Financial Implications

[kenfoggo 247]

Could someone please talk us through the financial implications of not being promoted this season? Loans to repay? Loss of parachute payments? Needing to cut payroll (players and back room staff)?

[The Real Buh 3,480]

Finance is intensely boring but I’m getting more and more of a feeling we are sinking 

fast

[Nexus_Canary 1,024]

These things are cyclic, with the binners on the rise and us on the sink I am quite worried.

[cambridgeshire canary 6,792]

1 minute ago, Nexus_Canary said:

These things are cyclic, with the binners on the rise and us on the sink I am quite worried.

Binner

[HazzaJet 256]

I can’t see really any issues with payroll because as far as I’m aware we have relegation clauses in all the contracts (although it’s rumoured that Pukki’s contract extension allows him to retain his PL wages). However, we only have one parachute payment left which will also be less than our one this season. As a result of this, if we fail to get promoted this season I can only see us having to part company with our best players as we are in debt, which I think will turn us into the type of side we were after our 2005 and 2016 relegations (nothing more than a mid-table finish)

[Branston Pickle 3,683]

We aren’t in debt, though, are we?  Where did that one come from?

[Nora's Ghost 157]

Smith and Jones have run out of lightning strikes.

Stagnation will be the new norm for us now with maybe an exciting relegation battle every now and then to draw the crowds in.

[TheBaldOne66 697]

8 minutes ago, Branston Pickle said:

We aren’t in debt, though, are we?  Where did that one come from?

Needing a 66million loan isn’t being in debt? Wow! 

[HazzaJet 256]

3 minutes ago, Branston Pickle said:

We aren’t in debt, though, are we?  Where did that one come from?

Are we not? - I hope that’s true. To be honest I don’t know for certain, it’s just I’ve seen a few posts that have made me think we are. If we are I don’t think we heavily are

[AJ 1,224]

I think we'd be okay for a season or two but after that we'd need to start getting rid of players on high wages

[keelansgrandad 6,679]

Why do I keep hearing that we are a well run club then?

[Branston Pickle 3,683]

5 minutes ago, TheBaldOne66 said:

Needing a 66million loan isn’t being in debt? Wow! 

It was a question.  You know, something ending in a question mark?  

[TheBaldOne66 697]

Just now, Branston Pickle said:

It was a question.  You know, something ending in a question mark?  

As was mine, we’ve got a 66 million loan apparently haven’t we? A loan is a debt isn’t it?

[Heading South 24]

3 hours ago, The Real Buh said:

Finance is intensely boring but I’m getting more and more of a feeling we are sinking 

fast

More to the point how many did we have in attendance yesterday , place more than scattered with empty seats .

[Branston Pickle 3,683]

Just now, TheBaldOne66 said:

As was mine, we’ve got a 66 million loan apparently haven’t we? A loan is a debt isn’t it?

I’m confused - have never heard of a £66m loan, but haven’t really been keeping up with the club’s finances.  

[chicken 2,642]

Wages wise:
Pukki, Hugill, Sinani, Hernandez, Cantwell, Dowell, Byram, McGovern, Martin - are all out of contract. Hayden and Ramsey will return to parent clubs. Then you have the likes of Placheta, Rashica, Tzolis all out on loan who's futures are potentially not with us but whom also represent assets we could get money back on.

Scarily, that's 11 players out of contract or who's loans will end come the summer. A further 3 who's futures are uncertain. That's 14 players. Leaves us quite bare in some departments. 

[Unhinged Canary 375]

26 minutes ago, Branston Pickle said:

I’m confused - have never heard of a £66m loan, but haven’t really been keeping up with the club’s finances.  

I'm fairly sure that's not true.

I thought our whole shtick was that we were externally debt free.

[Branston Pickle 3,683]

13 minutes ago, Unhinged Canary said:

I'm fairly sure that's not true.

I thought our whole shtick was that we were externally debt free.

Well, yes, that’s what I thought…

[Petriix 2,853]

As I understand it, we've taken out a ~ £60m loan tied to guaranteed future income (i.e. our remaining parachute payments and installments due on player sales). We will have the money to pay this off, but we've basically already spent everything we've got coming in.

The implication of this is we need to be absolutely balancing the books next year excluding parachute payments (which we've already spent). That means slashing the wage budget down from what is likely around £50m to something like £20m. The actual figures will emerge after future accounts are released.

In practice it means we need to sell players to break even, but we'll probably be offloading our best players. Pukki will leave on a free and a bunch of other players will be released. We'll be hoping to recoup some money on Rashica and Tzolis. 

Basically if you (like me) think the current squad is a little on the weak side you're not going to be ecstatic with who turns out for the first game next season. 

[Newtopia 519]

19 minutes ago, Unhinged Canary said:

I'm fairly sure that's not true.

I thought our whole shtick was that we were externally debt free.

We will have loans, the wuestion is can we afford to service them, not getting promoted will have a serious impact on our future ability to pay for the debt….

[SwearyCanary 1,179]

1 minute ago, Petriix said:

As I understand it, we've taken out a ~ £60m loan tied to guaranteed future income (i.e. our remaining parachute payments and installments due on player sales). We will have the money to pay this off, but we've basically already spent everything we've got coming in.

The implication of this is we need to be absolutely balancing the books next year excluding parachute payments (which we've already spent). That means slashing the wage budget down from what is likely around £50m to something like £20m. The actual figures will emerge after future accounts are released.

In practice it means we need to sell players to break even, but we'll probably be offloading our best players. Pukki will leave on a free and a bunch of other players will be released. We'll be hoping to recoup some money on Rashica and Tzolis. 

Basically if you (like me) think the current squad is a little on the weak side you're not going to be ecstatic with who turns out for the first game next season. 

It is, but it’s strong enough to go up still. As long as you have the person in to do that. Smith is not that person 

[Branston Pickle 3,683]

 Ok, I wasn’t aware of all that - completely missed it, must have been busy with my own year-end  when the financial stuff came out/was discussed.

[tricky974 61]

Smith win percentage is at 29% which is poor and he has a 2.5 year contract, we have a squad capable of getting promoted, but what will happen is we get a result every now and again and by the time the club react it will be too late and the season will be over.

[essex canary 505]

28 minutes ago, Petriix said:

As I understand it, we've taken out a ~ £60m loan tied to guaranteed future income (i.e. our remaining parachute payments and installments due on player sales). We will have the money to pay this off, but we've basically already spent everything we've got coming in.

The implication of this is we need to be absolutely balancing the books next year excluding parachute payments (which we've already spent). That means slashing the wage budget down from what is likely around £50m to something like £20m. The actual figures will emerge after future accounts are released.

In practice it means we need to sell players to break even, but we'll probably be offloading our best players. Pukki will leave on a free and a bunch of other players will be released. We'll be hoping to recoup some money on Rashica and Tzolis. 

Basically if you (like me) think the current squad is a little on the weak side you're not going to be ecstatic with who turns out for the first game next season. 

This season must be something like £80 million turnover including the Parachute receipt. £21 million is owed for the loan, £9 million net of receipts for transfer instalments completed by 30 June 2022. That leaves around £50 million to run the Club this season including non-pay expenses. The challenge then is to get the pay bill sufficiently low and/or generate some more player sale transfer instalments.

[vos 155]

Without becoming too deeply involved the major loans we have outstanding represent:

1) 30k spent in advance until Sky money is rec'd. Due to be completely paid to us by March 2024

2) 22k spent in advance of Players Transfers monies being rec'd. Due to be fully cleared September 2024

On the other hand we in turn still owe a further £25k on players we have bought.

So in the crazy world of football finance all Clubs owe each other money and in effect most of their assets are represented by grossly over valued players so overall they are not worth very much. Many, like us, own their Stadiums but they are rarely liquidated because the costs of demolition probably outweigh the residual value. Having said that most Clubs continue to survive by some means or other mainly because overseas buyers still think there are considerable commercial benefits etc, certainly so far as the major Clubs are concerned. A bit fascinating is the amount of advertising income earned, yet I do not have a clue who for example advertises at Carrow Road. Rather like the UK economy the balloon may go up one day. Rather wisely I only have a £100 in the Club !!!!

 

 

[chicken 2,642]

3 hours ago, Petriix said:

As I understand it, we've taken out a ~ £60m loan tied to guaranteed future income (i.e. our remaining parachute payments and installments due on player sales). We will have the money to pay this off, but we've basically already spent everything we've got coming in.

The implication of this is we need to be absolutely balancing the books next year excluding parachute payments (which we've already spent). That means slashing the wage budget down from what is likely around £50m to something like £20m. The actual figures will emerge after future accounts are released.

In practice it means we need to sell players to break even, but we'll probably be offloading our best players. Pukki will leave on a free and a bunch of other players will be released. We'll be hoping to recoup some money on Rashica and Tzolis. 

Basically if you (like me) think the current squad is a little on the weak side you're not going to be ecstatic with who turns out for the first game next season. 

If the loan matches the known income, then surely we break even without needing to sell? That appears to tie in with the suggestion that seems to be out there that the club would need to sell players to be able to reinvest in any new signings.

Still not good. And again, it's going to be a much more difficult field to try and pluck players from now. 

Edited December 19, 2022 by chicken

[Chelm Canary 404]

2 hours ago, vos said:

Without becoming too deeply involved the major loans we have outstanding represent:

1) 30k spent in advance until Sky money is rec'd. Due to be completely paid to us by March 2024

2) 22k spent in advance of Players Transfers monies being rec'd. Due to be fully cleared September 2024

On the other hand we in turn still owe a further £25k on players we have bought

Erm. These numbers seem a little on the low side to me. 

Edited December 19, 2022 by Chelm Canary

[TeemuVanBasten 3,327]

6 hours ago, Petriix said:

As I understand it, we've taken out a ~ £60m loan tied to guaranteed future income (i.e. our remaining parachute payments and installments due on player sales). We will have the money to pay this off, but we've basically already spent everything we've got coming in.

The implication of this is we need to be absolutely balancing the books next year excluding parachute payments (which we've already spent). That means slashing the wage budget down from what is likely around £50m to something like £20m. The actual figures will emerge after future accounts are released.

In practice it means we need to sell players to break even, but we'll probably be offloading our best players. Pukki will leave on a free and a bunch of other players will be released. We'll be hoping to recoup some money on Rashica and Tzolis. 

Basically if you (like me) think the current squad is a little on the weak side you're not going to be ecstatic with who turns out for the first game next season. 

We''re f*cked.

[shefcanary 2,446]

3 minutes ago, shefcanary said:

The accounts basically spelt out that all our parachute payments are earmarked to pay off the £65m of loans Webber has used to **** up the wall. Richens explained that any transfer dealings (and, my assumption, compensation outside normal salary budgets e.g. managerial sackings) has to be funded by new transfer income and / or drastic revenue cost reduction elsewhere. Given the accounts were signed off only 6 weeks ago the financial situation should not have changed substantially.

But, all this is predicated on financial forecasts which assume a relatively steady, but prudent, trading position. This will include assumptions about numbers of season ticket sales being maintained at previous years levels, albeit with what are termed sensitivities run of them decreasing by 5 or 10% say. These sensitivities show what level of cost reduction might be needed to balance budgets should season ticket sales fall. This would have seemed a distant reality 2 to 3 months ago, but each home match we currently play brings the likelihood of this ever closer.

Smith's post match comments after Blackburn will mean there will be some serious number crunching by Richens financial forecast team this morning. Once these are delivered to the Executive team, I expect to see some action after Xmas! 

Rather than re-type, see my comment on the other new financial thread above. Also consider the rumours re. Rashica being wanted by Galatasaray at €5m, it will have a bearing.

Whilst the forecasts that underpinned the signing off of the last set of accounts show we can pay our way for at least 12 months (the auditors would not gave given a clean auditvreport otherwise), certain assumptions may well have changed in the past 6 weeks. Income generated by match days will be reducing over the past 2 months as disaffected season ticket holder absence grows. The current cost of living crisis will be having an impact too. But broadcast income has increased with confirmation of further matches to be broadcast. I also believe the forecast assumptions included a sensitivity scenario where promotion was not achieved, and advantage was taken of reducing the wage bill as contracts end and players were released. 

In a nutshell, there is no more a likelihood of catastrophic financial failure at Norwich as anywhere else in football, even without a rich investor to bankroll the club. Much will depend on the vanity of the Board and the Executive. Do they want to be in charge of a middling Championship team, or is their stated ambition of being a top 26 team still ring true? The main forecasts are based on this latter aim, but Richens and his financial forecast team will have numbers that show an alternative vision.

The problem for the Board is that currently we are still on track to be a top 26 team. We can all point out we are one defeat away from not being such a team, but "at least the next match is away from home"!

Irrespective of managerial compensation for loss of office, Delia's Christian ethos will probably not sanction a sacking before the Luton match. Financially though Rashica's departure should enable such a move early in January, should we be outside the play-offs by then.

So, the question is not are we going bust, we are not! They are:

Will we win at Luton? Will the Board stick or twist? Will Webber sanction Rashica's sale? 🤔

[vos 155]

14 hours ago, Chelm Canary said:

Erm. These numbers seem a little on the low side to me. 

Thanks Chelm Canary. In the first instance it would have helped if I had referred to millions instead of thousands !!! The total loans outstanding amounted to £64 m, but I was referring to the £52m covered by so called "guaranteed" income due over the next 2 years. I am tempted to suggest that we will only be buying in the transfer market from any proceeds we get from player sales. Any monies from Mark A and advanced season ticket sales will merely go towards temporarily righting the ship. Or in other words the world of the football financial juggling act continues.