Financing the future

[PurpleCanary 6,387]

Ten years ago (dear lord, is it really that long?!) I posted an analysis of how football finance had changed over time, generally, and in relation to Norwich City (and only in part to explain why the Chase and S&J eras cannot be sensibly compared without a great deal of context – not that it has stopped posters carrying on doing just that right up to now🤓). I will put a link at the bottom, but in broad terms the argument was as follows:

That the old model which existed in the early decades after world war two, of clubs being funded by the success of the local economy, so in effect wealth produced by the community, was replaced by the influx of personal wealth, in the shape of very rich people.

That roughly still applies but even so a fair bit has happened in the last ten years, with what seem to me some crucial developments (and I am indebted for some of the figures to Robin Sainty, who recently wrote a piece that chimed with thoughts I had been having for a while).

The rich are getting richer

Ten years ago I instanced Randy Lerner as owner of Aston Villa being worth in the hundreds of millions. The current big cheese at Villa is worth in the billions. Everton used to be the plaything of Bill Kenwright, with £33m. Now it is Farhad Moshiiri, with £8.9bn. Crystal Palace’s Steve Parrish, another comparative pauper, has acquired £3.3bn Joshua Harris to help out.

It’s a corporate world

Back when Burnley won the Division One title in 1959-60 the chairman/owner was Bob Lord, a butcher who ended up with 14 shops locally. Fourteen! Increasingly now clubs are being bought not by a single rich fan but by families/corporations as part of a portfolio. Such as the Glazers with Manchester United and John Henry’s company, already owner of the Boston Red Sox, with Liverpool.

This has brought a different reality and a different mindset. A rich person by themselves, no matter how well off, has only their own money to use, which necessitates a certain caution, or should do, though frequently does not, as any number of cases prove. The corporate tycoon, often with the football club as only part of their business, can act more boldly (as well, if listed on a stock market, as Man Utd are, as having an extra means of finance).

One way in which this manifests itself is by knowingly and willingly going heavily into debt. It is perfectly common in big business for companies to have large debt. It isn’t particularly scarifying for them. And debt and publicly traded share issues are the two main ways of raising money for expansion. The contrasting constraints for Norwich City, not keen on owing even a comparatively modest amount of money for any great length of time and not listed on a stock market, hardly need spelling out.

Rules? What rules? You don't have rules in a knife-fight!

And these advantages/absences of constraints allow and often engender a more buccaneering and risk-taking approach to business not just financially but in terms of breaking the rules or at least stretching them very close to breaking point. As one US hotelier infamously said, ‘Only the little people pay taxes.’ Although she ended up in jail.

One must be careful here, but it seems clear that some clubs with ultra-rich and/or corporate owners have broken or sailed very close to breaking FFP rules to get promoted from the Championship and/or to stay in the Premier League.

Anecdotally (so not necessarily specifically true but certainly suggestive of a general truth) it was said that Villa could have been in financial difficulties if they had not stayed up that first season back (thanks to VAR going AWOL), and equally that Watford’s recent firing of their coach was for the same reason.

And the examples of Derby County and Reading and several others show this kind of gamble, which is only sustainable if promotion is achieved, is rife in the Championship. In 2016, after Brighton had announced a £25.9m loss for a season in which they had failed to get promoted (with the FFP loss £39m over three seasons but some bits of losses are allowable) owner Tony Bloom summarized the dilemma and the subsequent temptation:

"Our ambition remains for the club's teams to play at the highest level possible. As chairman (and lifelong supporter of the club), I will do everything I possibly can to achieve that and remain fully committed. Any Championship club without parachute payments wishing to compete for promotion will inevitably make significant losses. It remains a delicate balancing act for the board as we strive to achieve our ultimate aim."

Brighton then got promoted and have never been charged with breaking FFP, but it is a fair guess that if they hadn’t gone up the cost of another failed attempt would have been problematic.

The temptation, to which too many fall, is to double down and throw even more money at another bid for promotion in pursuit of that most misnamed of dreams – the promised land that supposedly is the Premier League, hoping that any FFP punishment will either be delayed or insignificant compared with the TV riches to come.

As Robin Sainty points out, having survived a winding-up petition from HMRC in January, ‘’Derby County are in administration, having accrued a reported £28m debt to the taxman as well as a £15m secured loan from an offshore company, while Reading face a deduction of up to nine points.’’

But the figures in the Championship are dwarfed by the eye-watering debts and losses racked up by the supposed elite clubs. ‘’Barcelona have announced a loss of €481m, taking their total debt to a barely conceivable €1.3bn, while in the UK, Spurs have external debt of £831m, Manchester United owe £526m and Liverpool £268m.’’

Turns out the sky blue’s not the limit

One might have thought the wealth of the owners (not to mention the size of their losses and debts) could not go any higher, but now we have clubs being bought by companies that are to a greater or lesser extent linked to the governments of oil-rich countries. And even there the purchase of Man City by an Abu Dhabi fund headed by a senior government figure didn’t set the ceiling. At the stroke of a pen the de facto head of the Saudi Arabian government has made Newcastle United the richest club on the planet.

Leaving aside (only for now) the morality of such blatant sports-washing, this development only confirms that the racheting-up effect that has taken place in world football generally but in the top two tiers of English football particularly has not stopped.

Mary Trump, the psychologist niece of Donald, wrote a book about him and the whole family entitled ‘Too Much and Never Enough’. Which is a pretty accurate summary of finances in the Premier League. Even though unsustainably vast amounts of money are being thrown at clubs this upward spiral means it can never be sufficient. There will always be a new and bigger deal that, as it were, trumps, the previous ones. Unless and until, as Sainty suggests, the whole gravity-defying circus comes crashing down.

