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PurpleCanary

2016 ACCOUNTS

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The usual caveats – I am only an amateur who has been faking it all these years, but until Chris Sutton, who plainly knows this stuff backwards (…), decides to make the effort I appear to be the only game in town.  Secondly, as a yo-yo club our accounts are often out of sync with the division we are in when they appear, so making comparisons with the previous year misleading. In this case the relevant comparisons will often be with the 2014 accounts.It was widely expected, including by me, that turnover (income) would hit or come very close to the £100m mark, after reaching £94.3m in our PL relegation season. The 2016 figure (ie for the 2015-2016 season) of £97.8m is respectable, but shows we have reached a plateau. The increase was mainly due to an extra £2m from TV (this being the same deal as two years ago), while ticketing, catering and commercial were hardly changed.This is why several years ago Bowkett and McNally said we needed extra capacity of several thousand to become self-sufficiently competitive in the PL. Fans get dazzled by the TV money, but everyone gets it and we less than most. The way to boost income in comparison with our rivals in the bottom half of the table is ground expansion. Academic for now, I assume, but…2) There is a specific new phase which has appeared:“The board delegates responsibility for operation risk to the chief executive. First team performance can have a significant impact on most of the other key risk area, so investment in the playing squad continues to be our priority.”I do not know what, if anything to make of that. One could see it as a coded explanation for accepting McNally’s resignation, linking him directly to some of our recent transfers failures (albeit exaggerated by some posters) that led to two relegations.3)The pay-off to McNally has been much discussed. One point is that he received no bonuses for last season, either footballing or financial, although we probably (by way in being in the Premier League) roughly hit our financial targets.  It might seem odd to mention that he was not paid a bonus for relegation, but he did, for example, receive a financial bonus the last time we went down, for that same reason.  It is possible his pay-off had a bonus wrapped into it, of course.4) McNally’s departure was one of three from the board, with three coming in although the arrival of Moxey (who takes on the responsibility for all that operational risk – be careful what you wish for etc) fetched up at Carrow Road after the end of the accounting period. But Ed Balls and Tom Smith were on board. Now it was reported here a while ago that 200 ordinary shares had been bought for only £1 each, despite the official price (unless it has changed recently and not been announced) now being £100, and the Supporters’ Trust, among others, having had to pay that. Even if the price has been lowered it will not have gone down to its purely nominal £1 mark. As suspected, the accounts show they were bought by Balls and Smith (100 each), with the former not having held any before.Posters will have their own views on whether it is fair that the Supporters’ Trust (I declare a small interest as a non-participating member) has to cough up £100 while directors get to pay one-hundredth of that, meaning the club has missed out of an extra £19,800.00 of revenue.5) It is generally accepted that what is spent on player wages is the best (albeit flawed, but that is too complex a subject to explore here) guide to how clubs will perform. And while in the PL Norwich have usually been in the bottom three in the wage league table, although not, as it happens, when we went down in 2014. And we will have to wait until the spring, when all the PL accounts are in, to see where we were placed in this relegation season.What our accounts show is that total staff costs (which is the figure taken when providing these wage league tables) were £67.19m, compared with £54m in 2014. Probably a better indicator is that given, in a roundabout way, as a percentage of turnover, for player wages. In 2014 it was 40 per cent, or £42.4m, and in 2016 55 per cent, or £56m Given that these PL seasons were within the same TV deal, that is a significant rise in wage spending for the club.6) It has already been noted here that we now appear to be paying a director apart from McNally, as it then was, as CEO. If so, this is a departure. Roger Munby’s firm received a small amount of compensation for the time he spent as chairman, but that was not a salary. It has been suggested the £90,000 (presumably for about half a year’s work) is going to Tom Smith, but Ed Balls, as semi-executive chairman, looks the probable recipient. Whatever some fans think of Balls’ politics he is a dynamic figure (I gather his recent TV appearances as a hoofer have confirmed this) and was never likely to be just a figurehead. Whether, if so, this presages a longer-term shake-up at Carrow Road (Balls did speak early on of drawing up a 10-year plan) I could not say. One could wrap in the paying –off of the remaining debt to S&J and Foulger into such a scenario. Or not.7) In the summer there was a claim (if I remember it right) that we had no money left and would only be able to spend on transfers what we received. The problem with a bald statement like that was that it raised any number of supplementary questions, to tie down exactly what the situation was, and how authoritative was the source, that seemed unasked or unanswered. Now the accounts, in the post-balance sheet section, provide what looks an answer, except that it is and it isn’t. Because what is written in plain English doesn’t mean what it says. This, I am afraid, gets very nerdy, but is important, not so much for this season but for past and future reference.That section itemises players sold and players bought after June 30, and without listing the individual transfers fees gives what it says is a net figure for all these transactions. Normally this seems to be the result of taking the money received  from transfers away from the (larger) amount of money paid out to  give a net figure for how much the club is coughing up for that summer’s business.However two years ago it was obvious those figures didn’t add up, because we sold Snodgrass, Fer, Pilkington and Surman, and bought Lafferty, O’Neil, Jerome, Cuellar, McGrandles VOO, Thompson and Miquel, for a supposed net cost to us of £13.6m, plus a potential extra £3.5m. Obviously, since we must have got at least £13m for those four who left we didn’t spend £26m or more on the incomers.So I queried this with a senior figure at the club, and was told, despite what the section says, the outgoing transfers are irrelevant. The net figure the club has to pay refers only to players bought, with the net meaning net of VAT.In this case the calculation is hardly changed anyway, because Redmond was sold before June 30, so the only fee in was the few hundred thousand, or whatever it was, for van Wolfswinkel. So the “net” figure given for the cost to the club for its summer transfers in of £12.6m, with a potential extra £9m, is quite close to what in the real non-accounting world would be the real net figure, of about £12m, with that van Wolfswinkel fee being taken away from what we paid for Canos, Oliveira, Pritchard, McGovern and Jones.As to the question of whether we only spent what we received, though, if we factor in Redmond, even though he was sold early, those figures indicate we spent a fair bit more, on the assumption that we got no more than what was the rumoured £10m-£11m for Redmond. Not only is that £12m figure a million greater than the highest supposed amount for Redmond, but the extra £9m is a whopping amount to which we are potentially committed.A final thought. This message-board has its critics, but it is noticeable how three or four of the newsworthy items mentioned above, such as the 200 share purchase, and another director apparently getting paid, were spotted first by posters here and – as far as I know – have not been picked up by the press. That we are, if we are, paying Ed Balls (or Tom Smith, or even Foulger, as deputy chairman) £180,000 a year is genuinely good story. And this is hardly exceptional for ths message-board. It has frequently beaten the professional media to stories.

