Would relegation help NCFC?

[Mister Chops 7]

[quote user="Glutton for Punishment"]

[quote user="Mister Chops"]I think you''re all wrong re: ticket sales being 12-13,000.  I think we would still sell 18-19,000 season tickets in League One for the first season.  After that, people may drift away, but when we came down from the Prem everyone said "oh, that''s it then," and it wasn''t - we''re still 20,000 strong now.  So that''s a bogus argument.And those of you who are saying "if we got relegated, we''d be in administration" - explain how getting relegated would put us in administration?  Bear in mind we would offload our high wage earners in the summer.I don''t want us to go down, but it would not kill us if we did.[/quote]

As another of those pesky fact driven accountants on here I can answer that one. Administration happens when the terms of a credit arrangement is broken and the creditor takes the view that it is the best chance they have of recovering the majority of money owed to them. So relegation on its own does not cause administration but the failure to comply with the terms of the securitisation deal would. A fall in gate receipts would do this although you appear to have a different opinion on the likely fan base in the third tier. The club has been fortunate to date in presiding over a period of economic growth, high disposable incomes and football being in vogue. I''m not so sure that those are conditions expected over the next couple of years.

[/quote]Good reply, thank you.  I don''t have much knowledge of the securitisation deal but as I recall it was over five years from 2004-2009?  You may well have the exact dates and I may be talking out of my hat.Over time I am sure the fan base would be eroded, but just as we sold out our season tickets with the "on loan to the Championship" approach (and how ironic that seems now, as our team is largely on loan to the Championship), I would expect 90% of fans to stick around for a promotion push in Season One, and then the possibility of drifting away becomes more likely in the later seasons.  I note Leicester City, for instance, sold as many season tickets this season as last season.Of course you are right about disposable income and the decline in leisure sector spending - I think this is somewhat separate from the League One/Championship debate anyway as if you can''t afford it, you can''t afford it irrespective of the club''s status.

[Mister Chops 7]

[quote user="Darren Butt-Head"][quote user="Mister Chops"]I think you''re all wrong re: ticket sales being 12-13,000.  I think we would still sell 18-19,000 season tickets in League One for the first season.  After that, people may drift away, but when we came down from the Prem everyone said "oh, that''s it then," and it wasn''t - we''re still 20,000 strong now.  So that''s a bogus argument.And those of you who are saying "if we got relegated, we''d be in administration" - explain how getting relegated would put us in administration?  Bear in mind we would offload our high wage earners in the summer.I don''t want us to go down, but it would not kill us if we did.[/quote]Is that your final answer?  In one post saying everyone is wrong,  you sliced your guess-timate from 20,000 down to 18,000.[/quote]What''s your view, butthead?

[Mister Chops 7]

[quote user="Smudger"]

Oh and err we would still have Mr Chops sitting on that fence getting splinters and happily making excuses for thos failing our football club and our City.

Tut, tut, tut... you should be ashamed of yourself Sir... [:$]

Oh well come this time next year you may be able to tell us why relegation to Div 2 would not be such a disaster?

[/quote]I''m not sitting on the fence.  I''ve said I do not want us to get relegated, but it will not be the end of the world if we do.  You have failed to indicate why this view is wrong, but then you''ve always been high on heat and short on light.And frankly, being told by Smudger that you should be "ashamed of yourself" for Norwich City

related matters is like being told off by Alex Higgins, George Best and

Gazza for having a glass of sherry.

[Mister Chops 7]

[quote user="ricardo"]

[quote user="Mister Chops"]I think you''re all wrong re: ticket sales being 12-13,000.  I think we would still sell 18-19,000 season tickets in League One for the first season.  After that, people may drift away, but when we came down from the Prem everyone said "oh, that''s it then," and it wasn''t - we''re still 20,000 strong now.  So that''s a bogus argument.And those of you who are saying "if we got relegated, we''d be in administration" - explain how getting relegated would put us in administration?  Bear in mind we would offload our high wage earners in the summer.I don''t want us to go down, but it would not kill us if we did.[/quote]

I remember gates of 12-13000 Mr Chops. Once you lose people you don''t get them back very easily.

Believe me  mate I''ve been there and I don''t want to go there again.

[/quote]I do believe you.  But I don''t believe the club would lose people in the first year.  Not particularly representative, but if I started a thread called "would you renew your season ticket?", I bet I would get 90% of grumbling responses that would end up "Yes", myself included.

