Got the following response from Doncaster...

He sent it through quite a while ago but I just kept forgetting to post it here. Probably as there was little of any interest until now; he completely fails to answer the question about what happens if we go down. Anyway...

1.a) A number of clubs have entered administration and re-negotiated their debts in recent years, have the Club considered administration as an option and what would be the pros and cons of doing so?

The Club considers all options open to it on a regular basis. Some clubs see a ?benefit? of entering into administration in that the process can enable the shedding of part of their non-football debt. However there are a number of real problems with this strategy:

1) It has no effect on football debts, all of which have to be paid in full;
2) Because of the long-term structured nature of our non-football debt (mainly the securitised loan), the costs associated with non-football debts each year are but a small fraction of our football costs;
3) A necessary by-product of shedding non-football debt is that the vast majority of those affected by this process are a club?s local trading creditors. That is why those clubs that have gone into administration have ended up short-changing the likes of the St Johns Ambulance, the British Red Cross, the Police, local builders and all the other hundreds of small local businesses who trade with their local football club;
4) The process of paying an administrator is itself hugely expensive;
5) The administrators? key focus is on providing a dividend to creditors ? a club?s long-term relationship with its supporters and its ambitions on the pitch become very much a secondary concern;
6) Generally the only group of people entirely unaffected by a club going into administration are the players themselves, who continue to be entitled to their wages, signing-on fees and bonuses in full.

That is why administration for a football club is generally only considered as an absolute last resort.

1.b) Given the current recession and housing slump, would it not be a good time to consider administration as the Club's main assets are in land and property? These would be hard for the banks to sell on and might make them more receptive to renegotiating a reduced debt than being lumbered with an asset they can't sell?

On the basis that the Club?s most valuable property asset is our Carrow Road stadium I find it hard to see how selling the Club?s home could be in the Club?s best interest. For the reasons set out above, administration is a hugely unattractive option and not one we intend to pursue.

2) It has been said that the Club?s debt would need to be repaid on a change of ownership. Can you explain to us non financial types why is this so and would it not be possible for a new owner to simply continue the current agreement?

Whenever a lender lends a sizeable sum of money to a company, it does so on the basis of a number of different factors. One of those is, in most cases, the owners and directors of that company. It is for that reason that it is absolutely standard for all commercial lenders to insist on a ?change of control? clause. This usually triggers repayment in full on a change of control.

The rationale for this is that, without such a clause, the lender will effectively be lending to an unknown and potentially entirely different entity. You might consider that a football club majority-owned by Delia Smith and Michael Wynn Jones might be considered to be a much better lending prospect than a football club majority owned by an unknown, faceless businessman with an unknown history. For example, I doubt many of you would feel comfortable lending a sum of money to a friend on the understanding that at any point he may pass that debt on to someone you have never met and know nothing about!

3) Does the club still value the business at ?16m - if not what would it take for someone with ?20m to invest to gain control of the club?

The Board has never valued the Club at ?16m. However, anyone acquiring majority control of the Club would have to settle the Club?s outstanding debts (as detailed above) of around ?20m. That would be on top of any money that was paid for shares ? and that in turn would be on top of any money that a newcomer wished to invest into the business.

As an example, if someone were to buy all of the Club?s existing shares at, say, ?10 a share, that would require cash of just under ?6m, plus ?20m to repay the debt, plus the millions of pounds of funding necessary to support the current player wage bill each year (or even increase it) plus, on top of that, any monies to bring in new players. It very quickly adds up!

4.a) What was Peter Cullum's interest in the club and why could a deal not be made?
4.b) Did the current shareholders do everything possible to conclude a deal?
4.c) Is the door still open?

Although I feel very strongly that the Peter Cullum question has been well-aired and perhaps it is time for us all to move on ? I will say again the Board welcomes anyone who wishes to put money into the Club.

What is not commonly appreciated is that many wealthy people who take over a club do not put in their own cash. They simply use their lending ability to burden the football club with further debt. If and when the experiment goes pear-shaped, they can simply then walk away from the football club, their own personal cash intact, leaving the football club with a mountain of debt that it cannot possibly repay.

Although I am not suggesting for one moment that that is what Peter Cullum intended to do, it does explain why so many changes in ownership of clubs have ended up in bitterness and unhappy supporters.

5) Is the Club actively seeking investment or sitting back and waiting for the phone to ring? If so what is being done?

For the last 13 years the Board have talked to a large number of wealthy individuals, including (but not limited to) Norwich City supporters. This has not stopped at any time over the last 13 years and discussions are continuing, albeit in a very difficult economic climate. However, it should be no surprise to anyone that relatively few people are keen to simply give money to the Football Club ? for that is what ?investing? in a football club tends to mean.

In addition, as has been well-reported, apart from these on-going efforts by the Club, Delia and Michael have themselves appointed Keith Harris, arguably the market leader in this field to try to find investment in the Club.

6) Have the club considered approaching a number of potential investors, either individuals of local businesses, that might join together to form a consortium either with or with the current shareholders?

Yes we have done this as part of our efforts as detailed above. We are not ruling out any form of investment whatsoever. Our doors remain fully open to talk to potential ?investors?, whether that be individuals, local businesses or consortia who may wish to put their cash into Norwich City Football Club.

7) If the worst happens and we're relegated what would be the impact in terms of lost revenue and how would the club deal with the reduction in income?

As we have already said everyone at Carrow Road is entirely focused on ensuring survival this season. We want Bryan and the team to remain focused on this mission whilst we, behind the scenes, do everything we can to support them.

8) Are we using so many loans because we don't want to be stuck with a squad of players on long-term contacts if we're relegated?

No. The players we have at Carrow Road are simply those that Bryan and previous managers have decided that they wished to bring to the Club. It is fair to say that players such as Leroy Lita, Ryan Bertrand, David Mooney and Alan Gow have made important contributions this season. However, it is also fair to say that if the Club were to be relegated, we would be much better able to adjust our expenditure to be more in line with our income than some other clubs because of the amount of players whose contracts/loans expire at the end of the season.

9) Why are we paying so much in wages for failing players and how does our player wage bill compare with other clubs in the division?

Our player wage bill is higher than some and much lower than others. One player in the Championship this season, it is reputed, has been earning ?35,000 a week. This is an extraordinary figure and the likes of this have resulted in a number of Championship clubs with player wage bills more than double what we are currently paying, which is itself far more than we can actually afford to pay. This is why as a business we are losing millions of pounds every year ? a scenario which, without the on-going support of Directors, would simply not be sustainable.

10) Was EventGuard sold to plug a hole in the finances or for some other reason?

The Club sold a 75.1% stake in EventGuard for two key reasons. Firstly because we believe that NORSE (which is part of Norfolk County Council) is far better placed than we are to fully exploit the potential of this successful, profitable business. Secondly, the cash that the sale has generated has been crucial to the Club in a year in which we terminated the contracts of Glenn Roeder and his coaching team and have supported Bryan Gunn?s recruitment efforts so positively.

11) To what extent is the club benefiting from the hotel and has it matched expectations?

The Club is not involved in the day to day running of the hotel and simply owns a 30% interest in the company which owns the hotel ? not the company which runs it. Any profits made by the hotel company are used to repay that company?s substantial debt ? which was taken out to build the hotel in the first place. Our 30% stake has a value as a long-term asset of the Club. Remember, we did not use any of the Club?s cash to build the hotel and indeed received a sum in excess of ?1m for the land on which the hotel is situated. This sum was used to repay some of the debt taken out to build the Aviva Community Stand.

So, overall, the Club has received income from the hotel venture and will do so again if and when our stake in the hotel company is sold. However, we do not receive regular income from the profits made by the hotel business.

12) Why did the Club allow the mishandling of the Huckerby situation? We all loved Dion but Hucks gave us so much more and to have to watch someone take the legendary plaudits, even as deserved as they were, and for Hucks to be swept aside like an old tramp was disgusting.

The Club?s policy on player matters such as these is simple. They are delegated to the manager ? they are his players after all. That is not to say that senior Club staff do not offer the manager some strong advice on player matters from time to time, but the final decision must be his and his alone. The alternative to this is a situation where a manager can feel totally undermined by a Board or executives deciding to act in a way contrary to what he wants.
Canary legend Darren Huckerby is and always will be welcome at Norwich City Football Club. It was for this reason we were delighted to welcome him back to Carrow Road to salute the fans on the pitch before the game against Forest earlier this season.

