Canaries lose £2.3m - and worse to come

NORWICH City's desperate need for a big money investor is laid bare today as the club announced it made a £2.3m loss last season - and predicted worse to come this year.

NORWICH City's desperate need for a big money investor is laid bare today as the club announced it made a £2.3m loss last season - and predicted worse to come this year.

Despite assurances that the Canaries remained a “robust” business, club chiefs admitted the absence from the Premier League top table, spiralling player wages and the credit crunch pointed to tough times ahead.

Chief executive Neil Doncaster said that if a major investor did not come forward, the most effective way to make ends meet was to cut player wages from the current £8.5m a year to a more affordable £5m.

Such a move would have serious implications on the pitch, leaving Glenn Roeder struggling to offer salaries to attract top-class players to Carrow Road.

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Mr Doncaster also confirmed that Roeder had spent his entire player budget for this season - raising fears that he may not be able to bolster the squad in the January transfer window.

And he told how the directors were the latest victims of cost-cutting at the club. Having each been entitled to four free tickets in the directors' box at home matches, from this season they can only have two.

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The bleak picture was painted as the club unveiled one of the most chastening sets of accounts in its history. The report for the 2007/8 season revealed:

- Turnover fell from £24m to £19m as City endured their first season without the £7m Premier League parachute payments

- Overall debt rose from £17.7m to £18.8m

- Losses after tax hit £2.3m, following a £90,000 profit in 2006/7.

- Profits from buying and selling players - including the exit of Robert Earnshaw and Dickson Etuhu - rose from £2.5m to £3.5m.

Chairman Roger Munby said: “The club's losses for season 2007/8 are likely to be exceeded in 2008/9 and, despite the much-needed financial help that we continue to receive from Delia Smith, Michael Wynn Jones and the Foulger family, there is now a need for other investors to step forward and help to underpin the ambitions of Glenn Roeder, your board and the City supporters everywhere.”

Mr Doncaster confirmed that there was ongoing contact with “a number of potential investors”, believed to include Norfolk-born billionaire Peter Cullum, but would not reveal if any progress was being made towards a deal.

The accounts show that expected losses of £5-7m were reduced by factors including: player sale profits; a small dip in expenditure; a reduction of player and staff wages from £14.4m to £13.6m; income from last year's George Michael concert and the inclusion in the accounts of City's £1.6m (30pc) share in the Holiday Inn at Carrow Road.

Mr Munby said: “Norwich City FC remains a robust, proud, community club, entirely at odds with some of the more alarming trends prevalent elsewhere in the game.

“Despite the many challenges presented to us by the current economic climate and the bizarre economics of football, your board will not swerve from its commitment to playing a full part in the community life of the great county that we are proud to serve.”

The club continues to be supported by joint majority shareholders Delia Smith and Michael Wynn Jones, who have put in another £3m in loans after directors Andrew and Sharon Turner suddenly left the board. It takes their investment over 12 years to £12m.

The Turners handed over an interest-free £2m loan when they became directors, but the accounts showed they may not be able to recoup their cash until May 2017 at the earliest.

The money is repayable either on that date, when City get promoted to the Premier League or when Delia and Michael's shareholding drops below 50pc.

Mr Doncaster said: “The situation at Carrow Road remains stable, controllable and is not one that should concern supporters.”

He said the number of players on short-term contracts or loan deals meant the club could “easily” cut the player wage bill.

But he added: “The player budget for Glenn Roeder has been spent for the season. In the event that we are in a situation where investment in January could make sense if we were doing well, we will do everything we can to support the manager.”

He added that the economic downturn would “hit Football League clubs a great deal harder” than Premier League clubs, but was hopeful that recent player wage inflation had peaked.

When asked what City could do if a major investor failed to materialise, Mr Doncaster said: “Reduce the player wage bill, which is only currently affordable through the financial support of the directors.”

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