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An accountant’s view on the latest ownership news at Sunderland AFC

Roker Report’s resident accountant David Holloway gives his views on the news revealed in recent days about how shares in the club are divided up between Sunderland’s ownership group.

Photo by Richard Sellers/PA Images via Getty Images

Yesterday’s news - if it was indeed news - that Kyril Louis Dreyfus owns 41% of the shares in Sunderland AFC, with Madrox retaining 59%, has shocked most supporters.

Every man and his dog knew that Madrox retained an interest in the club, and in that respect, the statement is not actually news, but we didn’t know until yesterday what the extent of that remaining interest was.

So that is the story really - that, and then whether it actually matters.

We have been told that KLD controls the board. That must be taken at face value as we don’t really know what the powers of each of the directors are. We can only make assumptions on that and there is little value in entering into whataboutery. There will be legal documents covering all sorts of commercial issues, they are commercially sensitive and will rightly remain private.

What is important, though, is considering what the role of the directors actually is. We must remember that a director has a duty to act in the best interests of the company and to its shareholders, and we now know who those shareholders are.

So, whilst KLD controls the board and it is likely that the day-to-day decisions are his, he will have to work within certain limits and with his shareholders in mind. We don’t know what his limits are, so no matter how hard we shout there will always be questions that remain unanswered.

Sunderland v Lincoln City - Sky Bet League One Play-off Semi Final 2nd Leg Photo by Stu Forster/Getty Images

What we must be interested in is how the club is funded, and by who. We know that we as supporters are funding it when we spend our hard-earned cash on tickets and merchandise, but that will never be enough to fund a club of Sunderland’s size in League One.

So, if we assume that the club is still incurring losses, then who is funding those losses? The accounts may tell us, but it is also possible that they may not provide the clarity that we are looking for so there will always be questions that remain unanswered. We are not unique as a fanbase in being in that position.

The evidence of Madrox courting the likes of Mark Campbell and then securing a loan from MSD suggests that their appetite to fund the club after year one had diminished. The perils of MSD finance are evident across the football league. That loan and the deal that Ellis Short did with SBC could have put the entire future of the club at risk.

Look at Derby County, and there are plenty of other examples in the EFL - that is why we should be interested in who is funding the club.

Hull v Sunderland - Sky Bet League One Photo by Ian Horrocks/Sunderland AFC via Getty Images

The ownership question could and should have been communicated clearly and unambiguously by the football club at the time that KLD arrived. Sunderland AFC is not a Public Interest Entity (they have much stricter rules) but it is an entity that the public are interested in. Without that public, the entity is nothing.

The directors would do well to remember that.

Our individual views of the ownership group as people are of little relevance, really. We don’t need to love our club’s owners or even like them, but as football supporters we have a life-long emotional investment in our football club, and we, therefore, need to trust those who own it - and especially those who fund it.

The events of the last three and a half years have broken that trust.

Despite recent events and revelations, I am not sure that we have seen anything very much to doubt KLD’s intentions. He arrived with a plan and a football philosophy - whether that was his or someone else’s we will never know, but there was a plan.

We will have to wait and judge its success in the coming months and years as he seems to take the Ellis Short route of not communicating outside of the club - if he is not careful, that will risk the goodwill that he still retains. He needs to make it work, so work it must.

Sunderland v Tranmere Rovers - Papa John’s Trophy Final Photo by Justin Setterfield/Getty Images

Moving away from opinion and back to the facts which are now known - Louis-Dreyfus owns 41% of the club, a stake that does not give him full control of the club without the support of others. His interest is at a level where the others could join together to wrestle control from him should they choose to do so - whether they actually would is another question.

The facts tell us that there are three people of significant control - as defined.

They are Kyril Louis-Dreyfus, Stewart Donald and Juan Sartori.

We would expect with this news that they would be listed as such at Companies House as People of Significant Control, and they are still not.

The filings at Companies House state that there is no one individual who has significant control. It may be an error - that would seem unlikely. It may be that the interests of those with more than 25% are diluted further and we do not know who is behind them. What we do know is that this is all very murky and unsatisfactory to us long-suffering supporters.

What we have a right to expect is straight-talking and honesty from those who are the current custodians of a once-great football club.

None of us are Sunderland supporters by accident. Most of us are following in the footsteps of our fathers, our grandfathers, and great grandfathers. We have stood by this club and we expect that those who own it are honest with us, despite the beliefs of some in charge.

We are not fools - so we are not asking for very much really, are we?


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