Charlie Methven has opened up on the 'frightening' financial picture he and Stewart Donald inherited when taking over the club.
The executive director says the Black Cats were in a 'near-death state' and that they would have faced fines and a transfer embargo from the EFL had they not cut costs.
Methven also explained why Sunderland had, by an large, not been able to invest this season's £35 million parachute payment in the playing squad.
Writing in the SAFC programme, Methven said: "SAFC's overall cost-base was £64 million for 2017-18, with projected ongoing operating revenue of £15.5 million.
"There was a net transfer payment deficit of £20 million and parachute payments over the following 12 months of £35 million.
"It was a frightening picture that had scared off a wide range of credible purchasers who had initially been attracted by the scale of the opportunity.
READ MORE: Sunderland's financial challenges explained and potential January issues discussed
"From May onwards, the following happened: the £25 million due in summer parachute payments had been ringfenced to pay down bank debt. Ellis then wiped his own debt, and paid off the remaining £53 million of SBC's. So SAFC became debt free, but its 'net' parachute payment (post paying off SBC) is £10 million from September 2018-June 2019."
The comments add context to remarks from Stewart Donald earlier this month, who admitted on the Roker Report podcast that costs and the wage bill would have to be reduced further.
As it stands, the club's ability to invest is the playing squad in the January transfer window is likely to be limited.
Methven said that the club have already halved their operating costs and added that Stewart Donald and Juan Sartori are likely to plug losses in excess of £10 million this year.
He said: "We are on the right track, though: if we reach next summer having thoroughly de-toxed the club and put it on a stable financial footing then we may have achieved only the first of our many targets for Sunderland. But I hope you agree that, given the near-death state the club found itself in last spring, that first step is going to be a mighty important one."