Why are we £18m in debt? The facts.

[mystic megson 0]

Here''s a quote from page 5 of the club''s Annual Report for the year ending 31st May 2004, ie. promotion season..  (Bear with me, it''s not meant to be discussion topic so much as a tool to inform other threads.  IMO it''s more helpful to have discussion based on facts rather than rumours.)

Debt

"Overall, the Group debt has increased to £18.1m from £8m.

"As reported last year, the Group secured funding of £15m to restructure its finances and provide funding to replace the ageing South Stand.  Included in the accounts for 2002/03 was the first instalment of the securitisation loan of £7.5m.  During the year ended 31 May 2004 the second instalment of £7.5m was drawn down and the Group financed the purchased of six acres of land from Laurence Scott and Electromotors with a separate facility of £2.5m from the Bank of Scotland.  Although the Board and the Club''s Executive Management recognise that the debt is high, they consider that the structured nature of the finance protects the long-term viability of the club."

In other words, we''ve turned a smallish debt into a huge one by borrowing money to fund construction projects.  Haven''t we been here before? 

Since then we have spent another £3.2m on the Community Stand infill, £1.3m to turn the third floor of the Jarrold Stand into a restaurant, 900,000 on purchasing another acre of land from Norwich City Council, and 360,000 on new offices and press facilities. 

Our net spend on transfers in the past two seasons is peanuts in comparison.  Is this still a football club or not? 

 

 

[Trent Canary 0]

£3.2m for that tiny little infill? What a joke! How many does it hold?

[EadiesRight Foot 0]

If this is overpayment to the builders and those cohorts of C***e, then this is a sorry reflection on our club. AS my knowledge of construction and its costs are not that up to date, hopefully someone is a builder / architect out there and can confirm or deny that this 3.2m is the going rate for a small corner stand??

Didnt the Millenium stadium cost £70m in total. Maybe we have the same guys who are building Wembley in.....

[3pmkickoff 0]

It may look like that on the surface but a lot of clubs now are investing in facilities at their grounds to generate income. The fact of the matter is that if you''re not in the top flight then it''s hard to balance the books and compete to get into the top flight. Banks won''t loan clubs money to spend on players, especially when you could fork out a seven figure sum for a player plus wages and potentially see them leave for nothing after three years.

[Chris Meadows 0]

we''ve sold land for the hotel and flats so that will raise a little back

[percyvarco 0]

Yes we are a football club but unfortunatly in these times we have to insert our fingers in other pies as the cost of running any football club is prohibitive if you only rely on gate reciepts.

In some ways we should be thankful to Mr Chase who had the forsight to acquire the land etc around the ground to allow us to be where we are today.

Restructuring the finances does not necessarily mean that all the money has been used for construction purposes. There is probably monies that are being used elsewhere to fund other revenue generation schemes such as our newly acquired Xara distributorship.

Yes we are in debt but name a club that is not. If the Russian ever got bored of Chelski they would need a massive financial restructure with their biggest asset being the ground. This alone may give any financial institution the security to lend, so in essence what the business side of the football club is doing is good. Emotionally as a fan, whilst I understand why we are property developers, I want all the money for the team but that is never going to be so anymore.

[Ken Aries 0]

I''m sorry, but you can''t knock the club for trying to improve the stadium facilities. The old South Stand was a badly decaying relic from the 1940''s/1950''s and was almost reaching  the point of being condemned. Therefore, it was pretty much a no-brainer to make the decision to build a new stand. The corner infill I would agree was a less essential development and quite expensive in proportion to the number of seats it added to the stadium. However, the club needed to do something about the problem of having nowhere near enough seats available to satisfy demand. Finally, I would say that despite improvements to the ground in the last few years, Carrow Road is still not big enough to accommodate everybody wishing to attend football matches there. Whether this will remain the case over the next few seasons, time alone will tell.

