The financial problems being encountered by Norwich City FC have their own specific local causes, but they are also typical of the challenges being faced by many lower league clubs. Little money from the Premiership now trickles down even to the Championship because few players from that level are signed by Premiership clubs who are either interested in foreign players or those British players who have already proved themselves at the top level. Bosses at Carrow Road are insisting that the club is ‘not in trouble at all’ and will not go into administration.
The financial problems being encountered by Norwich City FC have their own specific local causes, but they are also typical of the challenges being faced by many lower league clubs. Little money from the Premiership now trickles down even to the Championship because few players from that level are signed by Premiership clubs who are either interested in foreign players or those British players who have already proved themselves at the top level. Bosses at Carrow Road are insisting that the club is ‘not in trouble at all’ and will not go into administration. Nevertheless, the next set of accounts due within the next month will reveal that the Canaries lost at least £1m last season and will lose millions of pounds more than this year. City chief executive Neill Doncaster admitted that the accounts would show a ‘substantial seven figure loss’ for the 2007/8 season and warned the losses for this season would run into ‘millions of pounds’.
The reason for the big loss has been put down to players’ wages, with the current player budget of £8.5m the most the Canaries have ever spent on wages while in the Championship, even though their parachute payments ran out last year. Mr Doncaster said the only way losses were sustainable were through the sale of assets, including players, or through financial help from directors. However, he insisted: ‘We are in a far better position than a lot of other clubs because our season tickets sell out and activities off the pitch.’ The reason the club lost money was simply because ‘in common with the vast majority of clubs, we pay our players more than we can afford. Assuming that we sell out season tickets but that we do not enjoy a lucrative cup run, a break-even player budget is around £5m. Our player budget for this season was originally set at £10m, which would therefore have generated cash losses of around £5m this season.’ He said that as part of a package of measures introduced in the past few weeks, the player budget has been reduced to £8.5m, but even so the losses this season will run into millions of pounds.
The departure of millionaire directors Andrew and Sharon Turner meant that the promise of a further £2m loan they had pledged disappeared with them. Majority shareholders Delia Smith and her husband Michael Wynn Jones quickly agreed to plough another £2m loan into the club to try to plug the gap, but redundancies are likely at Carrow Road. The ongoing saga about whether or not the club is in talks with insurance billionaire Peter Cullum rumbles on.