The perceptions and the reality
During a live webchat that I carried out last week, I was asked: “Why we haven't had much money to be used in the transfer window.” I replied: “There is a huge gap between perception and reality.
During a live webchat that I carried out last week, I was asked: “Why we haven't had much money to be used in the transfer window.” I replied: “There is a huge gap between perception and reality. Many supporters believe that the £6million parachute payment that we received this year is available to be spent on players. The reality is that most of it is already spent on players.”
And that goes to the heart of where we are as a club at present. There is a perception that the club should be awash with cash; that with the sale of Dean Ashton and the parachute payment we should be cash-rich and able to compete on equal terms with the likes of Birmingham City and West Brom.
Unfortunately, the reality is, as is so often the case, far removed from the perception.
I had intended to explain the club's financial position after the transfer window had closed on August 31. But faced with a front-page article in the Evening News a fortnight ago (“Show Us The Money” - July 26), I felt it was important to set the record straight.
We're all Norwich City fans and we all want as much money as possible to be available to be spent on the playing side - something we remain totally committed to at the club.
However, while it may be tempting to maximise perceived income and minimise perceived expenditure in order to create as large a perceived 'transfer kitty' as possible, the club does not have the luxury of operating in this way when it comes to responsible management of our finances.
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The club suffers at times from a desire to be as transparent as possible for the benefit of supporters, whilst at the same time wanting to do our business quietly and privately, where practical. And this can result in key information about the Club's finances sometimes not being in the public domain - a factor that I accept can present challenges for journalists attempting to analyse our financial status at any given point.
However, the Evening News article suggested that the club should have much more cash available to spend on players than is actually the case.
And while I am sure that the journalist did not intend to mislead readers, he based his views on a number of assumptions that were way wide of the mark.
The following list is an attempt to show how perceptions can differ wildly from reality:
Perception: That Dean cost us £3million.
Reality: In addition to Dean's very significant wages (which were increased substantially last summer when his contract was extended) we actually paid £4.5m in total for Dean - made up of the basic transfer fee, the sell-on to Crewe, the League transfer levy, the sell-on due to Dean and, inevitably, the agents fee.
Perception: That Youssef cost us £500,000
Reality: As well as the base fee of £500,000, the club has paid out a further £450,000 in agents' fees, the League levy and appearance-related payments, taking the total amount paid to £950,000.
The 'Premiership millions'
Perception: That on being promoted to the Premier League, the club received millions of pounds of cash that were not spent
Reality: After all the incomings and outgoings of the Premiership, the club's cash balances were only £580,000 better off after our Premier League season than before. The fact is that we were as ambitious as we possibly could have been, without putting the club's existence in jeopardy. And if we had paid all of Dean Ashton's initial transfer fee during that season (rather than half up front and half last January), our cash would actually have gone down by just under £1million over the season!
Sale of the residential land behind the Norwich and Peterborough Stand
Perception: The sale netted us £6million
Reality: We had to spend £2million in infrastructure costs to sell the land, generating a surplus of only £4million.
THE Jarrold Stand
Perception: The stand cost £6million to build.
Reality: After the fit-out of the stand, the total cost was £9million.
Perception: With the stadium's recently expanded capacity and sell-out crowds, we should be millions of pounds better off than we were when we just had the old South Stand
Reality: Prior to our £15million securitisation, the club paid out around £1million per year in debt repayments and interest. After the securitisation (which paid for the Jarrold Stand, as well as paying off short-term debt and covering our losses for the year), we now pay around double that: around £1million in interest and a further £1million in debt repayments. So while we have more money from gate receipts thanks to the vital and hugely appreciated loyalty of our supporters, we have greater liabilities to spend that money on.
THE Norwich Union Community Stand
Perception: The stand cost £2.5million to build.
Reality: The stand cost £3.2million to build.
The above are just a few examples of the way in which headline figures can be bandied about and give a wholly misleading impression of the reality of the club's true financial position. The truth is that the board continues to do all they can to support the manager by making available as much money as possible to support our ambitions on the pitch.
Our ambition, to become an established member of the Premier League, remains undimmed. This summer the board have made available the maximum amount of money possible to the manager without risking our long-term survival. We realise that this, the final year of our parachute payment, presents our best chance of promotion. And that is why the board have sanctioned a player wage bill massively higher than in our promotion season of 2003/2004.
On The Ball, City!