[Carrow89 116]

" Is this still a football club or not? "

Possible the year''s dumbest post. Perhaps we could all bring beer crates to stand on or take it in turns to sit on each other''s shoulders.

After all, can anyone name any club which has spent money on the infrastrucure.

[chicken 0]

Were these not the figures that Doncaster said not to get too worried about as they dont contain any of the promotion money or is that the last set of anual figures.Either way I dont think you will find that we are now still in that much debt. As for the corner infill - I think there is more to that than meets the eye. Sometimes things are found when you are building that you cant account for so who knows. But yes at first glance it does look a bit expencive.

[Saint Canary 0]

I would be interested to see a post by Branston Pickle regarding the last few years accounts and what he thinks of them.

I fully understand the need for the club to invest in the stadium and buying land.  Considering the possible yields available to land owners due to the rise in the value of land in the City (and the surrounding area''s) in the last two years these investments make sense.  It’s also prudent to invest in the stadium and increase capacity to maximise the revenue stream attainable from selling tickets.  In modern football, clubs like City need to invest in projects that are not in the general remit of a football club to try and grow as a business and to not become completely reliant on money from TV companies.  

The investment in land and property is all well and good (and as I stated  needed in today’s football) but the club needs to ensure that any such investments do not take precedence over the football element of the club.  The main income for City will always be ticket sales and merchandising, as such relative success on the pitch is required for City to continually be a maintainable business.  At the moment it appears to me that we are prepared to take out loans and spend money on the acquisition of land yet we are very "prudent" and "calculating" when it comes to the strengthening of the team and squad.  We have seen from the accounts that Worthington spent just under £1m last summer despite bringing in over £2m in transfer fees.  More money was spent on loans and the Etuhu signing but money was needed from Delia for the £50k fee for Robinson and his wages for a season.  Money spent on Earnshaw was solely from the sale of Ashton and no doubt the club actually spent nothing on squad strengthening in 05-06 season when you balance the monies from transfers in and out.  This (for me) does not signal a club looking to move "onwards and upwards".

We have seen in the past what can happen if a board/chairman invests more in bricks and mortar than the playing staff.  How long were we known as a Club with Premier League facilities but a Championship team?  Until (A) we pay the loans off in the terms of the agreement or (B) make money from any land owned, then the loan will no doubt be furnished with money from the club that could be being spent on the team. 

Without being a doom-monger, another season such as the last will result in fewer people taking up the option of season tickets and the loss of “Premiership” money via parachute payments.  This again will greatly effect the playing element of the club and we could find ourselves in a situation like that of 5 years ago where the ground was never full and there was little money available for squad strengthening.

I have no problem with City investing outside the club for future benefit in fact I would encourage.  I just hope the get the balance right and that they show the same level of commitment this summer in the transfer market.

 

[Canaries for Ever 0]

[quote user="Trent Canary"]

£3.2m for that tiny little infill? What a joke! How many does it hold?

[/quote]

Over 2000 seats and it will have paid for itself in 4 years with season tickets alone (less if casual tickets). Sounds like good business to me.

[Carrow89 116]

This stuff usually crops up when a few binners wish to cause dissent. The replacement of the South Stand and the corner infill were always going to be one offs.

The club stands as a whole entity. It cannot follow the absurd notion that simply spending money on transfer fees and wages will guarantee success.

Do we really want to be another Wimbledon or Brighton ?

[Trent Canary 0]

[quote user="Canaries for Ever"][quote user="Trent Canary"]

£3.2m for that tiny little infill? What a joke! How many does it hold?

[/quote]

Over 2000 seats and it will have paid for itself in 4 years with season tickets alone (less if casual tickets). Sounds like good business to me.

[/quote]

Not saying it was a bad thing, just dont see how it could cost so much. But no im not complaining about the idea, we need to expand Carrow Road because we keep selling it out. Although I think if we have another poor season a lot of the fans that have turned up in the last few seasons will be off again. I would hope not, but its the same at every club.