[Mister Chops 7]

[quote user="The Prisoner"][quote user="Glutton for Punishment"]

[quote user="Mister Chops"]I think you''re all wrong re: ticket sales being 12-13,000.  I think we would still sell 18-19,000 season tickets in League One for the first season.  After that, people may drift away, but when we came down from the Prem everyone said "oh, that''s it then," and it wasn''t - we''re still 20,000 strong now.  So that''s a bogus argument.And those of you who are saying "if we got relegated, we''d be in administration" - explain how getting relegated would put us in administration?  Bear in mind we would offload our high wage earners in the summer.I don''t want us to go down, but it would not kill us if we did.[/quote]

As another of those pesky fact driven accountants on here I can answer that one. Administration happens when the terms of a credit arrangement is broken and the creditor takes the view that it is the best chance they have of recovering the majority of money owed to them. So relegation on its own does not cause administration but the failure to comply with the terms of the securitisation deal would. A fall in gate receipts would do this although you appear to have a different opinion on the likely fan base in the third tier. The club has been fortunate to date in presiding over a period of economic growth, high disposable incomes and football being in vogue. I''m not so sure that those are conditions expected over the next couple of years.

[/quote]Not only are gate receipts involved in the securitisation deal but other revenues such as catering and tv money. Obviously the catering revenues will drop should match day attendances fall but Championship TV money is set to double to £2m per club next year whilst third tier tv money is expected to be around £400,000 per club. That''s another £1.6m knocked straight off the clubs income in the event of relegation. I''ve a feeling and have expressed it in detail in this forum that all is not well with the securitisation deal and we are struggling to pay it back at the agreed rate. Lose £2m''s worth of gate receipts and £1.6m''s worth of tv money next year and factor in that our securities on this deal have likely devalued significantly in the last 12 months then I can see the creditor becoming more than a little worried about their investment, worried enough to make a move I don''t know but if property values decrease by another 10-15% in 2009 it''s likely that we are not much more than 12 months away from being in negative equity as a club.[/quote]Another decent reply, thanks.  The TV money would be a kick in the teeth, no question.  I wonder what the typical player budget for a League One side is?  I don''t think we would lose £2m in gate receipts though.  Although last season, didn''t the club offer a 25% season ticket discount if we went down to League One?  Presumably this would work out to being around £2m on its own.I don''t mind admitting I may have to rethink my views on this, but it''s good to see logical reasoning on why that might be.

[The Fish Seller 0]

[quote user="Mister Chops"][quote user="The Prisoner"][quote user="Glutton for Punishment"]

[quote user="Mister Chops"]I think you''re all wrong re: ticket sales being 12-13,000.  I think we would still sell 18-19,000 season tickets in League One for the first season.  After that, people may drift away, but when we came down from the Prem everyone said "oh, that''s it then," and it wasn''t - we''re still 20,000 strong now.  So that''s a bogus argument.And those of you who are saying "if we got relegated, we''d be in administration" - explain how getting relegated would put us in administration?  Bear in mind we would offload our high wage earners in the summer.I don''t want us to go down, but it would not kill us if we did.[/quote]

As another of those pesky fact driven accountants on here I can answer that one. Administration happens when the terms of a credit arrangement is broken and the creditor takes the view that it is the best chance they have of recovering the majority of money owed to them. So relegation on its own does not cause administration but the failure to comply with the terms of the securitisation deal would. A fall in gate receipts would do this although you appear to have a different opinion on the likely fan base in the third tier. The club has been fortunate to date in presiding over a period of economic growth, high disposable incomes and football being in vogue. I''m not so sure that those are conditions expected over the next couple of years.

[/quote]Not only are gate receipts involved in the securitisation deal but other revenues such as catering and tv money. Obviously the catering revenues will drop should match day attendances fall but Championship TV money is set to double to £2m per club next year whilst third tier tv money is expected to be around £400,000 per club. That''s another £1.6m knocked straight off the clubs income in the event of relegation. I''ve a feeling and have expressed it in detail in this forum that all is not well with the securitisation deal and we are struggling to pay it back at the agreed rate. Lose £2m''s worth of gate receipts and £1.6m''s worth of tv money next year and factor in that our securities on this deal have likely devalued significantly in the last 12 months then I can see the creditor becoming more than a little worried about their investment, worried enough to make a move I don''t know but if property values decrease by another 10-15% in 2009 it''s likely that we are not much more than 12 months away from being in negative equity as a club.[/quote]Another decent reply, thanks.  The TV money would be a kick in the teeth, no question.  I wonder what the typical player budget for a League One side is?  I don''t think we would lose £2m in gate receipts though.  Although last season, didn''t the club offer a 25% season ticket discount if we went down to League One?  Presumably this would work out to being around £2m on its own.I don''t mind admitting I may have to rethink my views on this, but it''s good to see logical reasoning on why that might be.[/quote]Although last season, didn''t the club offer a 25% season ticket

discount if we went down to League One?  Presumably this would work out

to being around £2m on its own.

