ANALYSIS: How the annual accounts add up to a change of mood for Norwich City

As Norwich City's annual accounts are published, STEVE DOWNES delves deeper to see the stories that the figures tell.

An annual loss of �3.94m. An overall debt of �16.8m.

They don't sound like the sort of figures to put smiles on the faces of a football club chief executive and chairman.

But if ever there was a case of 'lies, damned lies and statistics', this is it. For, arguably for the first time in decades, Norwich City FC's financial future looks bright.

The loss is almost entirely down to the club having to pay out more than �5m in bonuses to players and staff as a result of this year's promotion to the Premier League - plus �1.3m in 'incremental' payments to clubs from which the Canaries bought players, and which had clauses that demanded more money if promotion followed.

Club chairman Alan Bowkett said income was set to increase by 'more than �40m' this year, and said he was 'delighted' to have the 'problem' of the bonus payments.

Most Read

The debt is down significantly, from �20.9m in 2009/10. And the board aims to 'accelerate' the reduction of the debt in the coming years.

While previous announcements of the annual accounts have been downbeat, this one was relaxed and almost jolly.

Mr Bowkett and chief executive David McNally were clearly delighted with the remarkable turnaround achieved since the dark days of relegation to League One in May 2009, when there was a danger that major creditors Axa and Lloyds might call in their debts and push City into administration.

The club came close to the abyss then. Now it is close to something that could not have been forecast at the time: becoming a self-sufficient operation.

Mr Bowkett said: 'This puts into context the progress we have made since we were in League One two years ago. Revenue is up 36pc on when we were in the Championship.

'When we were relegated to League One and the balance sheet was in difficulties we rescheduled our debts with our leading creditors.

'Looking forward, we will be making a profit this year.

'The business is now generating cash. We will be paying down debt further and becoming a club that's self-generating. Our ability to service our debt is now on a normal basis.'

There is still an air of caution that indicates how difficult things have been to get to this stage.

Mr Bowkett said: 'Our aim is to establish ourselves in the Premier League and be self-funding. We are quite modest in our ambitions. Once we are in the Premier League for three years we are established and in every transfer window we focus on improving the squad.'

But, given that graphs of the club's projected progress have been torn up almost monthly since manager Paul Lambert arrived at Carrow Road in August 2009, that caution may yet have to be revised.

The aim of becoming an 'established Premier League club' is the key now, according to both Mr Bowkett and Mr McNally.

The pair said the club hoped to begin work on turning Carrow Road into a 35,000-seat stadium 'if we stay in the Premier League for three years'.

Mr Bowkett said the main focus of that work would be redeveloping the City Stand from 4,400 to 10,000 seats.

Mr McNally said the 35,000 figure would 'produce a self-sustainable Premier League football club', but the current capacity of 27,000 would not.

He added: 'We're absolutely convinced that there's a market for this, but we need some certainty about Premier League football.

'There were plans put together some years ago that we will dust down. But we will look at it afresh. We will thoroughly complete our research, looking at population change forecasts over 10 years.'

It all adds up to an enticing prospect for Canaries fans, who have enjoyed two years of footballing feast after 15 years of almost uninterrupted famine.

Deep in the accounts came the news that the final link with former directors Andrew and Sharon Turner had been cut, with the club able to pay off a �2.5m loan made by the couple.

But looking forward was the theme of the day.

The prospect of the good times continuing was improved by the club's confirmation that it 'remains a buying club', and could make its next foray into the transfer market in January.

Mr McNally promised that manager Paul Lambert would have money if he wanted it, to spend in the January transfer window on 'one, two or three players'.

Meanwhile, the change in outlook at Carrow Road was neatly summed up when Mr Bowkett gave an insight into how the club's at-times tense relationship with its major creditors - Axa and Lloyds - had improved in line with City's fortunes.

He said: 'The relationship has changed. They smile at us a lot more. And we've taken them out to lunch because we can afford it.

'During our very difficult times they were very supportive of us. The easiest thing for them to do would have been to call in the administrators.

'Now, I think they are using us as an example of how they can support a football club. I would like to think they are very happy with us.'