[mystic megson 0]

[quote user="Ralph Wright"]" Is this still a football club or not? " Possible the year''s dumbest post. Perhaps we could all bring beer crates to stand on or take it in turns to sit on each other''s shoulders. After all, can anyone name any club which has spent money on the infrastrucure.[/quote]

Mr Wright from Spennymoor, do you always respond to posts in such a way, or has this one really wound you up?  I note the "binner" insult in your other post on this thread - first one I''ve ever had, cheers.

You know perfectly well that I''m not saying we shouldn''t spend any money at all on infrastructure.  It''s the balance that''s wrong, and also the timing.  £1.3m on a posh restaurant for businessmen, compared with just over £788,000 on team strengthening last summer?  Something''s gone badly awry somewhere.  Did we fight so long and  hard ten years ago to get rid of Chase, only for this to happen? 

There are more questions than answers.  Chase''s purchase of land around the ground was highly controversial, but if we''re saddled with it, let''s try and make it pay.  But why on earth did we need to spend another £3.4m in the past two seasons on more land?  

The deepest irony is that by renewing our season tickets no matter what, we the fans are encouraging this building frenzy.  It won''t stop here if the board have their way.  Here''s another quote from the 2005 Annual Report:

"The Club is acutely aware of the demand for seats at Carrow Road.  The £3.2m investiment in the Norwich Union Community Stand created an additional 1,685 seats and brought the capacity at Carrow Road up to 26,034.  In the medium term we would like to further expand the capacity of our stadium.  But to do so we need to find a way of financing this very sizeable investment."

"Football comes first."  Surely this year''s most sensible post.

 

 

[Carrow89 116]

Your original guff was bad enough without adding a further level of ill informed twaddle.

How can fans renew the season tickets with nowhere to sit.

Those expecting something more than a gristle burger from some dodgy van lurking behind the Barclay might be posh businessmen to deluded fools like you but to the rest they are a reflection of the expectations of many todays'' fans.

You talk of football first as if the game can be played in some vacuum oblivious to all social and financial constraints around it.

What''s gone badly awry is your grasp on reality.

[Ken Aries 0]

Is it not quite difficult to achieve the right balance between expenditure on bricks and mortar and investment in the team, Mystic Megson? In a Utopian Abromavich style world, there would be ample funds available to lavish on both the team, and improvements to the stadium. Unfortunately here in the real world at Carrow Road some sort of compromise is necessary. Whether the club would be doing the right thing by constructing another tier onto the City Stand is difficult to predict. Obviously, if the team hit a downward spiral due to under-investment, then the stadium expansion policy could prove to be disasterous. I''m glad that I''m not involved in such major and far reaching decisions.

[Saint Canary 0]

[quote user="Ralph Wright"]Your original guff was bad enough without adding a further level of ill informed twaddle. How can fans renew the season tickets with nowhere to sit. Those expecting something more than a gristle burger from some dodgy van lurking behind the Barclay might be posh businessmen to deluded fools like you but to the rest they are a reflection of the expectations of many todays'' fans. You talk of football first as if the game can be played in some vacuum oblivious to all social and financial constraints around it. What''s gone badly awry is your grasp on reality.[/quote]

Are you Mad Dan in disguise?

I do see your points regarding extra seating and better quality facilities at the stadium, it needed to be done and to an extent I agree with you.  However if the club continue in the same vein on the pitch next season and there is the same disaffection from sections of the fans then the extra seating and better facilities will be superfluous.  If Carrow Road is less than three quarters full then the extra seats will be nothing more than somewhere for you and I to put our feet up.

Of course we need to accept that new revenue streams need to be found or existing ones maximised to sustain the club but fundamentally the business is based on supporters in the stadium on match days.  To fill the stadium the club needs to be having relative success on the pitch.  As I much as I don’t like it , I would guess that a few years of City sitting mid-table would see large numbers of fans choosing not to attend.  Personally I would watch City in the conference but then I have always had problems. 

