How well off are Norwich compared to other clubs in the wake of ITV Digital?
We certainly weren’t the worst hit, but we weren’t the lightest hit either. There are a number of clubs in the First Division whose aspirations year-to-year are not necessarily promotion and who had not pushed the boat out quite so far in terms of player salaries. Our wage bill this season of £5.5 million was budgeted for on the basis that we would receive £2.5 million income from TV. Even receiving it we expected to make a loss of £2.5 million over the year, so when the ITV Digital situation arose, you’re then looking at a budgeted loss of £5 million – which is why we had to go down the route of the share offer very quickly over the summer.
What are the longer term priorities for ensuring financial stability?
Since the new regime at the club took over in 1996, we’ve been trying to rebuild the club’s relationship with its fans – to bring them in and make them feel part of the club. The means to do that are through being part of the community, through realistic pricing – we currently have the largest family area in UK football as a proportion of home areas, 23 per cent, and offer season tickets for under-12s for £29 and for under-16s at £39. We believe we’re firmly investing in the future of the club. Studies show that 83 per cent of football supporters stay with the team that they first support, so we very much believe in getting them early. Being in an isolated geographical area is a bit of a double-edged sword. On the one hand, if people want to see live football, there aren’t too many options hereabouts. At the same time, we do need to work very hard to make sure we maximise our appeal, because there simply aren’t as many chimney pots around.
A lot of the clubs in trouble are those that have been in the Premiership. What would be the financial approach if Norwich were to go up?
The phrase we use is “ambitious yet prudent”. Last year we managed to make a small profit, but within that profit you’ve got £2.5 million of ITV Digital income, which you haven’t got this year, we had £750,000 from an FA Cup match and replay against Chelsea, which we haven’t necessarily got this year, and we got £1.3 million from the play-off final against Birmingham – so you can take all those things straight off the bottom line for this year. You can certainly look at other clubs and the way they’ve gone about things. I think actually it’s something you’ve got to think about as much for year two in the Premier League as year one. A number of clubs have come unstuck by budgeting on the basis that they will be staying in the Premier League after year two, and then coming down at that stage. A lot of clubs talk prudence, but then get tempted by doing things with players in the Premiership that in retrospect aren’t really that sensible. If and when we do go up, we need to make sure that we are thinking clearly and planning now for that event. We have regular monthly board awaydays when we go through those sort of long-term issues. Nigel Worthington is present at all those meetings, he has a very good dialogue with the board and he knows exactly what we can afford, and works very well with the board to make sure we can live within our means.
How has the balance swung between club and players when it comes to negotiating contracts?
Again, it’s a two-way thing. On the one hand, player wages are coming down in this division, and that means that when you’re renewing contracts you’re looking to offer less money, not more – which is in total contrast to many, many years of player contract negotiations. At the same time, when you’ve got players over the age of 24 coming out of contract who you might perceive as an asset that you might be able to cash in at a later stage, you’ve got to counter your desire to reduce the wage bill at the same time as wanting them to re-sign for you. That’s the difficulty that clubs are facing in this division.
Norwich has often been perceived as a selling club in the past. Have the new realities changed the club’s attitude towards its players?
We made £3 million from the sale of Darren Eadie in 1999, and then £5 million from the sale of Craig Bellamy a year later. On the basis that we run at a £2 to 3 million a year loss, that’s three years’ losses effectively covered by those two players. But since that time we haven’t had any player sales of note, and that’s the reality that the First Division clubs are now having to come to terms with. Players shouldn’t really be seen as assets in the way that they used to be – you have to look at their cost as a liability. You need to think of income from transfers as a windfall and try to budget on a break-even basis. But when you have £2.5 million wiped from your bottom line by the collapse of ITV Digital, that’s another matter.
Do you think it is still possible for a club of Norwich’s size to establish itself in the Premiership and seriously challenge near the top?
We’ve got a very strong academy, with players in the England Under-16, Under-17 and Under-18 teams, so we have got quality coming through after many years when that wasn’t happening because of the under-funding of the academy. So we’ve got those players coming through and challenging for a place in the first team, we’ve got a unified squad, we’ve got a young, dynamic manager who’s very ambitious and we’ve got a great feeling of togetherness around Carrow Road. So I think we’re relatively well placed as far as the First Division goes. Where we do struggle is to compete with those clubs with wealthy benefactors who put millions of pounds of their own money into the club. The difficulty is that the gap between the Premier League and the First Division has, I think, doubled year by year since Norwich fell out of the Premier League eight years ago. And it’s a lot more difficult now for a club coming up from the First Division to make an impact. Certainly Ipswich surprised many when they finished fifth the season before last, but the next season they struggled.
Where do Norwich see themselves among the First Division clubs in political wrangling over TV money and breakaway threats?
Now, more than any time, due to the collapse of ITV Digital, the Football League needs to be unified and fighting for the rights of its member clubs. And it’s disappointing to see that some clubs aren’t as unified behind the Football League as they might be. And it’s essential, when the new chief executive of the League is appointed, that the clubs give him or her every support that they can. I think if you ask the senior management staff at the League, they would say it’s been very difficult making decisions by committee, rather than having a leader. And it’s very important that we appoint the right person who’s going to give the League strong and focused leadership as soon as possible.
Do you believe the Football League is likely to get anywhere with its demands for a more even distribution of cash from the Premiership?
Very much so. We believe that the “family of football” concept is not simply an outdated ideal. There are 92 professional clubs that need to be looked after by the authorities and it seems absolutely unbelievable to me that this season any one middle-ranking Premiership club can earn as much money from TV as all 72 Football League clubs put together. That sort of polarity is not healthy for the long-term future. It’s in the interests of all clubs for the playing field to be slightly levelled. The speed with which the gap has developed is very damaging for the good of the game. And you’ve certainly got 12 to 14 of the Premiership clubs who each year as they go into the season will think it’s possible that they could go down. It’s very difficult to plan for going down because of the huge cut in income you have to deal with, but it’s in the interests of the vast majority of Premier League clubs that that gap is not as catastrophic as it has been recently.
Are there any clubs you would treat as a model of what to do in the event of promotion?
I think you can certainly look at Charlton Athletic in many ways as being a model of good practice – they’re a community-based club and have been very sensible about how they’ve developed for the long-term future.
How much does it help having a director with a public profile as high as Delia Smith?
She focuses very much on the catering side of things at Carrow Road, and that brought in a net contribution to the club last year of over £600,000. So it’s a very helpful influence, as well as her own private money that she and her husband have invested in the club. It’s very clear to everyone in the local community that Delia and Michael have the club’s best interests at heart, and I think people know that without their money over the past years we would have been in a lot of difficulty.
From WSC 191 January 2003. What was happening this month