Crunchingthenumbersthatmake up the Cats’ latest set of accounts
Sunderland released their accounts for the 2022/23 campaign on Thursday, outlining the figures for their first season back in the Championship.
The headline was a £9 million operating loss, but what else did we learn from the accounts? Here’s everything you need to know as we take a closer look and outline the club’s financial position more generally…
Sunderland lost almost £4 million more than their promotion campaign out of League One, which is relatively simple to explain. TV and media income surged from around £3 million to just over £10 million, but this was outstripped by the rise in the club’s wage bill which went from around £16 million to £25 million.
In a nutshell, this explains the immense financial challenges that all clubs in the Championship face if they are not in receipt of parachute payments.
The wage bill has to grow significantly to realistically compete with those teams dropping out of the Premier League, but the income streams are nowhere near enough to bridge the gap. While a huge fan base like Sunderland’s helps in terms of gate receipts and commercial revenue, that alone is nowhere near enough. It’s why, like it or not, the odd player sale is important to Sunderland’s strategy. It’s also why the EFL have been so aggressive in calling for a new financial deal which will increase the Premier League’s contribution to the pyramid, and why they are so keen to see parachute payments overhauled in favour of a merit-based approach.
It will change slightly next season when a major new TV deal with Sky Sports kicks in, which is estimated to be worth an additional sevenfigure sum to Championship clubs each season. The facility fee awarded every time your club features on TV will also grow. While this will make a difference, it’s unlikely to bridge the gap.
Sunderland’s wage bill (note, the £25 million figure relates to all club staff ) confirms what was widely thought: they were not one of the biggest spenders in the division and overachieved significantly in finishing sixth last season. Their wage bill was around midtable for the division across the campaign, as too were their losses.
The club continue to be in a relatively strong position in terms of the division’s Profit and Sustainability Rules, which limit losses to a total of £39 million over a three-season period. So the room to invest in the squad is absolutely there, but these results also show the scale of losses that will be incurred if the wage bill rises dramatically and quickly.
Sunderland’s accounts showed a £308,000 profit on player trading, down from £1,243,000 the previous year. This primarily reflects the fact that there were few significant departures in the period covered, while there were also fewer sales from the club’s academy.
That headline figure masks a much more complex position in terms of where Sunderland are at with fees both paid and received.
For one, much of the club’s significant summer transfer business took place outside of the accounting period.
That included the deadlineday acquisitions of Timothee Pembele, Adil Aouchiche and Nazariy Rusyn on long-term contracts, and more significantly the sales of Lynden Gooch, Isaac Lihadji and Ross Stewart. The accounts elsewhere show a £7,370,000 spend on transfer fees, and £1,151,000 recouped. The accounts also reflect the fact that most modern-day transfer fees are paid in instalments, rather than in a lump sum up front. The accounts therefore go on to explain that Sunderland owe £2,938,535 in future instalments, while £830,000 is owed to them by other clubs. Factor in the sale of Stewart set against those broader figures and you get a much better overall picture of Sunderland’s recent transfer spending.
That Sunderland ran up such losses while running what was a comparatively low wage bill for the level sums up their challenge to win promotion while moving towards sustainability. Their plan to do so is two-fold.
The first is on the pitch, their plan to invest in young players and create a clear pathway for academy players to break into the first team.
This is seen both as the most cost-effective way to obtain talent, and also creates assets who could potentially be sold on for a profit - allowing for a pot of money which can be reinvested to grow the wage bill as required.
These accounts also make clear that Sunderland believe growing their commercial revenues is absolutely essential to future sustainability. Those revenues rose sharply in the final campaign in League One, but grew only modestly in this year in question. Kyril Louis-Dreyfus says in the accounts that there will be significant investment in order to grow these revenues in future, with a planned wind farm on club land near the Academy of Light seen as one key development. We have already seen some of the other plans begin to bear fruit, with hummel announced as the club’s new kit partner and Fanatics this week announced as the company who will overhaul the retail offering. These developments are just part of a much wider plan to overhaul the club’s offering to fans, of which David Bruce is ultimately in charge. Bruce arrived from a role at the
MLS as the club’s chief brand and commercial officer earlier this season. There’s clearly a lot more to come. The club’s project to bring 5G to the Stadium of Light, spearheaded by outgoing chief commercial officer Steve Davison, is also moving towards a conclusion. Davison has also been instrumental in bringing concerts back to the stadium, which will be an important ongoing revenue stream...