AGM & Accounts

[PurpleCanary 5,557]

17 hours ago, Parma Ham's gone mouldy said:

Indeed Dylan.

Going forwards It’s a lot of pressure to always have a Ben or Jamal isn’t it?

If such a development conveyor belt is reliable as a source of revenue, why isn’t it the sole model for everyone?

Parma 

Parma, yes it is a hard act to keep going, but the reason why all other clubs don't follow it as the one true way, to the exclusion of everything else, is that they don't have to. They have the luxury of owners with pots of money as a backstop, but that doesn't stop them having academies and signing young players from the lower leagues, as we do.

Our model is the right one for us in the here and now, given our financial limitations, and I imagine either already has been or will be copied by other pauper clubs. Whether the owners, present or future, keep on believing we should keep to it is another matter.

[dylanisabaddog 4,911]

3 hours ago, chicken said:

Did the Jamal and Ben fee's come into this set of accounts or will that be the next one? 

The next ones 

[dylanisabaddog 4,911]

4 hours ago, Jim Smith said:

I'm aware of promition related fees and bonuses. As I said we had it last time. My point really was that last time it was £18m worth and as a conseuence of that we had no money to spend on promition. This time it appears to be £40m which begs the question as to whether we will have even less to spend on promotion than last time should we manage to get there?

I think it's a question worth asking at the AGM but I think the answer will be that the figure has gone up owing to potential additional fees for Hugill, Gibson and possibly others and improved contacts for players 

[dylanisabaddog 4,911]

4 hours ago, Jim Smith said:

Yes we would have a football club. Show me another club of our sort of size that no longer exists? This nonsense that without Delia we wouldn't have a club is ridiculous although I appreciate it suits the cult narrative.

Show me another football club where the manager arrives at work on Monday morning to find out from the players that his highest goalscorer had been sold over the weekend. That's what happened to Gary Megson as a result of Barclays Bank telling Chase to sell or they would fold the club. 

[chicken 2,624]

1 hour ago, dylanisabaddog said:

The next ones 

So it's reasonable to suggest that the liabilities may have also been offset against known incomings in terms of player sales etc?

[dylanisabaddog 4,911]

3 minutes ago, chicken said:

So it's reasonable to suggest that the liabilities may have also been offset against known incomings in terms of player sales etc?

I'm sure the club knew they would lose players. This is Norwich City after all. Before Covid I suspect they were going to use the money for building the club. Now we have used Ben Godfrey to pay for Covid and Jamal to pay for new players 

[TeemuVanBasten 3,327]

9 hours ago, Jim Smith said:

Yes we would have a football club. Show me another club of our sort of size that no longer exists? This nonsense that without Delia we wouldn't have a club is ridiculous although I appreciate it suits the cult narrative.

To be fair, there aren't any of significant size which have completely disappeared (could argue Wimbledon).

But there are 3 teams in League Two who have played in the Premier League, and 9 teams in League One who have played in the Premier League. 

So things could have got a lot worse. 

[Parma Ham's gone mouldy 2,219]

8 hours ago, PurpleCanary said:

Parma, yes it is a hard act to keep going, but the reason why all other clubs don't follow it as the one true way, to the exclusion of everything else, is that they don't have to. They have the luxury of owners with pots of money as a backstop, but that doesn't stop them having academies and signing young players from the lower leagues, as we do.

Our model is the right one for us in the here and now, given our financial limitations, and I imagine either already has been or will be copied by other pauper clubs. Whether the owners, present or future, keep on believing we should keep to it is another matter.

Indeed Purple. A further couple of questions for you:

How many pauper clubs* are there in the top 2 divisions? How many are there actually in the whole 92 clubs?

Is it presented in terms of a necessity or that of a strategic or moral crusade against the tide? The first would be pragmatic and transparent, the second would imply other choices were rejected and a certain religiosity of purpose (above market forces).

Parma

*owners worth the same amount or less than the approx £20m at NCFC

[dylanisabaddog 4,911]

4 hours ago, chicken said:

So it's reasonable to suggest that the liabilities may have also been offset against known incomings in terms of player sales etc?

Accountancy practice is that you provide for potential expenses but only recognise income on contractual sale. So even if the club were pretty sure at the year end that players would be sold they could not make a provision in the accounts. The sales are mentioned in the notes as post balance sheet events. 

https://en.m.wikipedia.org/wiki/Convention_of_conservatism

[PurpleCanary 5,557]

1 hour ago, Parma Ham's gone mouldy said:

Indeed Purple. A further couple of questions for you:

How many pauper clubs* are there in the top 2 divisions? How many are there actually in the whole 92 clubs?

Is it presented in terms of a necessity or that of a strategic or moral crusade against the tide? The first would be pragmatic and transparent, the second would imply other choices were rejected and a certain religiosity of purpose (above market forces).

Parma

*owners worth the same amount or less than the approx £20m at NCFC

Parma, I will omit the research but of course the number of pauper clubs is very small. The last time I looked there were clubs down in League One and League Two that had richer owners. Probably even below there.

As to the second question I would say it matters less how it is presented to the outside world (ie, in this case to our fans) than what the motivation really is.

 In this case I would say it is actually a mixture of your two alternatives. There probably is a certain (smug, even) moral element to this, along with a genuine sense that - for the moment - this is the right way to run the club.

Edited November 6, 2020 by PurpleCanary

[PurpleCanary 5,557]

atives

[Parma Ham's gone mouldy 2,219]

11 hours ago, PurpleCanary said:

Parma, I will omit the research but of course the number of pauper clubs is very small. The last time I looked there were clubs down in League One and League Two that had richer owners. Probably even below there.

As to the second question I would say it matters less how it is presented to the outside world (ie, in this case to our fans) than what the motivation really is.

 In this case I would say it is actually a mixture of your two alternatives. There probably is a certain (smug, even) moral element to this, along with a genuine sense that - for the moment - this is the right way to run the club.

Creating an internal narrative to justify a structural market weakness is not an unknown phenomenon. 

As with denial it has a habit of creating a filter through which all information and actions are coloured. 

Building an empire around the weakness would instead enshrine the fracture in the foundations. 

Working quietly wherever and whenever possible to address such a structural weakness must be the fiduciary responsibility of trustees. 

Parma 

Edited November 7, 2020 by Parma Ham's gone mouldy

[MrBunce 245]

Some potential answers to some of the questions noted above. Please don't snap my head off.

- R.e. key management compensation, see note 28 (p42). c.£4.4m for 2020; c.£2.7m for 2019 - I presume this relates to Webber & Co. (and Farke?). A substantial increase, even accounting for 13 month period in 2020 (though I'm not sure the 2019 above was the 'full cost', maybe the director remuneration, £480k (note 8, p31), should be added for fairer comparison).

- R.e. the preference dividend, cashflow statement (p18) shows that as paid (£65k). I suspect the text saying otherwise is "boilerplate" which was never corrected.

- R.e. the "short term loan", I think this is the assignment of premier league media income to Barclays that the club entered into in 2019 (see note 18, p36). The assignment and charge can be seen in Companies House (dates: 17 May 2019 and 29 October 2019). The question of whether it is necessary is more difficult. These arrangements are quite common - Macquarie are the leaders in this niche field - many other clubs utilise these arrangements for managing cash flow and working capital. Was it necessary for Norwich at the time? I don't know, though I recall we've had difficulty managing working capital over the past few years. In retrospect, the interest cost (5.2%) now seems quite high given we sit on £40m of cash, but that's with the benefit of hindsight.

- R.e. the KPI on player wages - agree with Purple et. al. Very disappointing to see it dropped. It limits comparability between Norwich and other clubs and, more importantly, to assess whether the cost of maintaining the current playing squad is sustainable.

- R.e. the contingent liabilities on promotion, these amount to £36.6m + £7.9m = £44.5m (note 25, p44). This compares to c.£30.6m + £2.6m = £33.2m last time around (based on these accounts - which is consistent with my recollection as well). Some thoughts: (i) not all the conditions might be met, so that jump in amount may not actually be realised; (ii) we have a much larger playing squad than before and many of the first teamers will be on much improved contracts compared to last time; (iii) we have invested a significant amount in players this season compared to prior to the last championship season (£4.6m of potential further payments on Dowell, Hugill, Skipp, Quintilla and Gibson - note 30). So overall, the increase doesn't seem unreasonable, though I'd caution the club to monitor this cost carefully and ensure it does not escalate too much.

- R.e. cash and tax, the club has c. £44.4m in cash at 31 July 2020 (p18), but owed "Other taxes and social security" of c.£29.1m (note 18, p36). I imagine most of this is VAT, particularly on season tickets sold (see tax owed of £4.6m in previous year). If my hypothesis is correct, the shift in period end, means that it 'captures' the VAT quarterly cycle differently and (presuming the club pays on account quarterly) a significant portion of the cash balance will have been used to pay the tax bill owed.

Otherwise, see what Shef Canary, Dylan and Purple (and others have all said) on the main issues.

Overall, I'm encouraged by the financial performance of the club. Though I would suggest keeping a close eye on managing wage costs. As we all know, these things only tend to go up and once up don't come down without great overhaul.

Happy to answer any questions - though please don't bite my head off.

[essex canary 495]

On Related Parties the only declarations that appear to have been made over the last 3 years are the core interest for Directors only.

No declarations have been made for the Executive Team albeit the mural at Colney indicates that they had some.

No declarations have been made for promotion bonuses for either Directors or Executive Team.

 

[A Load of Squit 5,161]

More here.

https://norwichcity.myfootballwriter.com/2020/11/10/finals-accounts-2020-clubs-aim-of-being-in-the-countrys-top-26-has-been-upgraded/

Did anyone else notice the change in 'hambition'?

 

[BigFish 1,986]

On 05/11/2020 at 17:35, Parma Ham's gone mouldy said:

Indeed Dylan.

Going forwards It’s a lot of pressure to always have a Ben or Jamal isn’t it?

If such a development conveyor belt is reliable as a source of revenue, why isn’t it the sole model for everyone?

Parma 

Bottom line is you have to play the cards you are dealt @Parma Ham's gone mouldy. We had a Ben and a Jamal, and we still have Buendia, Aarons and Cantwell. If we didn't, or in the future don't another plan will be required to either increase revenue or decrease spending. Equally, if the plan is particularly successful other strategies come into play. Southampton went from administration to Prem on the back of massive player sales, but can now approach things differently.

The reason not all clubs follow this approach is manyfold. It is long term in a short term business, it is hard & risky, as you point out, what is a guarantee of turning out diamonds, it is expensive and there is an emotional  fatigue in regularly selling your best players.

This is also not about the owners wealth which is a red herring. It doesn't matter how wealthy you owners are if they will not or cannot subsidise a football club. One only has to look at the paupers down the road to know that. TV money distorts the perception of football finance. Clubs generate income through quite narrow bands based on tickets sales and commercial activity, getting to the Prem doesn't make a club richer if all that money goes on increased wages and transfer fees. We are not Man U, and I can't see us ever being Man U.