Poor but honest?

If the circus collapses our Good Life self-sufficiency will be hailed as the model that should have been followed all along. But even if that were to happen football would not go back to some prelapsarian non-capitalist world of purely local community clubs. Manchester United have come a long way from being the works team of a railway company; Arsenal ditto from a Woolwich munitions factory; and Norwich City ditto from the amateur imaginings of some Edwardian gentlemen in a city café. Money would not stop being the key factor it always has been.

So unless and until, what faces our club? It can go on with its model. It works, and with good management should go on working. There has been much talk, prompted by the Saudi deal, of morality in football, but the often forgotten moral imperative and first duty for those running any kind of  business is to keep it running and not imperil it with vainglorious gambles. By its nature our self-sufficiency model avoids the dangers of financial over-reach and subsequent administration and points penalties such as those listed in far from exhaustive detail above.

But it is also of its nature limiting (and probably will be increasingly so) and even now everything has to work well for the club to keep its current (yo-yo) place in the football pyramid, and work perfectly for it to progress.

Fortunately the unlikeliest alternative is a takeover by one of the oil-rich states yet to decide they need some sports-washing. That seemingly leaves only a very wealthy someone, or something.

Anyone who has read  the recent expert contributions by @Badger to the ownership debate will know two truths. That most would-be buyers of football clubs, whether individuals or corporations, want and expect to make money out of their investment, or at the very least not to lose out.

And, such is the upside-down world of football finance, that well-run, debtless, ground-owning Norwich City is a less tempting proposition than basket cases such as Derby County and Ipswich Town, or Sunderland.

A third truth is that even if some altruist were willing to buy us, the ‘too much and never enough’ racheting-up process would not guarantee success. We might be better off but still be bottom of the Premier League Rich List. And the temptation to rolling-the-dice gambling would be there.

As it stands, the only plan known publicly is that Tom Smith will receive S&J’s 53 per cent majority shareholding. A common assumption is that this plan is set in stone, and that Smith will carry on self-sufficiency exactly as before. I do not believe the plan is fixed, and as far as how he might run the club I have no idea, knowing next to nothing about him, although that hasn’t stopped fans who seems to know as little as I do being certain about what he will do, and his ability, or more often his lack of it, to run a football club.

If I had his ear I would suggest another alternative. A version of self-sufficiency that was community-based, recognising the role of the club in Norfolk as a whole, with some finance from a group of well-disposed local people in business, and genuine – as opposed to lip service - fan involvement and power (a golden-share veto?) in decision-making.

Would that please all fans? Hardly. The extra finance would certainly not be anywhere near too much, and definitely never enough. We would still be poor but honest. Just not quite as church-mouse poor but honest as we are now.

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https://forum.pinkun.com/index.php?/topic/69368-big-bob-v-delia-the-verdict/&tab=comments#comment-959966

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Edited October 27, 2021 by PurpleCanary

[cambridgeshire canary 7,800]

Is my eyesight going or are you using a different font? Either way, good write up

[hogesar 10,770]

Great post Purple, good read.

[It's Character Forming 1,204]

A very interesting article Purple.

 

I wonder if any analysis has been done on Mike Ashley & Newcastle, looking at what he paid and subsequently injected into the club, against what he sold out for ?

 

Also I think it's very ironic that in the free-market USA, the big professional sports are all organized as cartels with wage caps which mean that although top players are paid fortunes, the owners make huge profits too.  Whereas in socialistic Europe, it's largely a free for all (with just some constraints from FFP as you've pointed out) which means owners don't make profits from the day to day running of clubs, e.g I'm not aware of any Prem club paying dividends to its owners ? 

 

So the way to make a profit from owning an English football club is to buy it cheap, get promotion, then sell it on to some other sucker who's willing to pay more.  Hence as you've pointed out, if you were a billionaire looking to buy a football club at the moment, you'd probably be thinking about one of the big clubs fallen on hard times in League 1 such as Sunderland or Bolton, or a Championship club in trouble like Forest.  Having said this, I don't think the likely value for Norwich would be that big a problem, it would simply be who the owners would be willing to sell to, which is not a bad thing IMO.

[king canary 8,758]

1 hour ago, PurpleCanary said:

If I had his ear I would suggest another alternative. A version of self-sufficiency that was community-based, recognising the role of the club in Norfolk as a whole, with some finance from a group of well-disposed local people in business, and genuine – as opposed to lip service - fan involvement and power (a golden-share veto?) in decision-making.

I've always liked this idea and would maybe even take it further- if we know financially we can't compete with the big boys then use some of the money to do fan focused things such as lowering season ticket prices.

[shefcanary 2,955]

As always a well based piece Purple, my conclusions are relatively similar.  However, some further thoughts on your final thoughts on the community based 50+1 scenario, which I fear would resolve little.

Unlike in Germany where the 50+1 rule covers ALL clubs I cannot see the community-based model changing things for Norwich.  First if we ploughed this route in isolation, we'd just get laughed at by the big boys.  Secondly I'd argue that the current shareholding effectively mirrors the 50+1 rule because of the underlying motivation of Smith & Jones, the only change would be the spread of shareholding would be more even.  And then the biggest issue would be who ultimately has responsibility for implementing the strategy deemed appropriate by such a wide base of owners who would in theory not be influenced by Pension and Investment Fund managers.  God knows how the current on-field crisis would first be presented to the shareholders and how a decision over future strategy would play out for instance - I fear a decision would take until after the next transfer window to resolve!