That''s where I took the £2m figure from, even in the best case scenario where attendances stay at the current levels I''m sure there''s an offer of a 25% reduction on season tickets (which I think tbh would have to be rescinded for the good of the club). Average Champs player wage bill is £10m as a ballpark figure, average 3rd tier is approx £5m. Now if we knock our wage bill down from this years £8.5m to a 3rd tier average £5m we are £3.5m better off. Problem is that as Doomy says we''re losing £50k per week thats £2.5m pa so we''d only have a net figure of £1m pa to play with to break even. Then you have to look at the tv money which would be £600k less at this years rates, (£1.6m less at next years), taking that off the clubs income we''d only be £400k better off a league lower. A 25% drop in prices would mean a  further £2m drop in revenue from ticket sales so we''re straight back to where we are now financially budgeting to make a (£1.6m) seven figure loss and thats if attendances stay the same, all other matchday revenues remain stable and our sponsorship deals etc haven''t factored in sliding scales dependant on league status etc. If we are relegated I can see us having to release all the bigger earners at the club to get the wage bill down to ND''s favoured target of £5m but even this might be unsustainable. A Board with ambition might bite the bullet and retain the better players in a promotion push but they''d be taking a big financial hit a league lower and I think we can guess what would happen at our club. I can see that in the event of relegation we''d be offloading half our first team (lucky our usage of loan players has saved us signing too many long term contracts eh?) and fielding a team next season of players worth 3rd tier wages and there would go our advantage in a re-promotion push. Drop to 3rd division (old) and we could be sat there for some time with a 3rd div quality team and still making large losses.So my answer in short to the original question is: No relegation would not help NCFC it might even be teminally destructive for the club as we know it.Our 3rd party liabilities are so high that any financial advantage gained by reducing the player wage bill to 3rd division levels is more than consumed by the revenue losses incurred as a result of relegation and if attendances fall away it could be disastrous since we have an extremely large liability in the securitisation deal  and likely insufficient equity or income to appease the creditor. 

[Mister Chops 7]

So I think you are saying that:> the overall club business would be shrunk (economies of scale, and all that) to League One levelsand> we''d be as poorly off in League One terms as we are now in Championship termsOh dear, what a pickle we find ourselves in.  There must be so many clubs on the brink of disaster then, I presume... any Championship club without a benefactor must be dreading the end of the season.  Sponsorship deals will presumably be pulled right in for the non-Premiership elite, causing further financial contraction.Something has to give, doesn''t it?

[Block E Buh 0]

NO! Relegation would be a disaster!! We would be every other teams cup final, everyone would want to beat us! league 1 football is a scrap, tough and rough league. Leeds have found that. Look at Gillingham, they thought relegation to League 1 would help them rebuild but they ended up in League 2! We don''t have the tough players ready for the battle of League 1 and if we got relegated we would be in real trouble on and off the pitch!

[ragniblov 0]

It definately wouldn''t. we would lose the only players we have that are any good, we could be seeing tom adeyemi making a debut at 16 if we go down.... you could say goodbye to Clingan, Marshall, doherty, russell, etc. [:(]

[grantroederdisaster 0]

It wouldn''t help the club as a whole and we''d be a while getting out of League 1 but it certainly would help get rid of the main instigators of our current plight the board and the idiot manager Roeder they appointed!

[foxile 0]

League one could be a blessing.

We thought it was the end of the world when we got relegated, but it has turned out to be the best thing since the Premiership in 2004. A new manager and a new team really gave us a fresh start.

And the standard isn''t that bad, its not all long ball, quite a few of the teams nearer the top will beat some Championship sides. Us, MK Dons, Peterborough all play good football, i now look forward to games because i know i am going to see a nice passing approach by us, something i didn''t think would be possible in this league.

Obviously, you don''t want your club to get relegated, but if it does happpen, it''s not the end of the world, it can still be enjoyable, financially the club won''t suffer that much, and it will give you a chance to get rid of Roeder.

P.S how is Carl Cort doing? And Bell?

[Blofield Canary 11]

Relegation would give Roeder job security. We can''t afford to sack him now we certainly wouldn''t on Div 1 income.

[WeAreYellows49 0]

[quote user="ricardo"]

[quote user="Mister Chops"]I think you''re all wrong re: ticket sales being 12-13,000.  I think we would still sell 18-19,000 season tickets in League One for the first season.  After that, people may drift away, but when we came down from the Prem everyone said "oh, that''s it then," and it wasn''t - we''re still 20,000 strong now.  So that''s a bogus argument.

