Norwich City are in better financial shape than most Championship clubs, but only really succeed financially when they are in the Premier League. This is the key lesson that emerges from the club's 2016/17 accounts. As the author of the Swiss Ramble blog has put it, 'At its simplest Norwich City are a profitable club - when they are in the Premier League. Outside the top flight, they lose money.'
After making a £13m profit before tax in the Premiership, they returned a £3.1m loss in the Championship. However, in a division in which clubs are notorious for raking up big losses as they seek to get promoted, this was one of the smallest in the division.
Revenue dropped by 23 per cent to £75.3m, mainly due to lower television money (down by £19.7m) but gate receipts (£2.3m) and commercial revenue (£0.5m) were also down. Canaries fans are known as a loyal lot, and the fall in gate receipts was largely due to lower average attendances resulting from fewer away fans. Revenue was £23.2m higher than the last time in the Championship in 2014/15 due to parachute payments increasing from £25m to £40.9m. The overall revenue figure will still be one of the highest in the Championship when all accounts have been published
Norwich have the second highest wage bill ever seen in the Championship, despite a fall of £12m to £55.1m even when £4.4m of severance payments are taken into account. (Their position may change once we have the accounts for Aston Villa and Newcastle United). The wages to turnover figure has increased from 69 per cent to 73 per cent, not dangerously high when you consider that fifteen clubs in the division are over 100 per cent. When one takes account of just player wage costs, it is 50 per cent. This implies quite a high spend on other wages, although severance payments may have boosted the figure.
There has been an increased reliance on player sales over the last three seasons, generating an average annual income of £15.6m. Alex Pritchard has already gone in this transfer window and others may follow.
Commercial income is better than for all clubs in the division than Leeds United in 2016/17. £4.3m of the £15.5m is generated by catering, not so surprising when one considers the skills of owner Delia Smith.
All debt has been removed apart from a working capital facility and preference shares. Gross debt amounts to £4m in a division where the figure for five clubs is over £100m.
The club states in its annual report (which can be viewed online at Companies House) that 'The club's future strategy remains one of investing all available cash in the playing squad and hence maximising the chances of returning to the Premier League at the earliest opportunity. This in turn will allow the consideration of longer term investment projects centred on both the club's training facilities at Colney and at Carrow Road itself.'
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