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Do you have any opinions on the reported 9m profit vs. relegation Purple.

Also, I still believe the Club should have gone for greater capacity by replacing the City Stand. They have wasted the opportunity of historically low interest rates.

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27th December 2015

Norwich City have announced that former Labour MP Ed Balls has become the club''s new chairman.

The former shadow chancellor, who was chief economic advisor to the UK Treasury for seven years, takes up the role in "an unpaid capacity, alongside his ongoing academic, commercial, charitable and media activities".

Norwich''s joint majority shareholders Delia Smith and Michael Wynn Jones said in a joint statement via the club''s official website: "We''re absolutely delighted to confirm that Ed Balls is the new chairman of Norwich City.

"His economic know-how and experience, coupled with his passion for all things Norwich City, will be a major asset for the Board and we''re excited about working closely together with Ed, David McNally and the other directors in this new era for the club"

Now I know that "unpaid" has various interpretations, but £90k in six months is going some.

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Would money paid to Stone as interim CEO count as directors remuneration? Presumably not as he as never a Director?

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As mentioned before Jim I don''t know , but I doubt it - Stone was being paid already and his title remained as Finance Director and Company Secretary, despite being "acting" CEO. There may well be accounting rules that Purple Canary would be better to answer, I see that the basis of reporting has changed to reflect the New UK GAAP standards but I get a bit of a nosebleed around this point. NCFC as a listed company so doesn''t have such stringent reporting rules.