 

[Drurys Left Nut 0]

"Chase''s purchase of land around the ground was highly controversial, but if we''re saddled with it, let''s try and make it pay. But why on earth did we need to spend another £3.4m in the past two seasons on more land?"

The answer to this is that the land, though owned by the council was a little enclave all to itself, only accessable by going through land owned by the football club. Possible new access routes to the new development of the flats around the river (the land the club sold), the land price and the fact the club actually had some money meant that they were able to buy said land at probably the best price and timing. If Neil Doncaster et al is to get praise any time this year it should probably be for this piece of business. The land is immediately worth more than it was purchased for, for the simple fact you can now get to it. Long term planning, there''s a lot to be said for it.

[blahblahblah 2]

[quote]why on earth did we need to spend another £3.4m in the past two seasons on more land?  [/quote]

In the words of Mark Twain - Buy land, they''ve stopped making it.  If you want a club that will continue to exist, you have to accept that the business that runs the club operates in the real world.  Land ownership = long term growth, and greater potential for revenue generation, reducing our reliance upon TV money, and giving us a long term competitive advantage over other teams of this level.  The club could have invested in the stocks and shares, as the church of england does, arguably these days land is a safer option, and you control your own destiny more with it.

[quote]£1.3m on a posh restaurant for businessmen [/quote]

A catering facility that generates 1 million a year in revenue would be a better way of looking at it.  Why should the stadium be quiet 13 days out of 14 ?  The more profitable uses for that space there are, the more money will become available to the playing side, surely ?

Would you prefer that we spent all our money on playing staff and miss out like so many other teams have ?  I remember Huddersfield spending 20 million plus in the early 90s to try and get in the Prem.  Where are they now ?

[Bernard Robinsons Paperboy 0]

Hello ERF, I work for  a Contractor and have previously worked on projects for NCFC

3.2m does seem a little excessive, but bear in mind the following:-

It would have been a lot cheaper if the two stands had been designed and built at the same time, nobody seems to have learnt that from when the new Barclay stand was built, only to have the corner infill (now the Snakepit) built afterwards. Instead of only having to join to one stand, they then had to join to two, design could probably been improved, with no visible join between the NU corner and the Jarrold stand.

Constructing the stand to a curve is going to cost proportionately more, the nature of most materials used in the stands being fairly inflexible.

When the stand was being built there was a lot of construction work being carried out in and around the city, pushing labour prices up to almost ridiculous levels.

Finally, there is an underground stream that runs under Carrow Rd, under the Barclay, under the pitch and to the best of my knowledge used to enter the river via the old dyke (now piped) that used to lead to the old Malthouses, which the Fat Controller demolished.This could add considerably to the cost. Remember all the Porta-Loos when the Barclay was being built, that was because the Contractor discovered the underground stream and all the foundations for the floor slab had to be re-designed, which meant that although the terrace units were in place and could be used, there were no facilities under the stand.

At 90% capacity it will take about 6 years to recover the capital, longer to allow for interest charges and running costs.

Any other queries, will be glad to assist

 

 

[mystic megson 0]

[quote user="Ralph Wright"]Your original guff was bad enough without adding a further level of ill informed twaddle. How can fans renew the season tickets with nowhere to sit. Those expecting something more than a gristle burger from some dodgy van lurking behind the Barclay might be posh businessmen to deluded fools like you but to the rest they are a reflection of the expectations of many todays'' fans. You talk of football first as if the game can be played in some vacuum oblivious to all social and financial constraints around it. What''s gone badly awry is your grasp on reality.[/quote]

Ahem. Mr ex-England Olympic Games 1968 footballer*, you appear to be unfamiliar with the procedure for renewing a season ticket.  Are you a freelo..... err, recipient of corporate hospitality by any chance?  Or perhaps this topic has wound you up so much that you aren''t thinking straight.