I saw on another thread that we cannot sit and complain about the current funding scenario within the EPL unless we campaign to get the rules changed.  At the moment though, even though most fans would have sympathy, given our current position planted at the bottom of the EPL we would just get laughed at and accusations of sour grapes would come our way.  There is little realistic chance of ownership models changing in the EPL until something cataclysmic happens to a Man City / Liverpool. 

So until the rules of ownership drastically change, our current financial model is one which at some point the financial resources we have at our disposal will mirror our on-field performance.  Unless we make the most of the current opportunity, at best we will continue to be a top 26 yo-yo club, more likely we will have a long spell of mid-table championship mediocrity, perhaps worse bottom out in Tier 3. 

It will take nerve from the Board to "gamble" within the current model to affect a change in on-field performance as to how this plays out.   Have the financial forecast scenarios included a change in the managerial position at all (rumours are that this could cost c. £5m for pay-offs and golden handshakes for instance)?  I very much doubt it as that is not the way a "50+1" model works.  The next month remains critical.  

[Don J Demorr 167]

Another thoughtful and interesting contribution from Mr Purple.

Thanks.

Edited October 27, 2021 by Don J Demorr

[chicken 3,087]

2 hours ago, king canary said:

I've always liked this idea and would maybe even take it further- if we know financially we can't compete with the big boys then use some of the money to do fan focused things such as lowering season ticket prices.

If we know we are going to find it difficult to compete financially, why not shoot one of our toes off and make it a bit harder?

How many season ticket fans do we have? Over 20k. Maths is pretty easy really. How much would you knock off season ticket prices? £10 is £200k. That's ten weeks wages for a player at £20k per week. In the Championship, say £10-15k per week it's even more. If you start talking about £30, £40 or £50 then you are looking at the best part of £1m.

Ticket costs are much higher for casual fans and can be much harder to get hold of in the first place.

[Commonsense 802]

5 hours ago, PurpleCanary said:

Ten years ago (dear lord, is it really that long?!) I posted an analysis of how football finance had changed over time, generally, and in relation to Norwich City (and only in part to explain why the Chase and S&J eras cannot be sensibly compared without a great deal of context – not that it has stopped posters carrying on doing just that right up to now🤓). I will put a link at the bottom, but in broad terms the argument was as follows:

That the old model which existed in the early decades after world war two, of clubs being funded by the success of the local economy, so in effect wealth produced by the community, was replaced by the influx of personal wealth, in the shape of very rich people.

That roughly still applies but even so a fair bit has happened in the last ten years, with what seem to me some crucial developments (and I am indebted for some of the figures to Robin Sainty, who recently wrote a piece that chimed with thoughts I had been having for a while).

The rich are getting richer

Ten years ago I instanced Randy Lerner as owner of Aston Villa being worth in the hundreds of millions. The current big cheese at Villa is worth in the billions. Everton used to be the plaything of Bill Kenwright, with £33m. Now it is Farhad Moshiiri, with £8.9bn. Crystal Palace’s Steve Parrish, another comparative pauper, has acquired £3.3bn Joshua Harris to help out.

It’s a corporate world

Back when Burnley won the Division One title in 1959-60 the chairman/owner was Bob Lord, a butcher who ended up with 14 shops locally. Fourteen! Increasingly now clubs are being bought not by a single rich fan but by families/corporations as part of a portfolio. Such as the Glazers with Manchester United and John Henry’s company, already owner of the Boston Red Sox, with Liverpool.

This has brought a different reality and a different mindset. A rich person by themselves, no matter how well off, has only their own money to use, which necessitates a certain caution, or should do, though frequently does not, as any number of cases prove. The corporate tycoon, often with the football club as only part of their business, can act more boldly (as well, if listed on a stock market, as Man Utd are, as having an extra means of finance).

One way in which this manifests itself is by knowingly and willingly going heavily into debt. It is perfectly common in big business for companies to have large debt. It isn’t particularly scarifying for them. And debt and publicly traded share issues are the two main ways of raising money for expansion. The contrasting constraints for Norwich City, not keen on owing even a comparatively modest amount of money for any great length of time and not listed on a stock market, hardly need spelling out.

Rules? What rules? You don't have rules in a knife-fight!

And these advantages/absences of constraints allow and often engender a more buccaneering and risk-taking approach to business not just financially but in terms of breaking the rules or at least stretching them very close to breaking point. As one US hotelier infamously said, ‘Only the little people pay taxes.’ Although she ended up in jail.

One must be careful here, but it seems clear that some clubs with ultra-rich and/or corporate owners have broken or sailed very close to breaking FFP rules to get promoted from the Championship and/or to stay in the Premier League.

Anecdotally (so not necessarily specifically true but certainly suggestive of a general truth) it was said that Villa could have been in financial difficulties if they had not stayed up that first season back (thanks to VAR going AWOL), and equally that Watford’s recent firing of their coach was for the same reason.

And the examples of Derby County and Reading and several others show this kind of gamble, which is only sustainable if promotion is achieved, is rife in the Championship. In 2016, after Brighton had announced a £25.9m loss for a season in which they had failed to get promoted (with the FFP loss £39m over three seasons but some bits of losses are allowable) owner Tony Bloom summarized the dilemma and the subsequent temptation:

"Our ambition remains for the club's teams to play at the highest level possible. As chairman (and lifelong supporter of the club), I will do everything I possibly can to achieve that and remain fully committed. Any Championship club without parachute payments wishing to compete for promotion will inevitably make significant losses. It remains a delicate balancing act for the board as we strive to achieve our ultimate aim."