I''m still wondering if Nephew Tom is getting a draw here. I don''t know though.

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It may be an accounting quirk GPB but certainly in the previous recent sets of accounts (indeed I think since Munby who used to take a modest notional remuneration) McNally has been the only paid Director so these figures do suggest that there was another director being paid for part of the year and if that is what they were paid for 6 months then I wish I could get some of that action!

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Thanks for this Purple - very interesting.1. Given that the record states that Balls is unpaid, doesn''t this rather suggest that Smith is the paid director? Did he give up his job (civil service?) to take up the role?2. can we tell if there is any money available for purchases in January, without player sales - although I rather hope there will be sales!

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[quote user=" Badger"]Thanks for this Purple - very interesting.1. Given that the record states that Balls is unpaid, doesn''t this rather suggest that Smith is the paid director? Did he give up his job (civil service?) to take up the role?

[/quote]

I think he retired from being a spy and now runs a photography business.

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Delegating operational risk to the chief executive is typical of what you would expect from the Stowmarket Two because it demonstrates yet again that they use others around them as human shields in order to attempt to deflect blame away from themselves.

This will not wash. The Board has a collective responsibility for all aspects of the club, including operational risk.

Ultimately, the buck stops at the top and this is true of any business anywhere so the Stowmarket Two ought to be roundly condemned for seeking to pull the wool over the eyes of shareholders and supporters.

I am still waiting for them to give a proper public explanation for the departures of Andrew and Sharon Turner, Mr Bowkett and McNasty himself. It is intolerable to expect shareholders especially, to welcome new directors when they are appointed, but then be left with no explanation at all for their departures.

Stowmarket Two must go by 5.30 tonight.

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[quote user="RUDOLPH HUCKER"]Do you have any opinions on the reported 9m profit vs. relegation Purple.

Also, I still believe the Club should have gone for greater capacity by replacing the City Stand. They have wasted the opportunity of historically low interest rates.[/quote]Oh, I much prefer a profit to staying in the Premier League, Rudolph...We are in the same situation as two years ago, when relegation meant we didn''t pay out bonuses that had been factored in, so instead of breaking even, as was expected, we made a six million pound profit. The 2016 accounts mention that "a significant proportion of salary costs" was based on staying up, and so was not paid out. Hence  a profit when we had assumed we would break even, or at least a much larger profit than expected.Thanks to Jim for pointing out that Ed Balls is unpaid,or at least was. That seems to scupper that idea of mine. So we are left with a mystery, which can be solved by someone asking a question at the AGM, unless the EDP gets there first. King Crimson is right that if it is Tom Smith and he is getting £180,000 a year, then that is a story. Unless he is really acting as a full-time executive director then that would be a scandal. Which is why I discounted the notion.

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I''ve just read the Strategic Report section, which is two pages long. The actual strategy is only two sentences :-"The Club’s future strategy remains that of investing all available surplus cash in to the playing squad and hence maximising the chances of returning to the Premier League at the earliest opportunity. This in turn will allow the consideration of longer term investment projects centred on both the Club’s training facilities at Colney and at Carrow Road itself."I''ve read plenty of annual reports in my time and have never come across anything so ridiculously brief. It''s an insult to shareholders.

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[quote user="93vintage"]I''ve just read the Strategic Report section, which is two pages long. The actual strategy is only two sentences :-"The Club’s future strategy remains that of investing all available surplus cash in to the playing squad and hence maximising the chances of returning to the Premier League at the earliest opportunity. This in turn will allow the consideration of longer term investment projects centred on both the Club’s training facilities at Colney and at Carrow Road itself."I''ve read plenty of annual reports in my time and have never come across anything so ridiculously brief. It''s an insult to shareholders.[/quote]

Yes, we used to at least get a chairman''s report or chief executive''s report, or both. But now non-communication is the order of the day. Agreed. Insulting to shareholders.

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Thanks for this purple.

So is it a genuine possibility that nephew has landed himself a 180k salary for being on the board???

