going to cost them more money they don’t have.
The world and his wife can see that City are short up front. Nelson Oliveira’s fitness problems have left Cameron Jerome carrying the burden up front and with 31-year-old not in the best of scoring form, City have a problem. The good news is that this January there is no need for City to sell…except if they want to buy. That means if City are to strengthen a beleaguered forward line then someone is going to have to go. But that will be the case for as long as Norwich remain a Championship side.
The academy is going to have to start earning its corn. If City don’t go up this season then ‘plan B’ as it was described by Stone heavily rests on the academy’s shoulders. When players are inevitably sold then youngsters from the academy are going to be expected to supplement the squad. When you consider the amount of change that has gone on at academy level since Stuart Webber’s arrival it’s clear he expects more. Getting the odd Murphy coming through every few years isn’t enough. Youngsters are going to have to come through every year and if they thrive and City remain in the second tier, the reality is that they are likely to be sold.
Norwich City are fortunate that their fans love their football. Despite last season’s disappointing performance City still sold 20,968 season tickets – 487 more than when they came down from the Premier League. Impressive stuff – hope does funny things to football fans. How long City can maintain that sense of optimism will be key to keeping those impressive season ticket sales. Season after season of Championship football would make it very difficult. Ask Ipswich.