13) Do you and also the Chairman feel any responsibility for the level of criticism Delia and Michael are currently receiving, do you believe the reason we have under performed in recent seasons is more down to the lack of funds put in or to do with the mismanagement of the funds allocated to those who run the club (managers/CE/chairman)?

There is no doubt that over the years not all the players brought in by various managers have been as successful as we all would have liked. And that, ultimately, is where the vast majority of money has been spent. The Club works on the basis of collective responsibility. No-one is happy with where we are at present and everyone is doing their utmost to turn the situation around.

14) We have had 2 successive relegation-threatened seasons, if we survive this season, what is the short-term strategy to give us the success a club of our size deserves? i.e How do we avoid the repeating of the last 2 seasons, next season?

The Club?s strategy is simple ? to generate as much off-the-field income as we possibly can and, together with cash put in by Directors, back the manager?s judgement as best we can. There is no magic bullet ? there are no quick fixes. We must remember that we are one division ahead of huge teams like Leeds and Leicester and we are vying in the Championship with many, many clubs whose recent history has involved spells in the Premier League.

15) A lot of blame has been put at the feet of Peter Grant and Glenn Roeder for our current predicament, not just by fans but by the CE and Chairman of Norwich. Have lessons been learnt about not allowing the manager an absolute free reign over the club, with a lack of scrutiny and input from the board on footballing matters? The board do not seem to have the required level of knowledge from a footballing perspective to pre-empt mistakes from the 1st team manager. What assurances can you give us the fans, loyal in numbers, that the same mistakes will not happen again?

This is a debate that has been raging in English football for much of the last 20 years ? most recently at Newcastle United. It is fair to say that examples of a ?Director of Football? working successfully in an English club are very few and far between. And the reason for that is simple ? when it comes to making a decision, whether that be about buying a particular players, selecting a particular team or playing a particular formation, one person must have the final say. And that person surely has to be the football manager. If not, all you are really left with is a football manager who is nothing more than an ineffectual puppet.

16) What are the Club doing to allow the casual fan access to first team football at Carrow Road?

The Club remains committed to making football at Carrow Road affordable and accessible to as many fans as possible, be they season ticket holders, members and/or casual attendees. The buy-back scheme is just one example of a policy designed to make sure every seat not being used by season ticket holders can be resold to anyone hoping to watch the game.

17) The club seems to be in good hands with Gunny, will he have the same/more budget for the 1st team as his 2 predecessors or will the budget be slashed next season? (on the proviso we stay up!)

This depends entirely on the amount of money that Directors and other ?investors? are able to commit to the Club next season.

18) Our over-reliance on loan players devalues the Club, gives the manager no foundation to build on and gives us fans little reason to invest our money and emotions in the Club. What is going to be done to rebuild the squad with Norwich players?

Whilst I have reflected on the benefits of loan players above, I do understand that it is more difficult to form an emotional bond with players who may be with us for only a short amount of time. The importance of a youth team and a reserve team providing us with a stream of prospective players is all the more crucial in the event that the manager needs to work with a reduced budget. The youth team?s successful FA Youth Cup campaign and the emergence on professional contracts of the likes of Tom Adeyemi, Korey Smith and Declan Rudd give us enormous hope for the future.

19) Would the club consider the option of having an elected fans representative on the board? This could bring new ideas to the boardroom and provide a trusted figure to reassure fans when tough decisions have to be made but detail can't be made public.

The practical reality of a ?fans representative? is that as soon as they become elected they are bound by the same duty of confidentiality that binds all Board Directors. There is nothing that a ?fans representative? could tell the world which we do not already broadcast as best we can. Do you not regard Delia Smith, Michael Wynn Jones and Michael Foulger as being Norwich City fans?

Meanwhile, the Club is able to call upon the 18 fan members of the Supporters Consultative Group and to consult with them over key issues that affect Norwich City supporters as well as the wider public consultation that our commitment to public forums and Meet The Board sessions offers.

The Club continues to seek new Directors following the departure of Andrew and Sharon Turner last year and would welcome any applications from wealthy supporters who have the desire and ability to use their personal wealth to help take the Club forward.

Posted By: Ben on April 19th 2009 at 22:57:17

Posted By: Charles21, Apr 20, 18:26:44