SAFC’S £20M ‘BLACK HOLE’
Shortfall in accounts linked to parachute payments – claim
Football finance expert Kieran Maguire has laid bare the ‘very messy’ financial situation at Sunderland - after it emerged there was a £20.5million hole in the club’s accounts.
The Mail and Times claim that the £20.5million gap in the balance sheet represents one of the parachute payments to the Black Cats, which were due following their relegation to the Premier League.
This sum has previously been reported to have been used to facilitate Donald’s purchase of the club for a sum of £40million via his holding company, Madrox Partners.
It was previously suggested that this money would be repaid by the shareholders.
But the report claims that the money has now been written off by Donald and his fellow shareholders by way of an 'exceptional operating expense' – which removes their legal obligation to repay the money.
And Maguire - of the University of Liverpool - has now explained exactly what these revelations mean for the club, and what has happened to bring us to this point.
Speaking to talkSPORT, he said: “The figures which have been seen and reported appear to indicate that Stewart Donald borrowed money, effectively using the parachute payments to buy Sunderland from the former owner, and he was going to repay that money at some point in time.
“It now appears that, if these figures are accurate, he’s saying that he’s not going to repay the money.
“This one seems very unusual.
“It ties in with Rick Parry’s comments about parachute payments earlier this week.
“He described them as an ‘evil’, and if they’re going to be used to buy football clubs, it certainly isn’t the original purpose. “It’s very messy. “By all accounts, the only way Ellis Short was prepared to write off all the money owed to him was if he was guaranteed some money coming back.
“But it looks like Stewart Donald now isn’t going to keep his side of the deal and repay the loan.”
And with the club publicly up for sale, Maguire has revealed how this eight-figure gap will affect takeover talks.
“This has huge repercussions for anyone buying Sunderland,” he added.
“They have looked at the numbers and said ‘well, where’s the money going to come in from?’.
“They’ve got matchday income, player sales, broadcast revenue and commercial revenue. “But this would have been a huge number - and it now appears that it’s not going to be received.
In a club statement responding to the claims, Sunderland AFC said: “Madrox has continued to invest funds as required, (which will be reflected in next year's figures) and in a way to ensure the club remains debt free, as promised. “This has resulted in SAFC receiving around £11.5M since the year end, from Madrox. The funds are interest free and replace a significant portion of the parachute monies.
“This takes the total Madrox investment to around £25M, to date. This investment, two years into their five year plan, is ahead of schedule.”