Why we had to let Lambert go
It`s been a traumatic few weeks being a Norwich fan. Who would have thought that the close season could be more stressful than the football part?
First it was Lambert to Villa, then Lambert to Liverpool, then Holt was leaving, then the Celtic love-in and now Armageddon finally hit last night with the news Lambert had quit.
So, what`s it all about? What is the straw that`s broken the camels back? According to the official statement released today, "Discussions with Paul throughout the last few days have been professional and amicable."
Amicable yet unsuccessful by the looks of it... Vital Norwich understands that the specific disagreements are around the playing budget for next year, and the summer transfer kitty.
In the red corner, Paul Lambert wanted to build on season one in the Premier League and push on, probably for a top 10 finish. In the blue corner, Alan Bowkett and David McNally were desperately trying to balance the books and ensure we never fall into the ever so popular trap of insolvency.
You see, all this success has given us a rather large bill to pay. We have to pay the (external) debt back. That`s the loans to AXA and Bank of Scotland. That`s the loans that we couldn`t afford to pay back in 2009, that we restructured. There`s a line in the latest accounts which confirms that if we were in the Premier League at the end on the 2012-13 season, we would have to pay the loans back. Every penny. Make no mistake, we were in no position to negotiate a better deal back then, we were inches from administration.
This is what Alan Bowkett is talking about when he says we are paying our debt off and becoming 'externally debt free` by the end of next season. He makes it sound like a choice - prudence even. However, it`s not a choice, it`s part of the rules around the debt restructure of 2009.
How much is it? In May 2011, we had £16.8m debt. That includes money owed to Delia as well as the other 'benefactors`. How much is external debt? Over to Alan Bowkett, "This year we`re paying off £6.5m and £3.5m in deferred interest from previous years. That`s £10m spent that in future years we can spend on players".
So somehow, we have to find £10m to pay back the banks who had within their power the ability to close us down back in those dark days on 2009, and have the ability to close us down now if we miss too many payments. We`re still paying for the mistakes of yesteryear effectively.
We make loads of money now though right? Wrong. Our ticket sales made us £9m this year, our player wages (just the wages) were £21m. There was an additional £3m in other wages too. Our total wages are nearly 3 times the value of our ticket sales.
What about the Sky money? Our overall revenue this year (including TV) was £41m (double last year), but our operating profit was just £18m. This doesn`t leave much to buy players when you have to pay £10m to the banks, and have spent c.£4m in January on players.
Alan Bowkett again, "Youth development is how we`re going to compete in the next 10-15 years. We`ll put youth development before transfers."
Perhaps Lambert didn`t want to put youth development before transfers. Perhaps he wanted success now, and perhaps we just couldn`t afford it. Our average weekly wage is £10k, even Bolton pay an average of £30k. I suspect Villa pay even more than that.
How well-run are Aston Villa? They have net debt of £114m and spent £73m more than they earned over the last two seasons. They're only solvent because of huge annual cash injections from their wealthy benefactor, and who knows how long that will last? Even relegated Bolton have a debt of £110m, which puts our position into perspective.
For similar debt-free stories such as ours, see the performance of Wolves or Blackpool. Let`s hope we don`t follow their lead on the pitch. Wolves spent a net £15m on players, more than Arsenal, Everton, Manchester United and Newcastle combined, and still got relegated. Stoke are the only successful debt-free team, and they didn`t climb 2 divisions in 2 seasons like us.
McNally and Bowkett cannot put the future of the club at risk. They are doing an extremely effective job with their hands tied behind their backs and in my view have saved the club again by refusing to budge on budgets.
Chief executive David McNally told fans at the last AGM that the main aims were to stay in the Premier League, keep hold of manager Paul Lambert and his backroom staff, but to remain solvent.
Two of out three ain`t bad…keep it up.