After a whirlwind week of change at the club, Sunderland today released their full finances up until July of 2017. As you might have expected, it doesn’t make for wonderful reading.
During the period of August 1st 2016 through until July 31st 2017, Sunderland lost close to £10 million. That might seem an improvement considering we had lost over £30 million the previous year; however, there are several issues that must be highlighted and resolved by incoming ownership if the club are to turn things around financially.
One major worry is the fact that the club will no longer have Premier League TV money coming in to swell the coffers - and a subsequent relegation has further hurt our position.
The EFL restrict League One clubs to spending on wages to 60% of their income. Sunderland have operated above that level for quite some time, and further cuts will need to be made this summer.
Currently the club spend around 66% of its income on wages, and with a summer clearout on the horizon, new owner Steward Donald and his consortium will need to be savvy in their approach to player recruitment in order to balance the books and make us more sustainable.
Summary of #SAFC in the #EPL under Ellis Short. Income £803m, player costs (wages & net transfers) £664 m, Highest paid directors took £9m Short has put in £191m plus £70m of SBC loans = £261m. By 2016/17 only 7pence in every £1 of income from ticket sales pic.twitter.com/kSIRgTuGEB— PriceOfFootball (@KieranMaguire) May 4, 2018
People might argue that the club is about to be taken over, our debts have been wiped and we have the opportunity for a fresh start... so what’s the issue?
Well, there are a few. The fact that we owed £45 million to other clubs as of July 31st last year is a major worry. Whether that money will continue to loom over us next season remains to be seen; after all, Sunderland might have been able to clear a large chunk of that debt to other teams this season.
That seems unlikely, though, especially when you consider how much money was owed to external banks (more on that shortly). Ultimately, this figure demonstrates how inept we’ve been at bringing in players for good value - this will need to change quickly with new ownership and a fresh approach.
The agreed sale of Jeremain Lens and likely departures of a host of other players (including Fabio Borini and Wahbi Khazri) will go some way to reducing the £45 million owed to other clubs at the beginning of this season. A huge reduction in expenditure on players will also aid the battle of our new owners as they look to balance the books.
#SAFC owed a scary £45 million to other clubs for transfers at 31 July 2017 pic.twitter.com/asvZl9dxME— PriceOfFootball (@KieranMaguire) May 4, 2018
It is also believed that the Premier League parachute payments will amount to somewhere in the region of £34 million in League One next season. Comparing that to the Premier League TV money of £95 million coming into the club in 2016/17, and you’ll see we’re losing out on a lot of income that we’ve desperately relied on in order to stay afloat.
Rumours still swirl that a large portion of future parachute payments could already have been earmarked to pay the enormous SBC loan that cost us £150,000 per week in interest - staggering! That remains to be seen, though.
Thankfully, the club is now debt free - in part thanks to Ellis Short swallowing his pride. However, further issues arise when you consider the fact that relegation last season led to a fall in gate recipts from a little over £10.4 million down to almost £9 million. This will likely reduce again with relegation into League One, yet if the club can get back to winning ways, the masses will return.
Furthermore, income from other stadium-based sources (including banqueting, catering conferences and corporate hospitality) dropped from a little over £10 million down to just over £7 million. Sponsorship and the like didn’t take too much of a hit, but will certainly need to be developed if we are to find ourselves on self-sustainable footing moving forward.
#SAFCl lost £750,000 a week in 2016/17 before player sales pic.twitter.com/xk52YuKeNo— PriceOfFootball (@KieranMaguire) May 4, 2018
Thankfully, the careless reign of Ellis Short appears to be over as Stewart Donald and his consortium look set to clinch their purchase of the club in the coming days. However, there are serious lessons to be learned from this latest set of financial reports - lessons that Donald and his backers must pay heed to.
An immediate positive to take from Donald’s ownership of Eastleigh is a focus on self-sustainability. That might mean some difficult decisions in the coming weeks and months as we look to reduce our overheads and pay off outstanding debts to other club for player purchases, yet this will be necessary if we are to move forward with this club on a level footing.
The last several years have been incredibly difficult to cope with as a fan. Sitting by unable to make an impact as our club hurtled towards oblivion has been a gruelling experience that has left many fans feeling alienated and out of love with a club they previously worshipped.
New ownership and sensible financial planning are part of a larger picture in ensuring this club moves back in the right direction. Perhaps the stadium of light will shine bright once more?