Sunderland need more than quick fix for their finances
TRANSFER WINDOW IS VITAL
WITH 15 days to go until the season begins – and only 20 days until the transfer window closes – Sunderland’s squad is still in need of major surgery.
Key positions are yet to be filled, and a handful of wantaway players remain on the books.
While half-a-dozen new faces have already arrived, all have been free transfers and there is anxiety amongst some fans that the club has yet to spend on transfer fees.
Fans are not the only ones who are impatient. Manager Jack Ross wants to finalise his group as soon as possible, although he admits he knew all along that this summer would see the club chasing its tail.
But the new owner Stewart Donald is having to grapple with the twin tasks of rebuilding the squad while restructuring the club’s finances.
The problem is not so much financing the fees, as accommodating new signings on the payroll.
Clubs in League One must comply with the EFL Salary Cost Management Protocol, which means they are only able to spend a maximum of 60% of turnover on player wages.
First things first, with a projected turnover of around £52m this season – including a parachute payment of £35m – and a wage bill that has been reduced to approximately £16m, the Black Cats are in no danger of breaching that ratio and triggering a transfer embargo.
But when Donald presented his business plan to the EFL during the approval process for his takeover, one of the commitments he had to make was to work towards putting the club back on a sustainable footing after years in which his Ellis Short bankrolled eight-figure losses – alarming enough at Premier League level, but completely untenable in the third tier.
And while Donald and EFL knew that relying on parachute payments to stay within the SCMP limits might work this season, in the mediumterm it would mean Sunderland’s finances were built on sand because the parachute payment reduces to just £15m in 2019-20 and then stops. Not only that, even in the shortterm, it would be a distortion because the reality is that the bulk of this season’s parachute payment has already been accounted for, with around £22m required to cover payments for players signed in previous windows, another chunk paid out to bundle Jack Rodwell out of the door, as well as smaller amounts to cover other costs such as redundancy payments. Under Donald’s plan, the club does not have to be profitable, nor even break even, but its losses had to be brought to manageable levels. To that end, the EFL are understood to be in regular contact with the club to ensure that the business plan remains on track and that the club’s wage bill remains on a downward trajectory to ensure it would continue to meet the SCMP requirements if the club has not been promoted by the time the parachute payments come to an end.
Sunderland still need to reduce the wage bill by offloading the big earners whose salaries are way out of kilter at League One level, such as Didier Ndong, Lamine Kone, Lee Cattermole, Papy Djilobodji, and Bryan Oviedo.
Wahbi Khazri’s exit this week has started the ball rolling and, for instance, with him off the books the club could use half the wages saved to pay two top-end League One players, allowing them to both rebuild the squad and reduce the wage bill.
As others follow him out of the door in the coming days and weeks, the process will pick up pace.
Patience is always at a premium during the transfer window but no one knows better than Sunderland fans the pitfalls of quick-fix, sticking plaster, solutions.
If the new owners are to reverse the spiral of decline, they must start by putting the club on a sound financial footing.
The club does not have to be profitable... but its losses had to be brought to manageable levels.