What the Black Cats’ accounts mean now and moving forward
The notes from the boardroom accompanying Sunderland's 2018/19 accounts, published on Friday, begin by paying tribute to Jack Ross and his coaching staff for their performance.
An early and neat reminder of just how much has changed since the period in question.
It's apt, too, as these accounts, which show a loss of £11.2 million, appear to have been signed off in January.
It is not clear, then, why it has taken seven months for them to be made publicly available, with the club taking advantage of a government scheme to delay the publication for three months.
Had it not been for the revelations in the Daily Mail and The Times in May, Friday would have been the first that Sunderland supporters would have learned of the £20.5 million parachute payment money used to purchase the club being written off as an' exceptionaloperating expense ', with no accompanying explanation offered in the accounts.
In this, much can be understood as to why an atmosphere of unity at the start of this accounting period has changed so dramatically two years on, with distrust and anger now the prevailing mood.
As it is, Madrox said in response to the revelations that this figure reflected the balance of payments between their company and Sunderland AFC as of July 2019. So, essentially, £20.5 million was the remaining balance between the money taken from the club to pay Ellis Short via Ma dr ox, and the money put back in at that point. Madrox’s accounts, also published on Friday, show a profit for the period of an almost identical number.
They told us that in the subsequent period, of which information is not yet publicly available, the balance had been reduced to £11.5 million. How much of this money relates to injections from the FPP remains unclear due to 'confidentiality'. Donald recently told supporters at a meeting that he 'hopes' the 2019/20 accounts, which would highlight this injection, will be available by November.
Friday's numbers won't come as a surprise to supporters,though the anger with what lies behind them remains.
The picture at Sunderland has changed significantly in the 12 months since the end of the accounting period in question, but they are nevertheless instructive when it comes to the challenge ahead, whether it be for Madrox or any potential new owner.
The accounts underline the success of the initial drive to win the backing of supporters, and the enduring loyalty of those who continued to put their hands in their pocket.
Despite dropping into the third tier for only the second time in their history, gate receiptsrose( two trips to Wembley help here, too ). The club also manage to increase income in areas such as sponsorship, conference and banqueting, a not insignificant achievement given the nadir the club had reached as it plummeted through the Championship.
One of the stark est changes from the 2018 accounts was the drastic drop in the club's cost base, something which Ma dr ox have regularly pointed to as one of their biggest successes since taking over the club.
A wage bill of almost £47M dropped to just under £27 Min a year, down mostly to the declinein the club' s player wages. Many players from the Premier League era departed, while many also saw a reduction in their contract due to relegation from the Championship, but the club remained wedded to some onerous contracts, such as Bryan Oviedo’s. The drop in cost base also owed much to a dramatic reduction of staff across the business, a process reflected in the figures.
Full-time staff at the club (football and administration staff) dropped from 316 in 2018 to 206 in 2019, with matchday staff down from 222 to 157.
One of the key frustrations for many supporters is that so many of the departments( such as recruitment) have not been built backup sufficiently since.
Directors’ pay also declined drastically, from just over £2M in 2018 to just under £300,000 in 2019, though supporters will be curious as to the £320,000 that was invoiced to the club for 'key management personnel'.
The playing wage bill has of course reduced significantly again from that first season in the third tier, and will do so again moving into the next( significantly, the club now has no players on a deal signed in the Premier League or Championship seasons ). But these numbershighlight some key points.
The club' s turnover was still dominated by parachute payment income, and Sunderland are moving into an era where they will no longer receive anything in that regard.
This is a major challenge to Madrox or any new owner, given the significant fixed costs that a club the size of Sunderland
incurs. It underlines the importance of the club's supporters, which is something that has not been reflected anywhere enough in some of the club hierarchy’ s recent actions.
The impact of the C OVID -19 pandemic will affect all clubs but these accounts simply serve to underline the impact that potentially losing a third of the club's attendance would have. The writing off of the parachute payment (and the confusion surrounding it) had always been the key headline from these figures and in that regard, so much damage has been irreversibly done.
Combined with other statements that have ultimately misled, a failure to implement a long-term footballing strategy and many other promises that have not been delivered upon, it has served to make Madrox's position at the club untenable.
The figures also underline the radically changing nature of Sunderland as a League One club, and the challenges that face any new owner in this most uncertain period.
Above all else, they highlight the scale of investment required for any new owner to steer it through the current climate and fund likely losses, rebuild key departments and invest in the playing squad if and when it was to return to the second tier. This is perhaps the most pressing issue of all, when you consider the asking price currently stands at £37.6 million.