Brighton then got promoted and have never been charged with breaking FFP, but it is a fair guess that if they hadn’t gone up the cost of another failed attempt would have been problematic.

The temptation, to which too many fall, is to double down and throw even more money at another bid for promotion in pursuit of that most misnamed of dreams – the promised land that supposedly is the Premier League, hoping that any FFP punishment will either be delayed or insignificant compared with the TV riches to come.

As Robin Sainty points out, having survived a winding-up petition from HMRC in January, ‘’Derby County are in administration, having accrued a reported £28m debt to the taxman as well as a £15m secured loan from an offshore company, while Reading face a deduction of up to nine points.’’

But the figures in the Championship are dwarfed by the eye-watering debts and losses racked up by the supposed elite clubs. ‘’Barcelona have announced a loss of €481m, taking their total debt to a barely conceivable €1.3bn, while in the UK, Spurs have external debt of £831m, Manchester United owe £526m and Liverpool £268m.’’

Turns out the sky blue’s not the limit

One might have thought the wealth of the owners (not to mention the size of their losses and debts) could not go any higher, but now we have clubs being bought by companies that are to a greater or lesser extent linked to the governments of oil-rich countries. And even there the purchase of Man City by an Abu Dhabi fund headed by a senior government figure didn’t set the ceiling. At the stroke of a pen the de facto head of the Saudi Arabian government has made Newcastle United the richest club on the planet.

Leaving aside (only for now) the morality of such blatant sports-washing, this development only confirms that the racheting-up effect that has taken place in world football generally but in the top two tiers of English football particularly has not stopped.

Mary Trump, the psychologist niece of Donald, wrote a book about him and the whole family entitled ‘Too Much and Never Enough’. Which is a pretty accurate summary of finances in the Premier League. Even though unsustainably vast amounts of money are being thrown at clubs this upward spiral means it can never be sufficient. There will always be a new and bigger deal that, as it were, trumps, the previous ones. Unless and until, as Sainty suggests, the whole gravity-defying circus comes crashing down.

Poor but honest?

If the circus collapses our Good Life self-sufficiency will be hailed as the model that should have been followed all along. But even if that were to happen football would not go back to some prelapsarian non-capitalist world of purely local community clubs. Manchester United have come a long way from being the works team of a railway company; Arsenal ditto from a Woolwich munitions factory; and Norwich City ditto from the amateur imaginings of some Edwardian gentlemen in a city café. Money would not stop being the key factor it always has been.

So unless and until, what faces our club? It can go on with its model. It works, and with good management should go on working. There has been much talk, prompted by the Saudi deal, of morality in football, but the often forgotten moral imperative and first duty for those running any kind of  business is to keep it running and not imperil it with vainglorious gambles. By its nature our self-sufficiency model avoids the dangers of financial over-reach and subsequent administration and points penalties such as those listed in far from exhaustive detail above.

But it is also of its nature limiting (and probably will be increasingly so) and even now everything has to work well for the club to keep its current (yo-yo) place in the football pyramid, and work perfectly for it to progress.

Fortunately the unlikeliest alternative is a takeover by one of the oil-rich states yet to decide they need some sports-washing. That seemingly leaves only a very wealthy someone, or something.

Anyone who has read  the recent expert contributions by @Badger to the ownership debate will know two truths. That most would-be buyers of football clubs, whether individuals or corporations, want and expect to make money out of their investment, or at the very least not to lose out.

And, such is the upside-down world of football finance, that well-run, debtless, ground-owning Norwich City is a less tempting proposition than basket cases such as Derby County and Ipswich Town, or Sunderland.

A third truth is that even if some altruist were willing to buy us, the ‘too much and never enough’ racheting-up process would not guarantee success. We might be better off but still be bottom of the Premier League Rich List. And the temptation to rolling-the-dice gambling would be there.

As it stands, the only plan known publicly is that Tom Smith will receive S&J’s 53 per cent majority shareholding. A common assumption is that this plan is set in stone, and that Smith will carry on self-sufficiency exactly as before. I do not believe the plan is fixed, and as far as how he might run the club I have no idea, knowing next to nothing about him, although that hasn’t stopped fans who seems to know as little as I do being certain about what he will do, and his ability, or more often his lack of it, to run a football club.

If I had his ear I would suggest another alternative. A version of self-sufficiency that was community-based, recognising the role of the club in Norfolk as a whole, with some finance from a group of well-disposed local people in business, and genuine – as opposed to lip service - fan involvement and power (a golden-share veto?) in decision-making.

Would that please all fans? Hardly. The extra finance would certainly not be anywhere near too much, and definitely never enough. We would still be poor but honest. Just not quite as church-mouse poor but honest as we are now.

-

https://forum.pinkun.com/index.php?/topic/69368-big-bob-v-delia-the-verdict/&tab=comments#comment-959966

-

There are some good points here, although it’s worth remembering that some of the debts you mention were actually caused by the owners. Famously Man Utd we’re debt free, the debt was loaded in order to enable the parasitic Glazers to buy. I believe Burnley’s recent takeover used a similar system.

While the fan owned model sounds useful, every example in the UK has led to the fans selling out as the club grows. It’s just not able to raise the size of funds required.

[Danke bitte 1,155]

Really good read. Thanks for taking the time out to write it 👍🏻

[PurpleCanary 6,387]

4 hours ago, shefcanary said:

As always a well based piece Purple, my conclusions are relatively similar.  However, some further thoughts on your final thoughts on the community based 50+1 scenario, which I fear would resolve little.

