Daniel Farke will suck up the short term pain for the gains from putting Norwich City on a sound financial footing.

City's latest published accounts showed a loss of £38m for the Championship title-winning campaign. Club officials expect to return to profit in 12 months, but Farke has the smallest transfer budget in the Premier League.

"Trust me this is not a situation where we are proud that we're not able to spend money. It's totally the other way around," he said.

"What we have to do at the moment in order to make sure this club has a good mid to long term future is invest in the infrastructure. We had to invest in building the academy a bit more and we had to pay for some sins of the past.

"That doesn't help me in the short term and that's quite normal.

"But it's so important in the mid to long term for this club and I totally accept that we have to do this and hopefully one day we are in the position where we do not need to talk about a financial situation; when also we don't have to invest so much in the infrastructure because that's money we invest into this squad.

"If you are able to become a permanent member of the Premier League, not just for one day, like the phrase I hear about a 'Yo-Yo' club, then you can take the next step. Then one day we are in a situation where we can spend even a bit more money."

City host lowly Watford on Friday at Carrow Road but even the Premier League's bottom club were able to lavish more than £25m on French youngster Ismaila Sarr last summer.

"We would like to do this but we are a self funding club and for that we have to accept the reality and hopefully if we can become a permanent member we will have opportunities to buy a player like Watford did with Sarr," said Farke. "As long as we're not capable to do this we will fight with our tools and stick to our principles and we'll go our way, and that is what we are doing at the moment.

"If I was to stand up and start asking the owners for money in January that would not be brave, that would not help my own players to believe in themselves. You won't see me doing that.

"I accept the reality and so do the players. We are in this game to achieve unrealistic objectives. We are honest and we have to face the reality."