Rubbish Reporting or Premiership Myth?

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Interesting reading about the accounts for last season - plenty of new stuff for board regularls to chew/argue over. For me the underlying message was that promotion does bring extra cash, but also extra costs, and the two cancel each other out meaning that in the long term its pretty neutral to the finances of the club.

But as if to ignore all the content of the interviews and the thrust of the piece, the Pink Un reporter finishes by saying:

"A return to the top-flight would clearly give City''s finances another timely boost - but for the time being a parachute payment of £6m has softened the blow of relegation"

Presumably the kind of timely boost that leads to:

"There were those who assumed that the club''s debts would just about be wiped off by promotion to the Premiership, but that certainly hasn''t been the case. The Canaries still have £14.1m to pay on their long-term securitization loan - which amounts to a 15-year mortgage - while other smaller scale borrowings mean that the level of debt has actually risen by £400,000 since May 2004."

So as far as I can see, promotion only brings a boost to players bank accounts, not the club. Financially it doesn''t matter what division we are in if the players contracts just expand or contract to match the income the club has. Of course, we want to be in the premiership for other reasons (quality of football and opposition for one), but at last we can dispel the myth that its mainly a financial thing....

[pitypart 0]

The players get their share, sure. But didn''t promotion also allow the club to spend:

£5m on players
£2.8m on the Norwich Union Community Stand
£700,000 on a re-laid pitch,
£260,000 on new offices for the Football in the Community team and
£140,000 on improved facilities at Colney training ground.

All while still making a small profit? (disregarding the "accounting quirk"). Being in the premiership may not be the land of milk and honey where it rains with free money that it''s often painted to be - but it still beats being in the Championship.

[Mr.Carrow 376]

WAY too much fuss is made over the clubs level of debt. People need to realise that these loans are secured against fixed assets (land owned by club etc.) therefore are much more favourable than alot of other clubs (eg.Ipswich) who have loans borrowed against unpredictable future income. 14m payable over 15 years is nothing to worry about.

I admit i am no expert but i fail to see how a 9m pre-tax profit can simply be written off as an `accounting quirk`. The fact is the club received far more money than it spent last season and i cannot see any evidence of substantial future commitments having been made which the profit has to cover. Beware spin.

Any financial experts out there willing to give their run-down of the accounts? I am particularly interested in Doncasters statement that "the Group still has substantial holdings of land around Carrow Rd. During financial year 2005/06 we hope that our property dealings will continue to make a contribution to the clubs financial health." Obviously the recent hotel announcement is connected to this statement but i wonder what else is in the pipeline? Just how much land does the club own?

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I presumed the ''accounting quirk'' refers in part to the fact that the costs of promotion came in one set of accounts, and the rewards in another. Didn''t we make a £5m loss in the previous accounts? So by my reckoning, most of the profit cancels out the earlier loss, hence it''s not money that is actually sitting there?

[MadDan 0]

"All of which brings us on to the £15m securitisation. Broadly speaking, £7.5m of the loan has been allocated towards paying off short and medium-term debt, paying for some of the site development costs and filling the remainder of the hole left by the collapse of ITV Digital.

The remaining £7.5m will then help bridge the cost of the new stand. For although the £6m that we should receive from Wilson Connolly will be set against the construction costs of the new stand, that £6m will only come in as staged payments over the next three to four years."

Neil Doncaster - 1st May 2003



Basically we have spread the original debt over 15 years and borrowed enough money to pay for the new stand. The money for the new stand will be paid for by the sale of the land to Wilson Connelly albeit in stages.

The infill is being paid off as and when ie the hotel land



"The location of Carrow Road, in the path of the gradual expansion and movement of the City centre and alongside the River Wensum, and the land assets that we enjoy, have been key to the Club''s recent success."

Neil Doncaster - 5th October 2005


I wonder what naughty old man bought those land assets that we sold to build the new south stand with and were used as security for the loan. Shame there isn''t a statue up to him so I could boo it.

[whoareyou? 0]

Received my copy of the accounts today. The club did make £7.5 million profit but i guess Mr Doncaster''s definition of a quirk is that we dont have £7.5 million in cash floating around to spend cos most of it has already been spent. Nearly £6 million went on signing players and their contract fees. In addition the club has spent another £14 million in the last few years on improving the ground and facilities. These are not taken into account when calculating the £7.5 million profit.

Players wages rose by £6 million last year and yes that doesnt include the bonuses for reaching the Prem cos that was in last years accounts.

 

Another part i read which was quite interesting was that NO finance houses will now lend money to any club to buy players. Apparently just 5 years ago they were queuing up to do it but now no longer. I wonder if that small club down the road has anything to do with that

 

Hope that is of help

[MadDan 0]

I think what is overlooked with our third world neighbours is that the £25m was not used solely to build the two new stands. Around £6m-ish was used to pay off some of the debt they were carrying and another million or so was used to upgrade their training facilities.

This was a result of a long term neglect of their infrastructure. The last time they tried any development was in the early 80''s with the Pioneer Stand. An unmitigated disaster financially.

It is also curious to see how many trophy''s have been added to their collection of ''grandad''s medals'' now they have lost the financial support of the two Cobbold brothers.

Never mind, another of their loanees is up on drink and drive charges. Beggars can''t be choosers though I suppose.