Unlike in Germany where the 50+1 rule covers ALL clubs I cannot see the community-based model changing things for Norwich.  First if we ploughed this route in isolation, we'd just get laughed at by the big boys.  Secondly I'd argue that the current shareholding effectively mirrors the 50+1 rule because of the underlying motivation of Smith & Jones, the only change would be the spread of shareholding would be more even.  And then the biggest issue would be who ultimately has responsibility for implementing the strategy deemed appropriate by such a wide base of owners who would in theory not be influenced by Pension and Investment Fund managers.  God knows how the current on-field crisis would first be presented to the shareholders and how a decision over future strategy would play out for instance - I fear a decision would take until after the next transfer window to resolve!

I saw on another thread that we cannot sit and complain about the current funding scenario within the EPL unless we campaign to get the rules changed.  At the moment though, even though most fans would have sympathy, given our current position planted at the bottom of the EPL we would just get laughed at and accusations of sour grapes would come our way.  There is little realistic chance of ownership models changing in the EPL until something cataclysmic happens to a Man City / Liverpool. 

So until the rules of ownership drastically change, our current financial model is one which at some point the financial resources we have at our disposal will mirror our on-field performance.  Unless we make the most of the current opportunity, at best we will continue to be a top 26 yo-yo club, more likely we will have a long spell of mid-table championship mediocrity, perhaps worse bottom out in Tier 3. 

It will take nerve from the Board to "gamble" within the current model to affect a change in on-field performance as to how this plays out.   Have the financial forecast scenarios included a change in the managerial position at all (rumours are that this could cost c. £5m for pay-offs and golden handshakes for instance)?  I very much doubt it as that is not the way a "50+1" model works.  The next month remains critical.  

Thanks, shef. I am not actually proposing the German 50+1 model, although the kind of fan involvement and power would be similar. And you're right that having a few well-off people putting in a few million, or whatever, would hardly make a difference, given 'too much and never enough'.

It would as much as anything be symbolic of the club being tied into the community and keeping its regional identity.

Edited October 27, 2021 by PurpleCanary

[PurpleCanary 6,387]

I appreciate the replies and reactions. Perhaps a further analysis will be required in another ten years!

Our poor but oh so honest model has triumphed and we have just won the Amnesty International-sponsored World Club Championship for the third time running. Or we are owned by the Poppy Growers of Afghanistan Friendly Society Investment Trust and have just been beaten by Vladimir Putin’s KGB Wanderers in the final of the trillion-dollar Sportswashing Trophy, played at US President-for-life Donald Trump’s Mar-a-Lago stadium…

I am indebted to Mary Trump for the ‘too much and never enough’ mantra , which does seem to sum up high-level world football. Pure reason says it cannot go on like this much longer, but then it wasn't pure reason that got us here.

My tentative suggestion of a tweaked version of self-sufficiency for the club is based on my view that we are unlikely, for various reasons, to attract a mega-bucks investment proposal that would meet the current owners’ criteria, which I suppose can be summed almost religiously as not wanting the sell the club’s soul

I believe if they received a mega-bucks offer that did not involve soul-selling they would happily accept it, but the chances of such a paragon of a deal are slim. A tweaked self-sufficiency, on the other hand, might appeal to them, or perhaps to nephew Tom, if he takes over.

I know some fans think such a moral stance, while perhaps admirable in theory, is totally outdated and blinkered in practice. As said earlier, football clubs, including Norwich City, have moved a long way from their local roots and original ethos. Why is one more step away such a big deal? 

As it stands the only opinion on that that matters is that of Smith and Jones. And for now, given there is no sign of a mega-bucks proposal, and little or no unrest among fans, and certainly none that is remotely coordinated, it is all rather moot.

 

[essex canary 623]

On 27/10/2021 at 08:25, PurpleCanary said:

 

As it stands, the only plan known publicly is that Tom Smith will receive S&J’s 53 per cent majority shareholding. A common assumption is that this plan is set in stone, and that Smith will carry on self-sufficiency exactly as before. I do not believe the plan is fixed, and as far as how he might run the club I have no idea, knowing next to nothing about him, although that hasn’t stopped fans who seems to know as little as I do being certain about what he will do, and his ability, or more often his lack of it, to run a football club.

If I had his ear I would suggest another alternative. A version of self-sufficiency that was community-based, recognising the role of the club in Norfolk as a whole, with some finance from a group of well-disposed local people in business, and genuine – as opposed to lip service - fan involvement and power (a golden-share veto?) in decision-making.

Would that please all fans? Hardly. The extra finance would certainly not be anywhere near too much, and definitely never enough. We would still be poor but honest. Just not quite as church-mouse poor.

That seems an entirely appropriate way forward albeit with keeping decision making at a more balanced based board level.

[Robert N. LiM 6,301]

Ah, so this is the thread with the word 'prelapsarian' in it, @PurpleCanary! 

I enjoyed the other words, too. Very interesting thread.

[PurpleCanary 6,387]

12 minutes ago, Robert N. LiM said:

Ah, so this is the thread with the word 'prelapsarian' in it, @PurpleCanary! 

I enjoyed the other words, too. Very interesting thread.

 

I'm not showing off with these words, honest. I put one in all of my long posts so I will be able to search for them easily years later!🤓

[Badger 2,745]

On 27/10/2021 at 08:25, PurpleCanary said:

If the circus collapses our Good Life self-sufficiency will be hailed as the model that should have been followed all along. But even if that were to happen football would not go back to some prelapsarian non-capitalist world of purely local community clubs.

