On Saturday we learned that the directors of the “Sunderland AFC Group” have applied to The Registrar of Companies to take advantage of the extension to the filing deadline for the Audited Group Financial Statements.
We are not the only club to apply for this extension - plenty of others in League One have done something similar - as have Derby County in the Championship – a club who are rumoured to be in financial peril.
The extension to apply for the additional three months to file was announced on March 25th as part of a package of government measures to support businesses through the coronavirus crisis.
The idea behind it was to provide support to those companies impacted by Covid-19 - giving them more time to deal with business pressures arising from the crisis and also to account for the practical difficulties in achieving sign off due to the current circumstances.
It must be remembered that it is necessary to apply for this extension - it is not, in theory, automatically given. Therefore, a conscious decision needs to be made by the directors to apply for the extension.
The club are within their legal rights to apply for this extension, and we can only assume that the financial statements for year end 31 July 2019 had not been signed off prior to the application being made – which if that were the case would make things more tricky.
The questions are therefore around the why.
Why would the accounts and audit not be signed off 8 months after year end? And why would a club in our position, with the resources available to it, choose to take advantage of the extension?
To put this into context we need to think about the year in question.
The year to 31 July 2019 was year one of the new owners’ involvement with the club - this was a year of huge change. The acquisition of the club was the biggest deal in the lives of the new owners. Why would they delay in producing, finalising and signing off the financial statements for that first year?
Surely, given the publicity around the acquisition they would be desperate to show good governance with regulators (The EFL), suppliers, and customers (both fans and sponsors).
Surely they would want the comfort of early audited numbers to assure themselves – as company directors - that everything was on track? This is after all a business which is new to them.
Surely they would want those numbers out in the public domain to dispel the questions around the financing of the acquisition of the club?
I would want to file early if the results were positive and the audit report clean if I were them.
There are reasons why they may not wish to or may not be able to publish early.
We are told that there are parties interested in buying the club. Perhaps publishing now would impact on those negotiations. However that would imply that the accounts exist and have been signed off – arguably not a particularly good reason to apply for an extension.
Could the directors be looking at League One and lower Championship competitor clubs and believe that filing accounts now would give rivals an advantage in any transfer fee negotiations - in or out? That may be the case if the numbers were good or if we had players who would command a selling fee. I am not sure anybody is expecting that, or believes that player transfer values are an issue.
It may be the case that the accounts and audit are just not completed. If that is the case, if I were a director I would be asking why the heck not. There is no excuse for that. The lockdown didn’t start until late March 2020 - we are talking 31 July 2019 year end. The whole process should have been done and dusted months ago.
We can only speculate as to the reasons why the extension has been applied for.
Whatever the reasons - it is unlikely to be because the club is running efficiently and the owners are delighted with the results. It will be for some other reason.
I guess we will have to wait until 30th July to work that one out for certain.