Norwich City: League One club, Premier League debts

by William Abbs

Thursday, January 14th, 2010
 

Last week it emerged that Norwich City’s debts had risen to £23m, a figure that would overwhelm most other League One clubs. However, while the Canaries’ books are certainly a cause for concern, the club is able to call upon a highly significant asset: its Carrow Road stadium. Opened in 1935, the ground has been demolished and rebuilt stand-by-stand over the last thirty years and now boasts a capacity of 26,034. Despite the club being in the third tier of English football for the first time since 1960, around 25,000 seats are still filled by loyal – and, crucially, paying – fans for every Norwich home game.

How ironic, then, that such an important source of Norwich’s income should also be the reason behind its formidable debts. For in 2002, while the club was chasing promotion back to the Premier League, a £15m loan was taken out to facilitate the redevelopment of the decrepit South Stand. Norwich duly won the Championship in 2004 but their return to the Premier League, after a nine-year absence, lasted just one season. Back in the Football League, and cut off like an errant child from the Premier League’s television and marketing allowance, Norwich have so far been able to pay back just £3.5m of that loan.

Following last week’s financial statement, the Norwich City board is considering a number of ways in which to boost the club’s income and reduce its debts. According to the Canaries’ chairman, Alan Bowkett, selling Carrow Road is “an option.” Although the club has not officially placed the site on the market, Norfolk County Council has already ruled itself out as a possible purchaser. Axa, the insurance company that loaned Norwich the £15m, represents one other party that might feasibly be interested at this stage. To most Norwich fans, though, selling the club’s home would have to be a last resort.

Faced with debts of £165m in 2001, Real Madrid chose to sell their training ground to the local council and they are currently – according to Deloitte – the richest club in the world. Conversely, Brighton & Hove Albion were forced to vacate their Goldstone Ground home after it was sold in 1997 – without an alternative venue for games having been lined up. Given the respective sizes of the two clubs, it might seem inappropriate to compare events at the Bernabeu with those on the south coast. However, Norwich’s chairman did something very similar in Tuesday’s local Evening News. Addressing the possibility of a buyout of the club by fans as a fund-raising alternative to selling Carrow Road, Bowkett cited both Barcelona and Ebbsfleet United as positive examples of supporter-owned clubs.

Alan Bowkett’s words point to a confusion at the heart of Norwich City’s current identity. A top-flight team for all but three seasons between 1972 and 1995, in 2010 the club sits as many rungs above Ebbsfleet in the football pyramid as it does rungs below the Premier League. In 1993 the club reached the UEFA Cup 3rd Round; this season it debuted in the Johnstone’s Paint Trophy. Although promotion back to the Championship for 2010/2011 is a distinct possibility, selling Carrow Road would represent an alarming reduction in the club’s long-term ambitions and compromise any advances made on the pitch in the short-term.

Despite the enormous financial gulf between the two clubs, both Ebbsfleet United and Real Madrid have benefitted from benevolent local authorities. Ebbsfleet will pay just £1 per year to Gravesham Borough Council for renting their Stonebridge Road stadium, following its sale to the council for £400,000, and such was the generous sum that Madrid received from the sale of their former training ground to the local government that – after clearing their debts – the Spanish side could afford to build a new base. Norwich do not have the option to sell to Norfolk County Council. The worry is that, with Carrow Road already surrounded by business developments including hotels and supermarkets, the land that the ground occupies could prove attractive to any number of commercial investors. Brighton & Hove Albion’s then-chairman, Bill Archer, sold the Goldstone Ground to property developers. Brighton almost dropped out of the Football League in 1997 and were evicted the same year. Thirteen years later, they are still waiting to move into their new home. With the Seagulls currently stuck in League One alongside Norwich, they are the most salient example for the Canaries to look towards – and to be wary of.

Be Sociable, Share!

Previous post:

Next post: