Charlie Methven opens up on six months at Sunderland, the financial picture, January and beyond
Charlie Methven says Sunderland are 'ahead of their blueprint', both on and off the pitch.
It is six months since Methven and Stewart Donald struck a deal with Ellis Short to take over the club.
They have faced up to a challenging financial picture, an extensive overhaul of the playing squad and management, and the realities of a club reeling from successive relegations.
Methven has been encouraged by what he has seen on the pitch and says that off it, good progress has been made towards executing Donald's plan for the club.
"We’re slightly ahead of our blueprint, on and off the pitch," he told the Echo.
"The revenue figures are slightly better than we budgeted, the cost base is about where we thought it would be and is still headed in a downward direction.
"Performances on the pitch, we hoped that, we knew that the first few months would be difficult with such a big turnover of players and a new league. I think we said that around Christmas we hoped we’d be in and around the top six, to give us a platform to push on in the second half of the season. So where we are now, third with a game in hand, is probably a bit ahead where we thought we would be.
"So overall, thus far, cautiously with fingers crossed, I’d give it a good 7.5/10. There are things that could be perfect but that would be a bit greedy and a bit presumptuous. If you’d given us this, on and off the pitch, six months ago we’d have taken it and taken it gladly."
Methven has hailed the contribution of managing director Tony Davison in raising the club's revenue streams, as well as the 'tough work' done by Donald and director Neil Fox in reducing the onerous cost base.
"The work that Stewart and his team have done on reducing the cost base is a tough, unpleasant grind," Methven said.
"There's no joy in it, just an understanding that it has to be done.
"Last year the cost base was Â£64 million, this year the projected cost was Â£50 million. The projected revenue was Â£15 million. So that would have been an operating loss of around Â£35 million for us.
"Yes there is the parachute payment but that had been promised out on debt reduction and a massive transfer overhang. When players were sold it was for cash up front, like Jordan Pickford for instance, but when they were bought it was over a period of time. So we ended up with an overhang of about Â£23 million.
"Closing that gap Â£35 million, then, was a necessity. It was unbelievably unsustainable. The cost base is now about Â£28 million, and it needs to come down to about Â£22 million.
"So while Stewart and Neil Fox have worked on that costbase, Tony [Davison] and I have worked on the revenue side, and Tony has done a phenomenal job. He is a real unsung hero.
"The projected revenues are up from Â£15 million to Â£18.5 million and rising all the time. We hope that we can get it to a point next June where we're losing around Â£4 million a year, which isn’t perfect but is a big, big leap forward."
The new regime have overseen a sea change in the mood on Wearside.
Attendances are on the rise (and Methven is keen for them to rise further still), and the popular summer concerts are set to return to the Stadium of Light.
Jack Ross and his squad are building bonds with the supporters and edging towards the top of the table.
In the near future, the January window looms.
Supporters will be keen to see the squad strengthened and key youngsters, whose contracts expire next summer, retained.
Methven says that outgoings will be required but also added that Ross is quite right to hope that he will be supported by Stewart Donald in the market.
The Black Cats have been facing a difficult balancing act to stay within the EFL's Salary Cost Management Protocol regulations since the summer and that was compounded when a number of high-earners did not land expected moves away from the club.
The rules prevent clubs spending more than 60% of their projected turnover on wages, with the threat of an embargo for teams who did not comply.
That will limit January business but Methven is expecting 'tweaks' to the squad ahead of the second half of the season.
"The negotiations [with young players] are ongoing, I can’t comment further than that," he said.
"We’re absolutely committed to keeping them. Ultimately, of course, if a player out of contract isn’t going to sign one, then we have to click into a different mode which is protecting our financial position. But the current mode is we want to keep them, we absolutely want to keep them.
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"In terms of January, in this division, we have SCMP rather than FFP. When we came in, the football league said, 'look, on technical grounds, because of your parachute payment, you could spend vast sums [on wages] and still say within SCMP grounds. But we can see from looking at your books that it would bankrupt you, because the parachute payments are already required for these black holes'.
