David Freezer: Plenty for City fans to savour in financial results amid wider worries in English football

NCFC releases their finances for 2020.
Ben Kensell, chief operations officer, Stephan Phillips, Dire

NCFC releases their finances for 2020. Ben Kensell, chief operations officer, Stephan Phillips, Director and Anthony Richends, Finance Director. - Credit: Sonya Duncan

There was a wider story surrounding the publication of Norwich City’s annual accounts this year, providing sharp focus on the financial challenges currently facing many football clubs in England.

The Canaries will no doubt take much pride in the fact that few were surprised to see them post a pre-tax profit of £2.1million, in spite of Premier League relegation and the major impact on income that the Covid-19 pandemic has brought, as a consequence of games having to be played without spectators.

Fortunately, as a club run as self-sustainable which opted to spend carefully after promotion to the top flight due to scars of past relegation woe, City have been able to survive the impact and adjust appropriately.

The pandemic cost £12,3million up until the end of July 2020, as the financial year was extended in accordance with the season being pushed back by its three-month suspension. Of that, £10.2m were rebates to broadcasters (£7.1m) and season ticket holders (£3.1m), of which around 80 percent did claim the rebate owed for the games they were unable to attend.

Clearly that is a huge sum for any business to contend with losing but in the land of Premier League riches, it meant that turnover dropped to £119.3m, which was still a huge increase on the £33.7million from the promotion season of 2018-19 - the first since Premier League parachute payments from relegation in 2016 had finished.

Which brings us around to the controversial Project Big Picture, the plan which the EFL, Liverpool and Manchester United saw come crashing down in a ball of flames recently due to the backlash at placing more power in then hands of the top flight’s nine longest serving clubs.

However, many involved in football doubt that will be the end of the matter, as talk of a European Premier League grows and negotiations around the financial bailout of struggling lower level clubs continue.

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In among the plans however were intentions of trying to level the financial playing field in the Championship, suggesting that Premier League solidarity payments should be shared evenly across the division.

City’s accounts illustrate how that horse has already bolted though.

Norwich City finance director Anthony Richens, right, speaks to EDP reporter David Freezer at Carrow

Norwich City finance director Anthony Richens, right, speaks to EDP reporter David Freezer at Carrow Road Picture: Sonya Duncan - Credit: Sonya Duncan

Norwich City accounts: Coronavirus impact, Premier League profit, what Delia’s owed - everything you need to knowIn the Championship during 2018-19 the Canaries earned £9.3m in broadcast revenue. In the Premier League that increased by 870pc to £90.2m during 2019-20. That is why clubs are so scared of dropping out of the Premier League.

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To put it another way, broadcasting revenue rose from representing 27.7pc of turnover in the Championship, to 67.8pc in the Premier League. Without parachute payments a self-sustainable club like Norwich would most probably have not just sold Jamal Lewis and Ben Godfrey, but would have had to sell a host of other players as well, tearing away their competitive advantage and making it incredibly difficult to shake off a relegation hangover.

Or take a look at wages as a percentage of turnover.

The club’s wage bill rose from £54.4m to £88.9m, having rewarded almost the entire promotion winning squad with new deals and made several signings, such as Josip Drmic on a free transfer and the loan signings of Ralf Fahrmann and Ibrahim Amadou from Schalke and Sevilla respectively.

However, thanks to big promotion bonuses - which were reportedly worth around £20million - wages as a percentage of turnover were 162pc for 2018-19 but down to 75pc in the latest accounts, thanks to the spike in income.

It’s also emphasised that: “Football player contracts have relegation clauses and therefore our largest cost line has been adjusted post relegation.”

The “significant value” of the sales of Lewis and Godfrey since relegation is also pointed out. Those sales were reportedly worth around £40million up front, with potential add-on fees to follow, although not all of the money is paid up front, as is usual in big deals.

All of which hints at some of the reasons why majority shareholders Delia Smith and Michael Wynn Jones have been so keen for the club to live within its means, as the financial bubble gets bigger and bigger in football.

Chief operating officer Ben Kensell has warned that the £12m loss due to Covid-19 could yet double if this season is played without fans, with City now accepting that is likely to be the case until at least March.

There is also the small matter of around £18m in tax being deferred, so much more careful is planning required and player sales will inevitably be a source of income if the current promising signs of a promotion push cannot be maintained by Daniel Farke’s squad.

Yet the overriding theme is that the Canaries believe they can remain competitive in the Championship through until the end of the season, that they are not staring into the financial abyss.

Compare that to the plight of clubs like Wigan, a Premier League rival of City’s not so long ago and FA Cup winners of 2013. After their financial crisis dragged a team undeservedly into League One, their fans saw their squad ripped apart and weren’t even sure they would be able to start the season. They currently sit bottom of League One.

Or how about Bury, now defunct after 134 years, a club Norwich faced on 35 occasions since the first meeting in 1934. Or Macclesfield Town, wound up after 146 years at the heart of the Cheshire community.

Or Southend United, founded in 1906 but bottom of League Two and fighting to survive in the courts. Or Bolton, a club which spent 11 straight years in the Premier League and enjoyed two Uefa Cup campaigns, now sat 20th in League Two after financial implosion.

Norwich City cannot crow or look down on anyone triumphantly, the fight for financial stability is a constant state for a self-financed club and many challenges are ahead, particularly if a return to the top flight cannot be achieved in the next couple of years.

Yet this morning Canaries fans were able to wake up in the knowledge that their club is safe, that it will be here tomorrow and next season - and for many years after that, regardless of whether the big boys pick up their ball and go to play with the wealthy super clubs on the continent more regularly.

Even the social media morons angrily bashing “WHERE’S THE MONEY GONE DELIA?” into their keyboards, having not bothered to read any of the facts, have stayed relatively quiet this year.

Does the sensible approach make it more difficult to achieve the clearly stated ambition of being an “established Premier League club”, as set out in the accounts? Of course. It will make achieving that aim even sweeter and more rewarding if it can be achieved though.

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