And those of you who are saying "if we got relegated, we''d be in administration" - explain how getting relegated would put us in administration?  Bear in mind we would offload our high wage earners in the summer.

I don''t want us to go down, but it would not kill us if we did.

[/quote]

I remember gates of 12-13000 Mr Chops. Once you lose people you don''t get them back very easily.

Believe me  mate I''ve been there and I don''t want to go there again.

[/quote]

Agree with that.  We too remember very poor gates.

[Mr.Carrow 376]

Well we are told that a break-even player budget is £4m in this league with 24,000 gates and £1.5m tv money.

Wonder what it might be in league 1 with 17,000 gates and £400k tv money........[^o)]

I think we may become a professional football club which literally can`t afford a professional football team.

[Smudger 0]

[quote user="Mr.Carrow"]

Well we are told that a break-even player budget is £4m in this league with 24,000 gates and £1.5m tv money.

Wonder what it might be in league 1 with 17,000 gates and £400k tv money........[^o)]

I think we may become a professional football club which literally can`t afford a professional football team.

[/quote]

I thought we had been one of them for the last year or so Mr.Carrow???? [:^)]

[row 0]

I think that, as current circumstances continue to disintergrate, with our team hovering perilusly above the bottom 3, maybe now is the time, or soon may be the time, for the club to enter administration, clearing are outstanding loans that total a quoted 18 million, that is a major contributing factor to such losses as 8 million per year. Maybe if we were to concede defeat at an earlier stage than the end of the season, when we may well find ourselves in the bottom 3 anyway, for example before the 12 game rule comes in that prevents clubs from going into administration with less games than this amount left to play, the rule that came in after leeds went into administration before the season was up in which they were relegated from the championship and were subsequently fined and given a 15 point deduction. More to the point, doing this perhaps unthinkable act could be all the better for the club, at first maybe, the implications of such an act are negative, but in the long run, we would have no debt, a chance to re-build the club in league 1, with a new board. This leads me into another positive that could come from this act. If they were to go into administration, a new person has to take over the club, and with a fair majority of supporters currently not in favour of our pocketless shareholders, it would give the chance , once again, for long time supporter Peter Cullum to come into the club. Im sure that being the shrewd buisnessman that he is, he would bite the clubs hands off to take control of his boyhood club for such a cut down price, which would then give him more money availlible to invest into the playing squad.

A crazy idea maybe, but one that could be the answer to problems, weve been looking for ?

[Smudger 0]

Not crazy at all ROW... if only the majority of our supporters could have such foresight.... [Y]

[Lambo 0]

While i think going into administration now could help, the last bit about Cullum won''t happen as he''s said himself he''s in no position to invest now.

[The Fish Seller 0]

Do you really believe that watching our creditors having a bunfight over our assets is the way forward? You are aware that an appointed Administrator is primarily charged with acting in the interests of all the creditors by trying to rescue the Company as a going concern, failing which his duty is to maximise recovery from the Company for those creditors?Huge sums of money have been lent to the club secured against assets, assets such as Colney, Carrow Road, the LSE land for starters. Do you think our creditors are likely to say ''that''s okay Delia we''ll write it off and you can start all over again with a clean slate'' or are they likely to say ''okay if you haven''t got the £19m you owe us we''ll have Carrow road ground instead, that''s what the loan is secured against after all''?The Turners have already conducted one cost cutting exercise and still we made a loss in excess of £2.5m and even that loss was propped up by accounting methods (eg £1.6m hotel money suddenly appearing).We''re on target for another loss of £2.5m this year and if we are relegated a further £1.6m in tv money plus whatever drop in gate receipts we suffer. Property values have decreased 15% since the club valued itself so even if only half our equity were in property that was still £25.5m representing a nearly £4m devaluation this year (2008) and likely the same next year(2009). The £16m equity valuation was tenuous at best at what point would the Administrator become legally bound to start maximising recovery for the Creditors? He wouldn''t be doing his job properly if he allowed us to continue trading knowing that our equity could be zero within a year that wouldn''t be in the creditors best interests would it? 

[Syteanric 1]

[quote user="Lambo"]While i think going into administration now could help, the last bit about Cullum won''t happen as he''s said himself he''s in no position to invest now.[/quote]

he never said that.. the press said it for him..... he actually said, if you read the article, that he wont be investing at the moment....

Like when Dean Ashton said on the championship he was committed to us "until January" yet the papers seemed to miss out the last 2 words of that statement to make him public enemy number 1....

Selective journalism...... goes on more than we might think....

jas :)