Thanks Purple - it's a great post and food for thought. I wanted to reply at greater length (and will) but got caught up in a load of silly debates with some that are convinced that there is a queue of billionaires waiting to just give us money. I don't know why I do it: I know from experience that you can never change their conviction and their ultimate argument that we only have two points so everything is failing and any change MUST be better.

At this stage, I'd just make a brief comment that the current state of football is like seeing Marxism in reverse! The capitalist dominated football world of people like the Glazers etc is being replaced by the essentially feudal oil rich Princes. It is stretching the argument a bit to put the likes Abromovic into this category, but his ownership is not really on a capitalist model either.

The point of this, is that if the top prizes are increasingly taken by those for whom profit is not the primary goal, it challenges the business model of investor owners as the chances of quick and/or substantial profit becomes harder. If they can't compete with the mega billionaires with little regard for profit & loss it might force them into more desperate action: (cf the premier League clubs reaction to the Newcastle takeover by blocking their sponsorship deals). It might also make the investor model less attractive as profits become increasingly hard to find.

[PurpleCanary 6,387]

9 hours ago, Badger said:

Thanks Purple - it's a great post and food for thought. I wanted to reply at greater length (and will) but got caught up in a load of silly debates with some that are convinced that there is a queue of billionaires waiting to just give us money. I don't know why I do it: I know from experience that you can never change their conviction and their ultimate argument that we only have two points so everything is failing and any change MUST be better.

At this stage, I'd just make a brief comment that the current state of football is like seeing Marxism in reverse! The capitalist dominated football world of people like the Glazers etc is being replaced by the essentially feudal oil rich Princes. It is stretching the argument a bit to put the likes Abromovic into this category, but his ownership is not really on a capitalist model either.

The point of this, is that if the top prizes are increasingly taken by those for whom profit is not the primary goal, it challenges the business model of investor owners as the chances of quick and/or substantial profit becomes harder. If they can't compete with the mega billionaires with little regard for profit & loss it might force them into more desperate action: (cf the premier League clubs reaction to the Newcastle takeover by blocking their sponsorship deals). It might also make the investor model less attractive as profits become increasingly hard to find.

And about whether Zaha is or is not a relevant comparison to Buendia.🤩 As Sean Connery (Indy's father) says to Harrison Ford (Indy) in ...The Last Crusade':

'Let it go.'

[PurpleCanary 6,387]

On 30/10/2021 at 12:19, Badger said:

Thanks Purple - it's a great post and food for thought. I wanted to reply at greater length (and will) but got caught up in a load of silly debates with some that are convinced that there is a queue of billionaires waiting to just give us money. I don't know why I do it: I know from experience that you can never change their conviction and their ultimate argument that we only have two points so everything is failing and any change MUST be better.

At this stage, I'd just make a brief comment that the current state of football is like seeing Marxism in reverse! The capitalist dominated football world of people like the Glazers etc is being replaced by the essentially feudal oil rich Princes. It is stretching the argument a bit to put the likes Abromovic into this category, but his ownership is not really on a capitalist model either.

The point of this, is that if the top prizes are increasingly taken by those for whom profit is not the primary goal, it challenges the business model of investor owners as the chances of quick and/or substantial profit becomes harder. If they can't compete with the mega billionaires with little regard for profit & loss it might force them into more desperate action: (cf the premier League clubs reaction to the Newcastle takeover by blocking their sponsorship deals). It might also make the investor model less attractive as profits become increasingly hard to find.

Badger, that a sharp observation. There may be a limit to this trend (how many oil states need sports-washing?) but it does potentially alter the game. It could possibly provoke a backlash from clubs that now feel their business model is threatened.

But unless and until that happens (more emphasis on the unless rather than the until) what it might well do is deter new takeovers based on the normal profitable-investment model. And just when I gather there is some vague talk among Norwich City fans of the need for new ownership!🤓

At least amid the strident calls there is an admission that football takeovers are fraught with danger and can go rather well or badly wrong. Examples available to suit both sides of the argument. For what it is worth I believe the following to be true:

That the Nephew Plan has never been set in stone.

That even if it happens it does not mean Tom Smith will carry on exactly the same self-sufficiency model.

That S& J are open to outside minority and/or majority investment, provided it maintains what might loosely be called the soul of the club.

That no prospective buyer worth their salt would be put off by the existence of the Nephew Plan. Indeed, that someone who was deterred would hardly be a suitable owner anyway.

That S&J’s majority holding would not enable them to stand in the way of the right soul-preserving takeover plan by the right person.

That based on the ‘Too much and never enough’ rachet effect I talked about in the OP even what looks like a dream takeover will never be sufficient for some.

That if fans really want S&J to sell up then to be taken seriously they need to get organised and campaign accordingly.

Edited November 2, 2021 by PurpleCanary

[PurpleCanary 6,387]

On 01/11/2021 at 11:42, PurpleCanary said:

Badger, that a sharp observation. There may be a limit to this trend (how many oil states need sports-washing?) but it does potentially alter the game. It could possibly provoke a backlash from clubs that now feel their business model is threatened.

But unless and until that happens (more emphasis on the unless rather than the until) what it might well do is deter new takeovers based on the normal profitable-investment model. And just when I gather there is some vague talk among Norwich City fans of the need for new ownership!🤓

At least amid the strident calls there is an admission that football takeovers are fraught with danger and can go rather well or badly wrong. Examples available to suit both sides of the argument. For what it is worth I have reason to believe the following to be true:

That the Nephew Plan has never been set in stone.

That even if it happens it does not mean Tom Smith will carry on exactly the same self-sufficiency model.

