There’s a lot of tosh talked about our financial position, mainly by our friends in the north.

I just thought I’d do a quick compare and contrast on the relative position of the two clubs.

The starting point is that, whichever way you look at it, ITFC is now part of Marcus Evans’ group of companies. That’s an absolutely fundamental issue to grasp. It means we’re not required to stand on our own two feet in the way we were before. Whilst Marcus doubtless expects all of his companies to operate profitably, the joys of group accounting mean that what really matters to him is the consolidated position – what does it all add up to.

That being the case, it doesn’t matter to anything like the same extent if we’re in debt. That’s because the debt is now intra-group. Essentially we owe an amount of money to another part of the ME group. The ME group only gets that money back if the ITFC part of the business generates the revenue. He can’t recoup that debt by selling the club.

If we’re promoted, he has a decision about how quickly he recovers that debt. Somebody playing the long game will look to take it back at a rate that gives the club a chance of consolidating its position in the Premier League.

In the simplest terms, we have a cushion against the uncertainties of football finances. That cushion is being part of a bigger whole.

Norwich, on the other hand, have no such cushion. Their ability to function seems to me to depend on Delia Smith’s ability and willingness empty the contents of her purse onto the boardroom table to bail them out on a regular basis.

What happens next for Norwich? Well, they depend on a benefactor. So do we. But Ipswich has a corporate benefactor, one that exists independently of any individual. Let me put that less tactfully. Delia is no longer the young cookery student who baked the cake on the cover of The Rolling Stones “Beggar’s Banquet” record (a record I steadfastly refuse to listen to, let alone buy). She’s getting old. How long will she want, or be able, to support her beloved Canaries? Or will she be forced tragically – like Josephine Baker or Maria Callas – to keep going long beyond her sell-by date to make ends meet. “Delia’s Care Home Cook Book” anybody?

Also, I detect across League football a growing determination to make the numbers add up. That’s why the ME Group are clearly enforcing a strict budget on the club. I have absolutely no problem with that – after all it seems to be creating the sort of “siege mentality” that so many successful managers use to motivate the team.

TheSpecialOne added 16:33 - Sep 2 Great blog FB.
0

TWBlue added 17:25 - Sep 2 Great blog Much like your issue with the album, I still refuse to use that women's cook books at home. My wife had a few books before I met here, but after 15 years I have never turned a page. My wife now lies to me if she has used a recipe from them as I used to refuse to eat it!
0

dude added 17:46 - Sep 2 I concur. Thanks for the time taken to write this Mr. B
0

dirtydingusmagee added 17:54 - Sep 2 mmmmm
0

beccles added 18:07 - Sep 2 what rubbish if m e wanted to sell he would and that would put us in problems
1

dickie added 18:39 - Sep 2 Beggars Banquet is an awesome album! Forgive the Stones for their Delia error!
0

Radlett_blue added 18:45 - Sep 2 Err...a growing determination among League football to make the numbers work??? Why, then, are so many clubs in the Championship & below still living beyond their means, with wages running at 95% of turnover or more?
0

Pinewoodblue added 19:17 - Sep 2 Well written FB, but wouldn't have expected anything less. MEGC are finally applying proper business standards to the running of a Football club even if gives the impression that they are at a disadvantage by not taking the risks other clubs take. Personally would have preferred to have seen these standards applied twelve months ago but hopefully results on the field will bring about the desired result with promotion. All that needs to be done now, from a financial viewpoint, is to look at the pricing structure with a view to bringing in more competitive (keen) prices for match-day tickets, merchandise and food/drink etc. MEGC certainly make this supporter feel that the club is in safe hands and how many supporters at other clubs could say that?

0

Guthrum added 19:55 - Sep 2 Beccles If ME were to sell the club now, he would realise very little, if any, profit on his investment (most likely a sizeable loss) - even if he could find a very wealthy investor willing to pay over the odds in the current poor financial climate. The debt would be sold with the club (I understand, from what I've read, that this was part of the deal when ME bought ITFC), so the outstanding amount would then simply be owed to the new owner. If they then demand the full face value of the debt, the club would be forced into administration and the new owner would lose virtually all of their investment - and thus pointless. Asset stripping would not make that much, as the ground (the bit most of that type are after, to develop or sell) is not owned by the club. So in reality, ME's best chance of recouping his money (with profits) is for the club to be run efficiently, do well in the League (aiming for promotion) and increase in value (if he's looking to sell).

0

Parisblue72 added 20:50 - Sep 2 There's a lot of tosh written about our financial position... including this ridiculously naïve blog!
1

Vic added 22:00 - Sep 2 Parisblue: so what is the current situation then Mr Wiseguy? You criticise the blog without offering an alternative. You obviously have a different point of view - lets hear it so we can wiegh the likelihood of one being right.
0

Mossy added 22:06 - Sep 2 Parisblue72 added 20:50 - Sep 2 There's a lot of tosh written about our financial position... including this ridiculously naïve blog! What have you got to back your argument up then? I thought it was a well put Blog.
0

DanLyles added 10:12 - Sep 3 ITFC is undoubtedly the only loss making segment of the Marcus Evans Group. However, Evans seems very astute to me. He has ploughed money into the club (admittedly some of it has been wasted on Martin, Lisbie et al), cleared our debts and kept faith in Keane during a time when most trigger happy chairman would have fired their manager. He is finally seeing the seeds he has planted come to fruition and will hopefully reap the financial rewards that come with playing in the Premiership. SAF referred to Man City's signings as 'Kamikaze', which is rediculous as they have a seemingly bottomless pit. However, I would direct this criticism at Cardiff and their 'strategy'. Based purely on talent, they have an awsome squad. Yet imo they are gambling on promotion and if it doesn't work out their club could go out of existence.