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[quote user="hogesar"]Thanks for this purple.

So is it a genuine possibility that nephew has landed himself a 180k salary for being on the board???[/quote]I have read and reread the relevant section, and what it still seems to me to say is that a director apart from McNally was paid £90,000 during this last financial year. Steve Stone has been suggested, for standing in as CEO, but that was for a short while, and he is not and was not a director. And it cannot be for Moxey, since he joined after the financial year ended.The figure of f180,000 comes from doubling the £90,000, on the assumption then that it is either Smith junior or Balls, who both joined the board half way through the year. But then, as others have said, Balls was said to be an unpaid chairman. And paying Smith, unless he is now working fulltime as an executive director at Carrow Road, which has not been announced, would be such a calamitous mistake in PR terms alone I find it hard to believe.So there may be a simple and uncontroversial explanation which has escaped me. It would not be the first time.

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Not that i know much about this but would any payments to balls as a consultant come under the banner of director ?

i know his chairman role is unpaid but he is not coming up here to do all this for nothing

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Ok Purple, thanks again.

Ignoring my naivety, there were obviously (unsure if confirmed or not) the idea we were using 3rd parties to negotiate buying and selling of players, particularly this summer. Is it possible it''s a payment for something like that? Would it technically be employing someone in that role for a temporary period? Or do the accounts specifically refer to it as a director salary?

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[quote user="93vintage"]I''ve just read the Strategic Report section, which is two pages long. The actual strategy is only two sentences :-"The Club’s future strategy remains that of investing all available surplus cash in to the playing squad and hence maximising the chances of returning to the Premier League at the earliest opportunity. This in turn will allow the consideration of longer term investment projects centred on both the Club’s training facilities at Colney and at Carrow Road itself."I''ve read plenty of annual reports in my time and have never come across anything so ridiculously brief. It''s an insult to shareholders.[/quote]
Vintage, I am not normally critical of our owners. I think they have done wonderfully well during their tenure given their relative wealth level. However, if what you have stated is all there is I have to agree with you. Not only is it brief but the wording within the brevity leaves a lot to be desired if a club wants its statement to demonstrate ambition. Putting it another way, if I were an ambitious  main stakeholder in a football club and one of my people came up with that  wording I would, at the very least,  question whether they were worth the salary I was paying them. This wording does not belong in a "strategic" section but should be in the "tactical" section. Is there one? As a matter of fact, I''ll rewrite it myself free of charge:
"The Club’s current commitment remains that of investing all available surplus cash in to the playing squad with the objective of being promoted back to the Premier League at the end of this season. This in turn will facilitate longer term investment projects centered on both the Club’s training facilities at Colney and at Carrow Road itself. The latter will be covered in more depth in the "Strategic" section."
Of course, if I were not ambitious, I might give my employee a pat on the back for the wording they did come up with. 

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YankeeYou can see the report for yourself here - [url=http://www.canaries.co.uk/cms_images/annual-report-2016-web132-3388231.pdf]http://www.canaries.co.uk/cms_images/annual-report-2016-web132-3388231.pdf[/url].There''s no tactical section, and the strategy part is two pages of mainly boiler plate. So it seems that they''re putting down the bare legal minimum, possibly because the club hasn''t fully worked out what their future strategy is. Note that we''re still waiting for Ed Balls'' 10 year plan.You''re right, it could be worded better and whoever wrote it could have perhaps added an extra page with a few obvious things, if only to make it seem like they''d put some effort into it!

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@93vintage
I think your reading of it in your reply to Yankee is very likely correct. I''d imagine the aim is to reveal the longer term thinking at the AGM and that this section in the Accounts is simply a legal-requirement-fulfilling stop gap.

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£180,000 Per-annum?.......Nice if you can get it........I''m sure that whoever is allegedly/supposedly/maybe earning that amount at NCFC for whatever role they perform, must be a really nice and clever person - and really well worth that tidy sum of a salary? I wonder if it also includes expenses?........Alas, will we ever know?.......Probably not?.......Wonder if they also have a season ticket that was paid for out of their own pocket?

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