That S& J are open to outside minority and/or majority investment, provided it maintains what might loosely be called the soul of the club.

That no prospective buyer worth their salt would be put off by the existence of the Nephew Plan. Indeed, that someone who was deterred would hardly be a suitable owner anyway.

That S&J’s majority holding would not enable them to stand in the way of the right soul-preserving takeover plan by the right person.

That based on the ‘Too much and never enough’ rachet effect I talked about in the OP even what looks like a dream takeover will never be sufficient for some.

That if fans really want S&J to sell up then to be taken seriously they need to get organised and campaign accordingly.

But then we have this today from Jim Smith:

 

4 hours ago, Jim Smith said:

And therein lies part of our problem. Zero pressure on the owners who (along with their entourage) enjoy their toy and don’t want to part with it.

 

As nutty replied, 'This always amazes me. People who put zero pressure on the owners (Maj shareholders) year in year out then complain about zero pressure being put on them.'

Quite. Post after post saying the owners have to sell up but  when it comes to actually doing something to put pressure on the owners to step aside there is zilch effort. Just whingeing in cyberspace. A common complaint from these posters who want S&J out is that there are too many docile Canary fans who will just put up with the status quo, but it is the cyberspace complainers who are being sheeplike in their continuing indolence.

[Dr Greenthumb 794]

39 minutes ago, PurpleCanary said:

But then we have this today from Jim Smith:

 

 

As nutty replied, 'This always amazes me. People who put zero pressure on the owners (Maj shareholders) year in year out then complain about zero pressure being put on them.'

Quite. Post after post saying the owners have to sell up but  when it comes to actually doing something to put pressure on the owners to step aside there is zilch effort. Just whingeing in cyberspace. A common complaint from these posters who want S&J out is that there are too many docile Canary fans who will just put up with the status quo, but it is the cyberspace complainers who are being sheeplike in their continuing indolence.

Good Point, it’s like having a dig at people in cyberspace

[PurpleCanary 6,387]

1 hour ago, Dr Greenthumb said:

Good Point, it’s like having a dig at people in cyberspace

Well, on the 'It's the owners' thread I counted 16 posters who specifically argued for a change of ownership or have done so in the past, so didn't need to again, because their views are so well-known, but not one of them said they were prepared to do anything about that.

And it is not as if it cannot be done. Fans of other clubs have mounted campaigns against their owners, sometimes successfully, and Canary fans demonstrated against Chase. And in the age of the internet organising protest movements has never been so easy. Yet now from these posters only words and no action. I think it is fair to point that out.

[essex canary 623]

2 hours ago, PurpleCanary said:

Well, on the 'It's the owners' thread I counted 16 posters who specifically argued for a change of ownership or have done so in the past, so didn't need to again, because their views are so well-known, but not one of them said they were prepared to do anything about that.

And it is not as if it cannot be done. Fans of other clubs have mounted campaigns against their owners, sometimes successfully, and Canary fans demonstrated against Chase. And in the age of the internet organising protest movements has never been so easy. Yet now from these posters only words and no action. I think it is fair to point that out.

Is there an expectation to follow the example of climate change protesters? 

Why shouldnt words be good enough for a Club with a community focus especially if a little evolution is sought rather than revolution?

[PurpleCanary 6,387]

14 minutes ago, essex canary said:

Is there an expectation to follow the example of climate change protesters? 

Why shouldnt words be good enough for a Club with a community focus especially if a little evolution is sought rather than revolution?

By action I mean the creation of a concerted and coordinated campaign to put pressure on the owners. The campaign itself might not need to go beyond words, but at the moment all you have are some fans sounding off in cyberspace whenever results are bad but totally undercutting what force their argument might otherwise have by doing sod all about it.

[nutty nigel 7,902]

Each to their own as always but it's a bit much trying to dig out other fans when in reality you are doing exactly the same as them.

[Rock The Boat 1,332]

The OP describes very well the nature of football as it currently stands. The question then is, where does it end up? The answer is probably that this is cyclical and it will at some time in the future all come crashing down once the core, underlying reason for football have been ripped out, but I expect that there is still a lot of momentum in the current system moving along its current trajectory. 

So we are at the point where even the mega-billionaires are being overtaken by the quasi-government organisations and their sovereign funds and for whom the profit motive is not the raison d'etre for the holdings in a football club. What therefore, is their motivation? Is it like hanging a Picasso on your living room wall? Something unique, yet without actual value other than what someone is prepared to pay for it? 

If this is the case then it is likely that the owners of these iconic marques (Man Utd. Arsenal) will want to protect their uniqueness and take measures - not to make profits, but to defend the value of these items. And that seems to suggest that a European Super League without relegation will at some point in the future become inevitable. The latest attempt failed because of pushback from the fan base. However, covid has proved that football can be played in empty stadiums and although devoid of atmosphere, this can always be added digitally later from a computer console, as can an artificial crowd. However, the carrot approach maybe even more successful. By reducing the cost of season tickets - income being made up primarily through TV and streaming rights - it would be possible to get a more compliant football crowds into stadiums by weakening the tribal identity that is an important feature of the current game. All other vested interests welcome the ESL as a means to make money, whether that be FIFA, EUFA, the FA, media, broadcaster, pundits and so on.

For a club like Norwich, any tinkering of the current model is like using a screwdriver to prevent the Titanic from sinking. It doesn't make a blind bit of difference what we do unless we are funded by the sovereign fund of ASEAN or some such grouping. We've actually achieved remarkable success in recent years for a club with no money. The real question is when will ESL happen and will we be in good shape when the rest of football goes into meltdown.

