Fan Letters: “It’s difficult to support something you don’t understand”

Dear Roker Report,

Today, your Fans’ Letters and Editor’s Response made me think again about what has gone on financially at Sunderland over the last 2+ years.

It occurred to me that there may have been a better, more acceptable, way for the last two owners to have explained what has happened, for the fans’ sake:

1. The Summer 2018 Purchase

It was reported in Summer 2018 that the club was £150 million in debt (£80m + £70m), mostly to the owner Ellis Short. He was looking at a total loss of £250 million for the period of his ownership. Reports also said he was ready to walk away from the club, rather than continue losing £500,000 a week. I guess that would have meant sending Sunderland into administration.

Reports said the EFL had a choice of seeing the club go into administration, or allowing a deal to be done between Ellis Short and Steward Donald/Madrox.

In reality, the deal required that £32 million of Sunderland’s Premier League Parachute Payments be paid to Ellis Short, in return for him writing-off all of the £150 million of club debt. In addition, Stewart Donald was to pay £5 million to Ellis Short.

2. The 2020 Sale

Regarding the forthcoming sale of Sunderland by Stewart Donald/Madrox. He has said that he “does not want to lose money on it”.

In addition to the £5 million he paid in the purchase, Madrox has put in a FPP loan of say £9.6 million to the club and he has put in another £2.4 “of his own money”.

Therefore, a buyer now would meet his financial conditions if they paid off the loan and reimbursed him for what he has outlaid i.e. 9.6 + 2.4 + 5 = £17 million.

Looking at what has gone on in this way, would mean that the £20.5 million written-off in the latest accounts, published on 31 July 2020, may not be material.

This £20.5 million figure on paper has caused a lot of confusion, as follows:

- Parachute Payments out of club to ES of £22.4m + £9.6m = £32m in total , then + £5 m (SD to ES) = the £37 million 2018 “sale” price reported;

- Payments made back in to the club of say £9.1 m (from the FPP loan) + £2.4m (from SD) = £11.5 m, + then another £20.5m = the £32 m that was paid out.

It seems to me that the way things have been accounted for may well be correct, but they do not explain clearly what happened in a way that is transparent and understandable for the fans to see.

It’s difficult to support something you don’t understand.

I’m not an accountant and only know what has been reported in the media, so forgive me for any parts of the above description which are not correct.

Your more informed views and analysis on what has really gone on would be great to read!

Warm wishes to all the fans.

Ken Allsopp

Ed’s Note [Rich]: Cheers for setting that out so clearly, Ken. I too am not an accountant, and Giles Mooney’s fantastic overview of this issue is my go-to resource on this question. Clarity, openness and honesty is all we have ever asked for from the owners. What we have had instead is a shifting story from the protagonists (was the £9.6m from FPP was it a gift, an investment, a highly conditional loan or a personal vote of confidence in Mr Donald?), and those asking the toughest questions have faced legal threats and abusive personal attacks from those in charge.

Dear Roker Report,

Harry, just to remind you, SAFC are in division 3, knocked out of the FA Cup last season in round one, which I don’t think has ever happened - and if it did it was probably in the 1800s.

I, like 1,000s of Sunderland fans, have given all the powers that be over nearly fifty years undivided support and loyalty. I personally have watched probably 2,000 games on 170 plus grounds in 9 different countries, swapped jobs and lost jobs cos of my loyalty to SAFC.

But this present regime, I did not trust from day one. He, Stewart Donald, is about as trustworthy as a dodgy second hand car or insurance salesman. Sorry, I can’t look at the state we’re in, down to the actions of SD, with the same rose-tinted glasses that some people appear to be doing. The bloke’s a greedy so-’n-so, only interested in lining his own pockets.

It’s about time this man was took to task and serious questions and investigations are carried out on behalf of the many thousands of fans suffering heartache dejection and ridicule - all down to one man’s ego.

William Longworth

Ed’s Note [Rich]: Cheers for your letter, William. Firstly, I must point out that - as far as I know - there’s no suggestion that anything Donald or his partners have done at Sunderland has been illegal or improper in terms of what private individuals are legitimately able to do with the money inside companies they control. We have seen an uptick in press interest in what’s going on behind the scenes at clubs in general, and to be fair both the Echo and the Chronicle (and occasionally a national title) have increased their scrutiny of the club in recent months and there’s been no smoking gun found.

Whether or not Madrox’s refusal to contemplate making a loss on their investment in SAFC is based on greed, pride or necessity, only they are in a position to say. I would only point out that businesses that are bought and then quickly sold for a profit are usually those whose overall performance has been significantly improve and, as you point out, the club has literally never been at a lower ebb than it is right now.

Photo by Ian Horrocks/Sunderland AFC via Getty Images