0

camblue added 10:15 - Sep 3 Factual blue, I don't think you have your facts right, the album with Delias cake on it is 'Let it bleed'.You have been refusing to buy or listen to the wrong album.
1

alsagerblue added 12:33 - Sep 3 Wasn't Delia a Town fan when she baked the cake? It was only when she met/married her husband that she changed to Norwich.
0

stiffshorts added 14:42 - Sep 3 parisblue..........?? Just appears, one post then gone....... bit like NCFC, one hit wonders!!! alsagerblue..... correct, Delia was a town supporter, once. She's now defunct and washed up........... incidentally; I have a mate who has never been to Narich and will not have the colours of green or yellow in his house, I kid you not. Now that is commitment!!!!!!!
0

Tractorog added 00:35 - Sep 4 Whilst i don't think that the club is badly run, it is pretty silly to point at the group companies and say they will support the club come hell or high water. Each company in the group is independent - it is only if they have issued inter company guarantees or strong letters of comfort to the banks that the group could be said to sit behind the club. It could be a valid point to make to say that the ME group has bigger net assets and a more diverse or sustainable sources of income than Delia. Certainly age and ambition come into this. The truth is that Norwich is backed by someone who put money in reluctantly to protect her investment when they were relegated and is on record as wanting to sell the club. That is an issue which will hang over Norwich for months possibly years. I can't see a sensible investor looking at a club with no tradition, a financially limited catchment area and no silverware worth the polish.

-1

TractorRoyNo1 added 12:30 - Sep 5 Evans will not see a ROI until Town are 'secure' in the Premier League, then he will be able to find a friendly American, Arab or Oriental to pay off what he has invested plus £20-£25m profit, so the sooner he speculates the sooner he will accumulate.
0

Back_The_Boss added 17:18 - Sep 6 Great blog FB. I agree with a lot of your points.
-1

CambridgeBlue added 13:24 - Sep 7 I'm not certain that all your points are entirely valid. Being in the ME Group does to a small extent give us a bit more of a financial umbrella, but we are talking about at most an extra year or so on top of what we would have had before. He will certainly see each of his companies separately, and a regular loss-maker will be dropped or massively restructured if necessary. Conversely to the umbrella scenario, if the group as a whole is making massive losses, which would be the first part to be sold off? I would imagine that a football club which is more of a luxury than a business and which has never made a penny would be the more likely to go. The ME Group would certainly pass the debt back on to any buyer, and if they didn't they would increase the purchase price accordingly - a truly debt-free club is something of a rarity, and the buyer would need to pay a premium (presumably similar to the debt taken on by the ME Group) to buy the club without it. In terms of supporter base and season ticket sales, Norwich are ahead of us by some margin, and their dependence on Delia to empty her purse out is no different to RK having to go to ME to ask for the same. It's just that so far, ME has been happy to do so. In a year or two, we could end up having a smaller transfer budget than they do. Who can say? Ultimately our financial situations are not vastly different. We're reliant on ME and they're reliant on DS. They currently have better cashflow, we have a richer (and currently willing) benefactor. He could lose interest at any point, whereas Delia almost certainly won't. Sheepshanks held on until he found a suitable buyer - I suspect that Delia will do the same. If you say that many Norwich fans are taking the p*ss about our situation, then they shouldn't be, but then we're not so much better off than they are.

0

Blue041273 added 19:17 - Sep 7 As everybody knows, Football Clubs do not easily fit into traditional business models. ME took over the ITFC debt and acquired the majority of the Clubs equity. On top of that he has ploughed significant funds into the Club to finance the purchase of new players. His outlay to date must be the thick end of £ 50 million. He has now tightened the purse strings and obviously is not prepared to let the Club haemorrage cash to the point where the business is not viable. His business empire comprises many successful businesses and if he views his investment in ITFC purely as a business transaction then his advisors and bankers would counsel against propping up the club financially indefinitely. However I'm sure he recognises the fact that football business is different to the usual world of business. He probably sees the potential for filling FPR if we reach the Premiership as well as the spin off commerce that would ensue. The TV money and other sponsorships would massively increase revenues and consequently he probably recognises the need for patience in striving to secure a reasonable return on his capital outlay. For the moment therefore the Club will not be judged on its balance sheet alone. Interestingly if / when promotion is secured, it would be then that we would see if ITFC is to be run as a typical commercial business or continue in its present form, at the whim of a generous benefactor, albeit as mentioned above with characteristic budgetary constraints. But make no mistake, the Club will be sold off if it cannot achieve the business plan targets set by ME and his advisers, even if ME has to take a massive financial hit on the deal. No-one knows the timescale involved. The crunch could come in 2 years, 3 years, 5 years or longer but be sure the clock is ticking. We need that promotion, and sooner rather than later!

0

MVBlue added 19:56 - Sep 7 Marcus Evans does want this club to be Premier League. He will not continue to support a club that flounders and stalls for 3-4 more years outside of it. But when we do get there, being the owner of a Premier League club could do him many favours. I would hope that, as we have an English owner, it stays that way, Marcus and his company being mainly English.
0

tractored added 14:46 - Sep 9 Hopelessly over optimistic in my view, 50m+ is not sustainable whether intra group or not. A long time ago there used to be a know all poster, can't remember his name, who used to write long long posts about how healthy the finances were and he was absolutely insistent that the club had £9m in the bank. He was still absolutely sure of his facts right up to the day administration was announced.

1

Parisblue72 added 11:29 - Sep 13 Agree 100% with Cambridge Blue.
0

blueasfook added 15:53 - Feb 13 Well this aged well, didnt it?
0

Blogs 295 bloggers