[essex canary 623]

10 hours ago, PurpleCanary said:

By action I mean the creation of a concerted and coordinated campaign to put pressure on the owners. The campaign itself might not need to go beyond words, but at the moment all you have are some fans sounding off in cyberspace whenever results are bad but totally undercutting what force their argument might otherwise have by doing sod all about it.

Risk is that different people want different outcomes or even if they want effectively the same thing it won't necessarily come across that way.

My AGM focus will be upon the Annual Report sentence 'The Club are committed to a robust Consultative process with it's supporters.'  Clearly that is primarily about non-footballing issues but in many ways I feel that the words 'robust' and 'NCFC' are not conjoined in any sense so perhaps that could also be a lead in a more general context?

[PurpleCanary 6,387]

3 minutes ago, essex canary said:

Risk is that different people want different outcomes or even if they want effectively the same thing it won't necessarily come across that way.

 

If it was as I said concerted and coordinated, and competently organised, that would not be a problem.

[Danbury Yellow 126]

On 29/10/2021 at 13:53, PurpleCanary said:

I appreciate the replies and reactions. Perhaps a further analysis will be required in another ten years!

 

Our poor but oh so honest model has triumphed and we have just won the Amnesty International-sponsored World Club Championship for the third time running. Or we are owned by the Poppy Growers of Afghanistan Friendly Society Investment Trust and have just been beaten by Vladimir Putin’s KGB Wanderers in the final of the trillion-dollar Sportswashing Trophy, played at US President-for-life Donald Trump’s Mar-a-Lago stadium…

 

I am indebted to Mary Trump for the ‘too much and never enough’ mantra , which does seem to sum up high-level world football. Pure reason says it cannot go on like this much longer, but then it wasn't pure reason that got us here.

My tentative suggestion of a tweaked version of self-sufficiency for the club is based on my view that we are unlikely, for various reasons, to attract a mega-bucks investment proposal that would meet the current owners’ criteria, which I suppose can be summed almost religiously as not wanting the sell the club’s soul

 

I believe if they received a mega-bucks offer that did not involve soul-selling they would happily accept it, but the chances of such a paragon of a deal are slim. A tweaked self-sufficiency, on the other hand, might appeal to them, or perhaps to nephew Tom, if he takes over.

 

I know some fans think such a moral stance, while perhaps admirable in theory, is totally outdated and blinkered in practice. As said earlier, football clubs, including Norwich City, have moved a long way from their local roots and original ethos. Why is one more step away such a big deal? 

As it stands the only opinion on that that matters is that of Smith and Jones. And for now, given there is no sign of a mega-bucks proposal, and little or no unrest among fans, and certainly none that is remotely coordinated, it is all rather moot.

 

Hi Purple,

Excellent posts.  Out of interest what do you consider, ballpark, is the value of the club and rough expectations of sale value of the Smith shares?

Perhaps I’m biased, but I feel there are a few high net worths around thinking about a football club purchase.  While we are clearly well run, with a number of valuable assets, surely someone out there would see us as a great opportunity? Future infrastructure investment would be minimal, perhaps £30m on upgrading Carrow Road. Then it’s players….the big wedge but built up over time. Academy nicely set up too.
Unlike many other clubs attempting to reach the promise land we are there and when not, likely to challenge to get there again. The club is very close, but sadly not quite good enough.  To turn us from yo-yo to established would surely turn that investment into a very positive return?  Is that not attractive? 

Personally I think I’ve seen enough to see our self funding approach is too risky and will probably fail eventually (bad head coach, some poor young player recruiting etc)…… investment required to compete and one that can mitigate for potential recruitment errors. We have limited wriggle room right now. 

[PurpleCanary 6,387]

Thanks for the comments. I am no expert on valuing football clubs, and I don't think it is an exact science anyway! I have seen a couple of posters mention a figure of £100m, partly just for argument's sake. There was a time (it may still be the case) when the club valued the ordinary shares at £100, which if kept to would mean a potential price of £63m.

That would value S&J's shares at around £35m but buying out S&J, and indeed buying out everybody else, if need be, doesn't put any money into the club. Only buying enough new shares to have a controlling majority would do that. As to by how much would depend on whether this paragon of a tycoon bought existing shares as well.

The other potential big-ticket item would be ground expansion. I think most fans would expect the main obvious benefit of a mega-rich owner being an early and total rebuild of the City Stand, to increase capacity by anywhere between 3,000 and 5,000 seats. That would cost quite a few tens of millions, but any would-be buyer who said they couldn't afford to do that would find it hard to present themselves as the right person to take the club to a higher level.

[Icecream Snow 777]

I'm hearing a lot about "investment" but case in point Wes Edens co-owns both Aston Villa and the NBA team Milwaukee Bucks who won the NBA Championship this year. Edens bought the Bucks in 2014 with a partner, and even factoring a dip for Covid, turnover was doubled since he bought them and they won a Championship.

 

 

Compared to the Premier League, where even with Leicester's successes they had a turnover of £180m in 18/19, Brighton's was £148m Burnley's was around £138m. Man United was £500+m (I'm ignoring 19/20 as it was Covid impacted).

So it highlights the gap between the "Big 6" and the rest of the Premiership, largely because of their branding, marketing and international merchandising sales. Tony Bloom has allegedly paid £300m into Brighton ( and Eddie Davies spent £180m at Bolton ), yet that's still smaller than the revenue gap in one season between Brighton or Leicester and Man United .

There is money to be made from football. Kroenke and FSG supposedly take out 7-10% of the revenue as profit, but I struggle to see it outside of the Big 6.