Kyril Louis-Dreyfus, Madrox & Sunderland AFC: What we learned in a dramatic week & what might happen next

The discontent reached an understandable crescendo last week when the shareholding was finally confirmed over a year after Louis-Dreyfus’ arrival.

To widespread concern, it was revealed that Louis-Dreyfus has a 41% stake, with Stewart Donald still owning over a third of the club’s shares.

Sunderland have moved to clarify how the club operates, insisting that Louis-Dreyfus is in control of the club’s operations and that he can act unilaterally in key areas.

So what have learned from a tumultuous week and perhaps even more importantly - what are the likely next steps for all parties?

Here, Phil Smith attempts to make sense of what has been another dramatic period on Wearside…

HOW CAN LOUIS-DREYFUS CONTROL THE CLUB WITH 41% - AND WHY DID HE AGREE TO THAT DEAL?

Chief Operating Officer Steve Davison met the supporter collective last week alongside Sporting Director Kristjaan Speakman, and said that full control over decisions was a non-negotiable condition of Kyril Louis-Dreyfus’ initial investment.

Though the other three shareholders collectively hold a majority of the shares, the shareholding agreement gives decision-making authority to Louis-Dreyfus, who also commands a significant majority on the board.

The shareholding agreement is private and so Davison conceded he had not seen it, but both he and Speakman say they report directly to Louis-Dreyfus.

Though Juan Sartori sits on the board, both insisted that neither Stewart Donald nor Charlie Methven have a formal, active role in the club’s operations.

Funding/investment is set out in a pro-rata plan (separate to the shareholder agreement) and the executive team say that has been followed with no issues over the last year.

They believe, for example, that investment in the January window, including fees and wages, was one of if not the highest in League One.

However, that pro-rata funding commitment means that any deviation from the plan would require shareholder approval.

As for why Louis-Dreyfus took the deal, Davison argued that it was not uncommon for controlling rights to be held without a majority shareholding.

Sources have suggested that while Louis-Dreyfus wanted a greater shareholding, negotiations were protracted.

The controlling rights therefore in his mind offset not being able to purchase more than 50%, as he was eager to quickly get to work in implementing his plan for the club.

But undoubtedly, it is a key question for Louis-Dreyfus to answer himself.

WHAT WILL LOUIS-DREYFUS DO NEXT?

Supporters expressed their disappointment that Louis-Dreyfus did not attend the supporter collective meeting last week, with Davison sending his apologies due to a family commitment.

Louis-Dreyfus will be back on Wearside this week and will meet supporters in an attempt to start rebuilding trust in his leadership.

Davison acknowledged the level of fan anger over the share revelations in last week’s meeting, with the minutes reading: “SD reiterated there was no intent to mislead but that was not the perception and acknowledged that the club must work hard to restore the trust that has been lost.”

Davison also confirmed to the supporter collective and subsequently to local media that Louis-Dreyfus does want to purchase Donald and Methven’s shares.

Indeed, sources have suggested that Louis-Dreyfus has continued to attempt to do so since purchasing that initial 41%, and retains that ambition.

In statements released to The Athletic following last week’s revelations, both Donald and Methven said they were prepared to sell, the former saying he would do so at the ‘initially agreed price’.

A renewed attempt from Louis-Dreyfus is therefore likely, though the key question will again be whether an agreement on price and terms can be reached.

It’s a saga that will likely run on for a while yet, much to the understandable disappointment of supporters eager for a fresh start.

Davison said that given Donald and Methven’s statements, he was hopeful an agreement would be reached.

WHERE DOES JUAN SARTORI COME INTO THE PICTURE - AND IS HE LIKELY TO SELL HIS SHARES?

Sartori has been an enigmatic figure since his arrival in 2018, initially highly visible on Wearside before his political ambitions in Uruguay seemingly took precedence.

Fans became increasingly frustrated that semi-regular claims his involvement would step up never seemed to materialise.

Louis-Dreyfus’ arrival initially saw Sartori depart the board, but he returned last year and has returned to Wearside on a few occasions since, most recently during the January transfer window.

Some sources have been keen to stress that the Uruguayan has long-standing links and a strong bond with the Louis-Dreyfus family, and that he should therefore be seen as an ally of the chairman despite his obvious links to Madrox.

It appears at this stage that there have not been any substantive talks around Sartori selling his shareholding, and it is not expected that there will be in the near future.

While Louis-Dreyfus wants to increase his shareholding significantly, his attempts to do so over the past year are not thought to have included any move to take 100% of the club.

WHAT’S THE LATEST ON THE REPAYMENT OF PARACHUTE PAYMENTS?

The purchase of the club (initially by Stewart Donald and Charlie Methven) from Stewart Donald was funded in part through parachute payments from the Premier League.

Though the obligation to repay this money back into the club over time was written off in the club’s accounts, Madrox have publicly said that all money will be repaid before their eventual departure.

A spokesman for Madrox told The Echo in May 2020: “We are totally committed to replacing all funds as promised. Any potential sale would reflect this desire.”

Davison confirmed last week that when Kyril Louis-Dreyfus took a controlling stake in the club, the total still to be repaid stood at around £11 million.

While that number has reduced further over the past year, Davison said that the process is ongoing and at this stage not yet completed.

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