I don''t wish to be pedantic (okay, yes I do!), but I referred to the restaurant as posh, not the businessmen.  I should hope it is posh for £1.3m.

 

* for those too young to remember, we picked up a player called Ralph Wright, central midfielder or defender, can''t remember which, from the 1968 Olympic Games squad.  To conform with the rules of amateurism, England used to field an Olympic team consisting of players from non-league clubs, in his case Spennymoor United in County Durham.  He stayed less than a season if I recall.  He never made the first team, but bought a sports car, sh**ged everything in sight, then moved to Bradford Park Avenue who went bust shortly afterwards. 

It sounds as though our charming poster is a fan of his.  Superb judgement mate.

 

[mighty yellow 0]

Regardless of the debt, they say it''s all under control, however, isn''t it pathetic that we can''t afford a bloke from Plymouth or Calum Davenport, who will probably fetch £1.5m tops?

[mystic megson 0]

[quote user="stephen nobbs"]Is it not quite difficult to achieve the right balance between expenditure on bricks and mortar and investment in the team, Mystic Megson? In a Utopian Abromavich style world, there would be ample funds available to lavish on both the team, and improvements to the stadium. Unfortunately here in the real world at Carrow Road some sort of compromise is necessary. Whether the club would be doing the right thing by constructing another tier onto the City Stand is difficult to predict. Obviously, if the team hit a downward spiral due to under-investment, then the stadium expansion policy could prove to be disasterous. I''m glad that I''m not involved in such major and far reaching decisions.[/quote]

With respect, we already ARE in a downward spiral due to under-investment.

[Saint Canary 0]

[quote user="blahblahblah"]

[quote]why on earth did we need to spend another £3.4m in the past two seasons on more land?  [/quote]

In the words of Mark Twain - Buy land, they''ve stopped making it.  If you want a club that will continue to exist, you have to accept that the business that runs the club operates in the real world.  Land ownership = long term growth, and greater potential for revenue generation, reducing our reliance upon TV money, and giving us a long term competitive advantage over other teams of this level.  The club could have invested in the stocks and shares, as the church of england does, arguably these days land is a safer option, and you control your own destiny more with it.

[quote]£1.3m on a posh restaurant for businessmen [/quote]

A catering facility that generates 1 million a year in revenue would be a better way of looking at it.  Why should the stadium be quiet 13 days out of 14 ?  The more profitable uses for that space there are, the more money will become available to the playing side, surely ?

Would you prefer that we spent all our money on playing staff and miss out like so many other teams have ?  I remember Huddersfield spending 20 million plus in the early 90s to try and get in the Prem.  Where are they now ?

[/quote]

I agree that the restaurant is a great idea and as you point out it keeps the stadium in use when football is not being played.  I do wonder at what profit margin is it running though?  It''s all well and good having £1m in revenue but if your costs are £1.5m then it''s hardly a success.

Land/Property ownership is a profitable and generally safe investment, that is why pension funds invest so heavily in it and they make vast profits.  The rent rolls and service charges collected on behalf of some of the bigger funds can be mind blowing.  City should be investing in land and property.

I will reiterate the point I made earlier though. I commend and encourage the board for looking to increase revenue and plan a long-term future for the club but ultimately this is a football club. If there is no success (relative to City) on the pitch to keep the turnstiles moving then the club will struggle to be viable. Money needs to be invested in equal measures on and away from the pitch for the club to be successful financially.  We currently are in the Premier League in terms of attendance - that will not continue to be the case without a good football team.

[Mark .Y. 372]

"He never made the first team, but bought a sports car, sh**ged everything in sight, then moved to Bradford Park Avenue "

And thats a terrible way to live is it ?????

 

Mark .Y.

 

[Herb 0]

[quote user="Mark .Y."]

"He never made the first team, but bought a sports car, sh**ged everything in sight, then moved to Bradford Park Avenue "

And thats a terrible way to live is it ?????