"So we had to sign off on an FFI (Future Financial Information agreement), which was our business plan and included how we would bring our finances under control. Two of the assumptions in that were that Papy Djilobodji and Didier Ndong would leave the club. So them leaving does not mean there is money to spend in January. For us to be able to bring in more players, our current wage outgoings will have to be reduced. It is as simple as that. The Football League will be more lenient with contracts for the younger players because they can see while wages might go up, it is good business, it is responsible. Taking on four players on 500 grand a year [without outgoings], would not be.
"The funds are fine. Stewart and Juan are ambitious football people, they will naturally want to achieve promotion and will see it is an investment. But we are in a bit of a bind and Jack is aware of that. But at the same time, one or two players leaving in January would be perfectly natural, and we have quite a big squad, certainly by League One standards.
"I don't think Jack wants many more numbers but like most managers I'm sure he does want to tweak in certain areas, and I'm sure in the board and Stewart he would find a willing listener."
While the demands of this season already have shown that promotion from League One will not be easily achieved (Donald and Methven themselves set the play-offs as a target), the executive director thinks Sunderland can travel a long way without ruinous financial spending.
That applies not just to January but beyond, whether Sunderland get back to the second tier or not.
Should they achieve that goal, however, he says the club will have a strong playing budget for that level.
"The idea that there is a massive gap between the top of League One and the bottom of the Championship is pretty much disproven every year," he said.
"A lot of teams go up, don’t change their team that much and end up in mid-table.
"The Championship is a great league, a competitive league, but I don’t think it is radically better or much faster than what we saw at Doncaster.
"At Oxford, just before the end of the season a while back, we beat Millwall 3-0 at the Den. Millwall went up through the play-offs, kept their squad and had a good season.
"So, first of all, if you do go up,, then you tend to have the wind at your backs and a young, hungry, physical side. To then be competitive [at the top end], and we would be ambitious and want to compete at the top end, then you want to bring in those players who give you a bit extra.
"So, if you look at our wage bill now, it is around Â£14.5 million. The average in this league is about Â£3 million. As we go into the Championship, you’re roughly looking at a Â£10 million rise in revenue, so your playing budget would rise accordingly. That budget would then be top ten, and then you take into account your Category 1 Academy which is producing players who are viable for that level.
"If we were lucky enough for it [promotion] to happen this season, then we would also have our final parachute payment. We would be able to use that over and above plugging some of the black holes, as it has been in recent times."
Central to this vision, regardless of the division, is that focusing on and reconnecting with Sunderland's core support can drive it back to the top.
That was something neglected when TV money from the Premier League was vast.
"The size of the club and the potential, anywhere outside the top six [of the Premier League], it should be the other clubs having to themselves into debt to compete with us," he said.
"That’s where have to get to. Of course, if you ever get to mid-table in the Premier League, then there's a decision on what you want to do, whether to push for Europe or whatever. That’s for many, many years down the track.
"Until that point, no one can tell me that we need to plunge into debt to compete.
"Our natural revenues are so much higher than most that if we run it tight and hard [we can compete].
"Going back to our first six months, I hope fans will have felt that we’re running it very hard on their behalf. We’re happy to upset third parties and be unpopular if it is best for the club, the fans, the city. That's our responsibility and is really important to us.
"We won’t be ripped off, and I think the business we did in the summer and the sales we made will come to be seen as good business.
"We want people to look at it with admiration, and say, 'no free ride there, you get nothing from that club'.
"At that point we will be protecting the fan's money because the vast majority of that revenue we talk about is the fan's money, and a bit from Stewart!
"But it's about stretching that money as far as possible."
In six months time, Sunderland's immediate future will be a lot clearer.
But they have already come a long way in a six month period that has challenged and enthralled in equal measure.