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Sunderland’s Financial filings fast approaching, so what should we look out for?

Before the end of this month Sunderland AFC will have filed their financial reports up to July of 2016; will they provide encouragement, or cause yet more pain?

Sunderland v Burnley - Premier League Photo by Nigel Roddis/Getty Images

While it goes without saying that results on the pitch are obviously of paramount importance, results off the field are equally as important. Sunderland’s finances have continued to deteriorate for the last decade - with our last posted profit coming back in 2006. The reading has become bleaker and bleaker as loss upon loss is heaped onto a mounting pile of debt that does nothing but prevent the club from abandoning the shackles of perennial struggle.

Even a cursory glance is disheartening, I mean the last 4 years alone have seen the club accumulate £88 million of debt - the 4th highest in the Premier League. As of our last financial reports (up to July 2015), the club sits somewhere north of £140,000,000 in gross debt. It’s safe to say the future isn’t looking good.

By the end of this month the club must release their finances up to July of 2016 - information that is accessible to anyone and everyone upon its release. This information will be crucial to the club’s future, especially when couple with the club’s impending drop into the less financially lucrative world of Championship football.

Chelsea v Sunderland - Premier League
How will fans react to this season’s financial reports?
Photo by Jamie McDonald/Getty Images

What should we be looking out for, though?

Have we managed to curb our losses?

Very few clubs in football can continually post such horrific losses without taking drastic measures to reduce their hemorrhaging. If Sunderland have found a way to reduce the £25 million loss as witnessed last season then there may be hope going forward.

The sale of Connor Wickham for around £7 million to Crystal Palace - which is believed to be a profit - will certainly aid our cause; however the club spent a fairly decent chunk money again in the summer of 2015 and January of 2016, so don’t be surprised if the losses are once more fairly substantial.

One major indication will be the club’s wage bill, and the ratio of wages to turnover. Last time out our wage bill was somewhere in the region of £77 million, which accounted for over 75% of our overall expenditure. This is a rather large amount of money that is really crippling our ability to chip away at our debts; it was also the second worse in the entire league! What makes it worse is that there is no on-field success to show in exchange for these troubling numbers. If we have reduced this figure, then there are clear signs that the club understand the root of our malaise and are taking active steps in the right direction.

Has the debt grown?

As already mentioned, the club’s debt is astronomical, and if it is allowed to continue to grow, then we could be in serious trouble.

Ellis Short has taken steps to help try and control the debt by converting over £100 million to equity. This has helped prevent the club from finding itself sitting in over £240 million of debt, and is definitely a proactive move. Still, though the club has been unable to turn profit in recent years and the debt continues to grow. If we have managed to grow revenue aside from TV money, that also could be viewed as a positive considering we will be faced with a decrease in TV money over the coming seasons.

Whilst around £60 million is owed to Ellis Short’s ‘Drumaville’ company, much of our debt is actually owed to other banks who aren’t quite so sympathetic to our plight. In fact we owe over £80 million to Security Benefit Corporation who it would appear we have given the entirety of our Premier League money to in the past.

I wouldn’t be surprised to see the club’s debt increase again in these reports, but such is the manner in which financial accounts are filed we must remember that these figures are already one year out of date, and who knows what will have been going on behind the scenes this year.

So is Short to blame?

Yes and no. There’s little chance of a total conspiracy behind all of this because all of our finances are audited and are public record; essentially someone would have been able to see through any nefarious actions. That being said, Short’s Drumaville company are based out of Jersey and don’t need to provide as much financial information, yet even that is a stretch to suggest something untoward is happening in the shadows.

Short also supplies money either from his own wealth or that of one of his other companies in order to keep us afloat, so he must also be commended for that (whilst this also suggests he isn’t siphoning cash away from the club). That being said, there is just something about his position in the world of private equity, and dealing with distressed assets which makes me feel uneasy about the position in which we find ourselves. Maybe I’m just overthinking things?

Short’s decision to take a back seat and let complete novices run our club is the real crime that has been a major factor in our regression. He alone must shoulder the blame for that, because he hasn’t just let himself down - he’s actually let all of us down.

Sunderland v Tottenham Hotspur - Premier League
What next for our beloved club?
Photo by Jan Kruger/Getty Images

Here’s hoping for some positive news to come from the release of our financial records, but in all honesty I wouldn’t hold your breath in anticipation.

Hopefully the accounts show steps taken to help prevent any further financial infirmity - that would be a positive we could take from these accounts because unfortunately no magic wands will have been waved in the meantime.

As a club relegation wage drops, player sales and astute investment is honestly the only course of action available to try and heal our club. We mightn’t like it, but this is a long-term project and we will go through more troubling times before we find ourselves back on a financially sound footing.


Note: Figures and statistics taken from: The Swiss Ramble and filing info from Companies House