Relegation to the Championship has evoked mixed reactions from within the club’s fanbase. Some appear relieved that dropping down a division releases us from the seemingly never-ending cycle of surviving by the skin of our teeth year after year. Others are angered by the ineptitude of the club’s hierarchy in presiding over such a disappointing moment in the club’s history whereas many are left shrugging their shoulders unsure of what to think or who to blame.
There is a small section of fans, however, who think relegation isn’t a major concern, and that next season the club will be back in a strong position - ready to return to the Premier League. I admire their enthusiasm, but unfortunately this relegation signals the beginning of a tricky few years ahead.
Although the club will certainly be a big name in the Championship, and our facilities, fanbase and history will certainly attract many players, you merely have to glance at the clubs currently inhabiting the league in order to fully comprehend the task that lies ahead.
The Championship is littered with a host of teams who fell from grace and have been unable to climb their way back into the big time; a glimpse at the league table shows an assortment of former Premier League clubs. From Aston Villa to Ipswich Town, the Championship is a proverbial scrapyard of Premier League dreams.
We’ve all heard that the Championship is a tremendously difficult league to get out of, but why? It’s clearly a very competitive league, but why is it that so many teams who go down simply fail to come back up? I mean, many of them have more money thanks to parachute payments, right? So why does it take them so long to fight their way back?
In an attempt at doing some research I headed over to football finance blog The Swiss Ramble and had a gander at their financial musings on the league in which we will find ourselves next season.
The first thing worth noting is the fact that pretty much every team in the league loses money. Literally one team made a profit. As a team who have lost money in the cash-rich Premier League in recent years this is a worrying statistic - I had no idea so many teams weren’t able to turn a profit in the Championship.
Unfortunately, Sunderland’s current financial predicament casts further worry over our potential to recover from relegation. With well over £100 million of debt, the club will have to be extremely wary of their finances when it comes to almost every aspect of running the club next year.
One bonus will be the fact that we will collect somewhere around £100 million going down, and parachute payments should ease the burden of our financial obligations. However, the club must use this money wisely because it’s clear to see that money is tight down below.
From the above graph it’s clear to see that parachute payments are incredibly important to teams finding their feet in the Championship as well as those trying desperately to escape its grasp. Sunderland too will be heavily reliant on the Premier League’s parting golden handshake for the next several seasons therefore it is imperative we use this money wisely - both to help alleviate our debts, and also on savvy player investment.
Nearly every Championship club bringing in decent revenue has the Premier League to thank for it. Sunderland simply have to sort themselves out within the years we receive parachute payments otherwise we risk stranding ourselves in a league which provides little in the way of financial growth.
When Martin Bain discussed earlier in the season his plans to help the club recover he argued that:
This football club has to get better at buying and selling football players. I see it and I hope I can achieve. Like it or lump it we should be looking at bringing players to this football club and selling them for a greater value. We have to look at acquiring players at a younger age too.
His assertion that selling players in order to better ourselves financially is a great idea; however, when you look at the reality of the Championship it’s clear to see that sides in this league struggle to sell players consistently at a profit in order to help their overall financial position.
It’s already been noted that Championship teams don’t bring in enough cash to turn a profit - in fact many teams in the league constantly find themselves losing money - and part of this is down to an inherent inability for clubs in the league to consistently sell players on at higher prices.
It’s a catch-22 situation whereby clubs can’t sell their top players at top prices because top clubs aren’t willing to pay top dollar for a player they can’t grantee will be top class. Toppa.
We will make be able to raise a good sum of money from the sales of players such as: Kone, Pickford, Khazri, and Borini - but some of those many be sold at a loss overall, and the rest of the money will be used to either repay loans or restructure a squad that will need major surgery this summer.
Will we be able to consistently purchase and nurture young players who can be sold on at a profit? It sounds a great idea, but it’s easier said than done. Efforts must be focused on assembling a squad capable of securing promotion before the parachute payments run out, whilst also signing several players who could potentially be sold on at a profit. It really is a huge task.
One major area in which the club has struggled in recent years is the amount of money we’ve spent on wages as a proportion of our turnover. Last year that figure stood at around 78%, yet that figure pales in comparison when compared to the figures above.
Teams are literally paying more than what they earn on player’s wages - how can this be remotely sustainable? Teams like Bristol, Blackburn and Forest haven’t looked close to promotion, yet they’re throwing huge sums of cash away on player’s wages.
This either suggests that the clubs are paying too much money on player’s wages, or that the income is so low in the Championship that it isn’t feasible to assemble a squad capable of promotion - or even stability - without paying over the odds. And that is simply shocking.
Then again, Burnley’s old records show that perhaps there is hope of a conservative approach to relegation if the club can wisely utilise their relegation money and parachute payments. Reports in recent weeks have suggested that Sunderland’s current squad face wage cuts as high as 50% in the event of relegation, so perhaps the club could potentially put themselves into a relatively decent position... here’s hoping.
We’re in a pretty fortunate position going down with so much money coming with us. Theoretically adding TV money, parachute payments, wage drops, and player sales together could be enough to write off a huge portion of our debt, and fund the need to rebuild a lacklustre playing squad.
However, the priority simply has to be assembling a squad capable of a swift return to the riches of the Premier League, unless Short and co. are willing to take a very long-term approach.
Ipswich Town’s owner, Marcus Evans, penned an interesting letter to the fans back in December whereby he outlined the club’s strategy to return to the big time.
My view, based on the finances available to us compared to those with parachute budgets and the small group with, often short term, huge owner investment, is for the club to maintain a sustainable and consistent strategy, which I firmly believe provides a foundation each season for a promotion challenge.
In summary, a focus on the Academy; a competitive wage structure; careful use of our transfer budget on developing players and a stable management team are factors which I believe provide us with the best chance of promotion out of the Championship, which is one of the toughest - and getting even tougher - leagues in the world.
Evans’ realism should act as a stark reminder to all Sunderland fans to just how brutal the Championship can be. Teams like Ipswich and Brentford - major proponents of analytic driven scouting - demonstrate just how difficult remaining competitive can be should a club be unable to utilise parachute money.
Sunderland simply must get this summer right, we need a Premier League return within the next three years otherwise we might be looking at an unwanted stay in the wilderness.
Short, Bain, Moyes and co. simply must get the next few years of investment and planning absolutely spot on - there’s no ifs, ands or buts about it. This is a cathartic moment in the history of this club, and if they aren’t able to stabilise this sinking ship then who knows what the future holds for our beloved club.