The authoritative Swiss Ramble reviews Norwich’s financial results for 2020/21, when they increased pre-tax profit from £2.1m to £21.5m, despite the impact of relegation to the Championship and COVID reducing revenue by £62m to £57m, thanks to £60m profit from player sakes.
it was a notable achievement for to post a £21.5m pre-tax
profit. In fact, this was better than any other club in the Championship in
2019/20, when just three clubs were profitable (all of which were only around
£3m). It used to be the case that they were profitable in the Premier League, but
lost money following relegation, but they were also profitable twice in last 4
years they were in the Championship.
Main driver of the revenue decrease was broadcasting, down
£41m (46%) from £90m to £49m, as TV deal much more lucrative in Premier League,
while gate receipts dropped from £7.6m to just £0.1m as games played behind
closed doors and commercial fell £13m (62%) from £21m to £8m. Despite the significant decrease, the £57m
revenue was still one of the highest in the Championship, around the same level
as three other relegated clubs in 2019/20,
After surging to £21m in the Premier League, commercial
revenue dropped £13m (62%) to £8m after relegation, with big falls in
sponsorship and advertising from £10.3m to £2.7m and catering from £4.6m to
£0.4m, as COVID took a toll. This is still
pretty good for the Championship.
The bottom line
was massively boosted by £60m profit from player sales, up from only £2m prior
season, including the club record sale of Emi Buendia to Aston Villa. By far the highest in Championship in the last
two years.
The business
model is very dependent on player sales, where they have made an impressive
£158m profit in the last 7 years, including £60m in 2021 and £48m in 2018,
mainly due to the big money sales of James Maddison to Leicester City and Josh
Murphy to Cardiff City. The club have
the two highest annual profits from player sales in Championship history. [Clubs across the board are becoming more
reliant on player sales to stay in the black].
Championship revenue ranking is hugely influenced by
parachute payments. Details for 2020/21 have not yet been published, but relegated
clubs received £42m in the first year in 2019/20. If Norwich are again
immediately relegated this season, will only get two years of parachutes.
The wage bill
fell £22m (25%) from £89m to £67m following relegation, though this was still
the club’s third highest ever. Wages would have been much lower without a
good-sized bonus payment for the Championship-winning promotion exploits. Despite the decrease, the £67m wage bill was still one of the highest in
the Championship, though the three largest were all inflated by promotion
payments.
Following the big decrease in revenue due to relegation and
COVID, the wages to turnover ratio increased from 75% to 117%, though not as
high as 2019 (when they had no parachute payments). The vast majority of clubs
in the Championship have (unsustainable) ratios over 100%.
gross debt more than doubled from £14m to £29m, mainly £25m
bank loan secured on TV money, repayable by September 2022, plus £2.3m Canary
Bond and £250k from directors to help fund the new training ground. Also
includes £1.4m preference shares classified as debt. Even after the increase, the club’s £29m
debt was still one of the smallest in the Championship, miles below the likes
of Stoke City £187m, Blackburn Rovers £156m, Birmingham City £116m and
Middlesbrough £116m.
The Canaries paid £978k interest in 2020/21, down from prior
year £2.5m, though their bank loan charges a chunky 5%. Most debt in the
Championship is provided interest-free by club owners, so only 5 clubs pay more
than £1m annual interest.
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