Norwich City should be eyeing a return to the Premier, but can they do it?

NORWICH CITY, one of English football’s genuine yo-yo clubs, enjoyed a 134% rise in income in their last Premier League campaign. On the face of it, that looks like good news, but the season ended in relegation and a pre-tax loss of £ 23.6 million.

The club’s revenues were a record £ 133.9 million versus £ 57.2 million in 2020-21. It was the second time in three years earnings have been risen above £ 100 million. But like Norwich’s playing status, their financials fluctuate, emphasising the gulf between the Championship and Premier League.

However, the club refuses to believe they cannot compete with the big-spending Premier League. Norwich’s record is such that they are currently playing in a different division for the fifth consecutive season. In the past decade, they have won promotion three times and have been relegated four times.

Norwich’s CEO, Zoe Ward, said that while rubbing shoulders with big names with greater resources is a challenge, it is not insurmountable. “We have the fanbase, the infrastructure and staff to compete,” she said. “Relegation is disappointing, but our model allows us to bounce back.” Norwich have a loyal audience and season ticket sales were over 20,000, but the way they were relegated in 2021-22, with just 22 points, suggests it might be a little harder to return at the first attempt. They are currently in the top seven, but recent form has been poor.

Although their wage bill when they are in the Premier League –  £ 118 million in 2021-22, 88% of income – is lower third, it will be among the highest in the Championship. Norwich are paying an uncomfortably high level players wages, the average wage was £ 45,600 per week, the highest in their history. The club is smart enough to have relegation clauses embedded into contracts, which means the cost for 2022-23 will be much lower.

What is also clear is Norwich’s flow of saleable talent seems to have temporarily dried up. In 2021-22, they made very little from player sales, unlike 2020-21 when they made a profit of £ 59.6 million. The sale of Emiliano Buendia to Aston Villa in June 2021, for £ 38 million, was included in the previous accounts.

There were some positives, however. Their commercial revenues totalled £ 21.2 million, a best-ever figure, while they made over £ 100 million (£101.8 million) from broadcasting for the first time. Matchday income totalled £ 10.8 million as normal services were resumed.

But the lack of player trading profits meant the club had to cover its losses through other means, especially as the pandemic hit Norwich quite hard. Their borrowings went up to £ 48 million, almost £ 20 million higher than the previous season. Consequently, the club’s net debt is now £ 44 million.  

Norwich City are the sort of football institution that investors are eyeing at the moment as they seek out opportunities beneath the elite band of clubs. They recently gained a new shareholder in Mark Attanasio, an American businessman who owns the Milwaukee Brewers baseball team. Attanasio, who comes from the Bronx in New York, has acquired 16% of the club from long-time shareholder Michael Foulger. At some point, the club’s majority shareholders, Delia Smith and her husband, Michael Wynn-Jones may decide it is time to dispose of their stake.

The Canaries, as a forward-looking Championship club, at the very least, would be an attractive proposition, but anything lower than that would make them less appealing. Their track record in recent years indicates it won’t be long before they are in contention for a place back in the Premier League, but are they really equipped to do it this time?

Millwall suffer covid hit, but remain realistic

MILLWALL continued to be unprofitable in 2020-21, recording their biggest ever loss as the affects of the pandemic came to the fore. The Lions lost £ 13.8 million before tax, an increase on 2019-20’s £ 10.9 million deficit. However, because Millwall are generally a well-run club, the losses could have been worse in the circumstances.

Over the past decade, Millwall have accumulated pre-tax losses of £ 78 million, but the past two seasons have accounted for almost £ 25 million, largely due to covid-19. The club continues to make little from transfers and in 2020-21 the profit on player sales was just £ 0.7 million, arguably the lowest in the Championship. In the period between 2011-12 and 2020-21, Millwall spent £ 7.8 million and received £ 9.9 million, according to Transfermarkt. 

The club has tried to bring through young players into the first team, current first team players Danny McNamara and Billy Mitchell have come through the ranks at Millwall. They operate with a relatively small squad compared to most of their rivals and the overall market value of their players is estimated at £ 31.6 million. The squad has cost, in actual terms, less than £ 4 million.

While the club’s income went down by 24.4% to £ 12.5 million – the lowest since they returned to the Championship – the wage bill rose by just under £ 2 million to £ 20.8 million, a jump of 10%. This suggests Millwall’s wage bill is still too high for the amount of income they can generate. Thankfully, the club’s shortfall is covered by American owner John Berylson. Even though the loss for 2020-21 was bad by Millwall’s standards, Berylson commented that a number of clubs are likely to lose £ 20-30 million during the pandemic.

Even allowing for the difficulties of the past two seasons, Millwall’s wage-to-income ratio over the decade has been 110%, but in 2020-21, because of the near total absence of matchday revenues, the ratio soared to 167%. Income over 10 years has increased by 9% compared to a doubling of wages. Millwall were assisted by the league’s support loan, borrowing £ 8.3 million over a three-year period. These loans are in the name of the EFL, but secured against future solidarity payments from the Premier League.  

It’s easy to see where Millwall were hit hardest, their matchday income was just £ 1.4 million versus the £ 4.4 generated in 2019-20. Broadcasting monies were also down by £ 1 million to £ 8.4 million, while commercial revenues totalled £ 2.7 million, on par with the previous year, which was no mean feat in a challenging environment. Fortunately, the club is currently enjoying its best-ever sponsorship deal with Swedish company Huski Chocolate.

Millwall remain one of the most passionate clubs in English football and in normal times, they can call on close to 14,000 people at their home games. At present, retaining their Championship status has to be the priority and their performance this season suggests they should be secure for the 2022-23 season. But in the current climate, Millwall will need to maintain their realistic approach to financial management in order to get through the immediate challenges created by the pandemic.