Everything Sunderland owner Stewart Donald told fans on the big financial and investment questions
Sunderland directors Stewart Donald and Charlie Methven have offered an in-depth analysis of the club’s current financial position - with investment options on the table.
During their latest appearance on the Roker Rapport Podcast, the duo gave updates on the Black Cats’ hunt for fresh investment while also clarifying rumours on the use of parachute payments, the deal put in place to buy Sunderland and the short-term loan the club took out:
Donald on the deal put in place to buy Sunderland…
“The deal is very, very simple.
“The overall deal, and it has changed slightly so we’ll explain what it was and then why it changed afterwards.
“The deal was £40million. Now that was the deal. £25million of that was ring-fenced out of the parachute payments to go to settle off SBC, which was a football club debt which had been run up by [Charlie Methven: the bank, it was the bank debt.] with me, or Madrox as it was which is all of us, paying £15million. So the total deal was £40million.
“We then agreed to cover the cash flow. The view of that was they would be pretty much neutral to the £25million bank debt because of the hole in regards to cash flowing, but mainly because of the unpaid transfer fees where we bought them over time.
“So that was the deal. The legal contract is that of such, so that’s what we had to pay.
“As we got into the detail of the deal, it was clear that our cash-flowing was going to be worse because there was things like Ndong down as going to Watford for £8.5million because they had an option on him. Were they going to take him? No, so that’s another £10million I have to find.
“So I turned round to Ellis and said ‘of the £15million we’re giving you straight away, we’ll make that £5million.
“That’s not been hidden. I think the Sun reported it and we made it clear in the press releases that we were going to pay for the club in installments.
“So we agreed £5million for that, and that was the deposit.
“The remaining £10million we had to pay, and the £25million, was all secured against the parachute payments in case we didn’t pay the £10million or we didn’t pay the money to SBC or whatever it was.
“I agreed to pay the remaining balance in September .”
Donald on why the club took out a short-term loan...
“We took out a short-term loan.
“We wanted this summer to have all the options, so what we wanted to do is just get rid of the payments to Ellis [Short] and the charge. So what we did was we advanced, I think it was April, May, June and July’s parachute payments for this season.
“We did that and basically the bulk of that went to settle off this final debt to Ellis, the £25million. That was a short-term debt. “
Donald on the club’s Premier League parachute payments...
“We have got most of July, the run-off money from the Premier League which is another million, plus August through to June next year of the Premier League parachute payments to go into the club next year.
“I haven’t spent them, I haven’t had them. They’re there for the club.
“So to say we’ve used the bulk of the parachute payments is completely incorrect. We’ve used a little bit for July, which is paid back on a very short-term loan - three or four months - that enabled us then to have conversations about possibly raising funds on the stadium, which I don’t think we’ll do.
“But we wanted to have every option available to us in case we wanted the funds. It also accelerated the Ellis and SBC payments.
“So we have got the parachute payments? Yes. Is our academy in jeopardy? No.”
Donald on investment options...
“At the moment, we’ve seen no proof of funds from anybody, I haven’t signed a heads of terms.
“I’ve got options. This is Sunderland, the world and his wife as soon as they can wants to be associated with Sunderland.”
Donald on finding the right investment fit - and the fact there is no desperate need for fresh finance...
“I think if we could do a Sheffield United, if we could have Jack Ross follow that Chris Wilder path etc etc and we don’t spend too much and get into the model where some of the Premeir League clubs don’t lose money and we run ourselves well and we spend our money well, then we could do this [get to the Premier League] on our own.
“The problem we’ve got is we can’t make many mistakes. If we make them, and the money goes dry then actually our investment goes down.
“Our desperation to do a deal goes up and you’re tempted to get the wrong person in.
“I’ve had lots of people come on to me.
“I’ll show you my phone now, I’ve had someone come on to me and said ‘I’ll buy the club’. He asked me six weeks ago and is chasing me this morning. I haven’t even got back to him, because it’s not right for the club.
“I don’t want to sell it in its entirety and I don’t think anyone who has approached us and said ‘we’ll buy the club’ - we aren’t getting people I think…they’re saying we’ll go on a journey. Well what will you do? ‘We’ll employ some people’. Will you move to the area? ‘No.’ That would be no good for the club, that’s my judgement.
“So they haven’t come along and offered any, I think, Sunderland need. Some people have come along and offered investment and it’s on the wrong basis.
“There’s a couple of people who have offered investment and want a lot of control, and I’m sort of saying ‘well can I keep a bit more? Can we do this?’. We’re having those conversations.
“There are, I would say, two serious options where I think people would be good for the club.
“But can we get the right deal for everybody? And what I mean by that is not a deal where I just go ‘I just want to stay so I’m going to be detrimental to the club’, one that I feel can build on what we’ve done. That’s what we’re looking at.
“Will something happen over the summer? Possibly.”
Donald and Methven on revenue streams and targets for next season…
SD: “Next season, pre-transfer payments, I reckon we make £100,000 a week moving forward - unless we spend it.
“There won’t be a loss, not a chance will there be a loss.”
CM: “The interesting question, if we’re going to get into the nitty gritty of that, and the one which I’m very focused on, is let’s say you have costs of £27million, operating revenue of £20million and you’ve then got a £10million parachute payment.
“That £10million parachute payments means that, for that year, you’re going to make a profit of £3million which then you can spend on investing in the academy, on the odd player etc etc.
“But at the same time, you’ve got to be thinking at the back of your mind ‘what about next season when we don’t have that parachute payment?’.
“We need to increase those revenues and keep those costs coming down so that even once those parachute payments are finally gone, we’re still a sustainable club.
“So, there’s still a lot of work to be done.”