 

Mark .Y.

 

[/quote]Nope, except for the not making the first team bit.Still, 2 outta 3 aint bad :)

[nh_ncfc 0]

[quote user="percyvarco"]

Yes we are a football club but unfortunatly in these times we have to insert our fingers in other pies as the cost of running any football club is prohibitive if you only rely on gate reciepts.

In some ways we should be thankful to Mr Chase who had the forsight to acquire the land etc around the ground to allow us to be where we are today.

Restructuring the finances does not necessarily mean that all the money has been used for construction purposes. There is probably monies that are being used elsewhere to fund other revenue generation schemes such as our newly acquired Xara distributorship.

Yes we are in debt but name a club that is not. If the Russian ever got bored of Chelski they would need a massive financial restructure with their biggest asset being the ground. This alone may give any financial institution the security to lend, so in essence what the business side of the football club is doing is good. Emotionally as a fan, whilst I understand why we are property developers, I want all the money for the team but that is never going to be so anymore.

[/quote] Totally agree with ya mate

[beelsie 0]

Saint, many good sound points have been made by various posters yourself included.  I have for two seasons attempted to explain why we are in debt,and the necessity for it to be limited to the minimum, and for it to be able to guaranteed by saleable assets.  To go into that all over again would be a trifle boring to say the least.  One thing I have to say that backs up what NCFC are doing, is that as two seasons ago we  were, according to the official figures loosing more than three million a year on wages.  To meet that shortfall in the future one method is to up the ground capacity to at least 350000 where depending on the quality and price of the signings and wage demands, and the hope that we may have some home grown talent to use at no cost.  We may then break even.  It is a cost that must be met, finding the balance means that we must first guarantee our ground capacity and ticket income while finding good solid footballers to get us to a respectable and exceptable position in this league, where we at least produce the hope and reality for the fans to watch us in the play off final and maybe into the Prem.  This is a crucial balance of financial complexity and we cannot go the way of Leeds and Ipswich etc with rash and unrealistic purchases that cannot ever guarantee success. OTBCity!!!

[Syteanric 1]

Ralph Wright is a bit of a Robert Chase it seems.. plough ur money into Bricks and Mortar and hope fans will come just because u have a big stadium.

Look at Liepzig in Germany.. Pakced for the World cup games.. but Lokomotiv Leipzig will be getting just under 2000 fans next season... why??? because they play in amateur League... with amateur players.. because the club bank rupted them selves by building a new stadium rather than getting in players to make them good...

Queens Park in Scotland... Play at the 80,000 Hampdon Park...which is fantastic... until u realise that Queens park only get 200 fans a week.

 Closer To home, Bradford... on 3 sides Valley Parade is top notch... but they threw all that cash at it in the premiership.. Foregoing getting players in to keep them up there.. what happened?? they ultimately ran out of money... their nice 30,000 stadium gets 10-12,000 a week in League 1. Ask any Bantams fan and i bet they will tell u that they wished that money had gone onto players and if people couldnt get into the ground then so be it.. they miss out...

Look at the flipside of the coin.. Hillsboro... no work has taken place on that stadium in years... it holds 40,000 fans.. during their days in league 1 they were getting 30-35000 sometimes... not every week i''ll admit but they had the fan base. the stadium wasnt full... but the fans knew the team was on the up.. Why?? because Wednesday were better than anyone else in that division.... it matters not the size of the stadium.. people want entertainment...

i''d sooner have a 10,000 all seater stadium and be the best team in the world then i would have a 90,000 all seater stadium and lose 8-0 every week because the players are rubbish.

what would u prefer Ralph?

jas :)

[beelsie 0]

I''d rather have a club that is able to pay it''s players from income from fans through the turnstiles. Then irrespective of results I would back the team 100% and continue to watch them home and away.  I would have the title of a normal supporter enjoying the best that we as a club could pay for, and have the football that we deserve.