League 1 has four clubs who have descended recently from Premiership glory (Oldham were there much longer ago). Each of them has faced financial problems. After a regime of overspending, Leeds was eventually rescued but paid a penalty on the pitch. Southampton were rescued from administration at the last minute. Charlton have put together enough money to get through the season, but face a real threat of insolvency if they don’t get promoted or find a new investor.
League 1 has four clubs who have descended recently from Premiership glory (Oldham were there much longer ago). Each of them has faced financial problems. After a regime of overspending, Leeds was eventually rescued but paid a penalty on the pitch. Southampton were rescued from administration at the last minute. Charlton have put together enough money to get through the season, but face a real threat of insolvency if they don’t get promoted or find a new investor. Now cash strapped Norwich has come up with a plan which has divided Norwich fans: sell and lease back their Carrow Road ground. It is only one option being considered as the club deals with a £23m debt mountain. Axa would be the most likely buyer: the club owes the insurance firm £11m. The annual rental might be fixed at around £1m which is less than City pays Axa in repaymemts on the debt. Carrow Road is valued in the club’s accounts at £34.5m which seems on the high side to me given the location and the current state of the property market. It might also be possible to do a deal for the Colney training complex, as Charlton proposed to do at one time for their Sparrows Lane training ground. Built-up parts of Colney are included in growth plans for ‘Greater Norwich’, but the training complex is not near the urban area.
Mike Reynolds of the Norwich City Supporters’ Trust told the Eastern Daily Press ‘If it’s a question of no Norwich City Football Club or having football and not owning Carrow Road, then it could be looked at. Our view is that it would be very much selling off the family silver – once it’s gone, it is gone and you can’t go back and use it as an asset. We as a trust would like to see them go through other options. Things like the Barcelona model which puts the ownership of football cluns into the hands of fans and local businesses.’ Terry Pyle, chairman of Norwich City Shareholders’ Association said drastic and unpopular decisions would have to be taken. He said, ‘The board has got to explore every avenue, none of which are going to be enjoyed by any of the supporters. Whether it is selling the naming rights of Carrow Road, selling the ground or selling players. Other options are to raise income through increasing season ticket prices, or reducing the wage bill of the club through staff and players. We have to trim the expenditure because it’s very difficult in the present financial climate to increase commercial activities.’ Some comments have argued that part of the strength of the fan base arises from the location of the stadium near the city and the station, but it is not actually proposed to move the stadium which would incur the cost of a new build.
Norwich made a loss of £5m in 2008/9 and saw a reduction in turnover from £19.2m to £18.2m. What chairman Alan Bowkett described as ‘tough’ negotiations have taken place with two major lenders, Axa and Lloyds Banking Group. These were successful in relation to this season in the sense that they provided a football budget that allows Norwich to maintain their challenge for automatic promotion to the Championship (they are currently second in League 1). However, the challenge is to secure continued support for next season, even if television, gate money and commercial income improved as a result of promotion to the Championship. Mr Bowkett told the Lowestoft Journal ‘The figures make grim reading but we’ve taken the club by the scruff of the neck. Thankfully our lenders have been very supportive.’ The problem for clubs like Charlton and Norwich is that they have high and unavoidable infrastructure costs on their grounds and training complexes such as business rates, insurance and maintenance. There are clubs in League 1 that much have smaller gates, but they also have more compact grounds and limited training facilities which is fine given that the the extent of their aspirations is in effect to stay in League 1.