Phil Smith: Sunderland's eye-watering loss highlights two major challenges for Kyril Louis-Dreyfus

The club announced a loss of £11.7 million for the 2020/21 season, the third at League One level and another to end in play-off failure. Significant losses were expected as a result of the regular campaign being played behind closed doors, and indeed the notes accompanying the accounts (notably more in-depth in the aftermath of Kyril Louis-Dreyfus' arrival) pointed out that the extremity of the circumstances means comparisons with previous years are fundamentally flawed.

Scratch a little deeper beyond the surface, though, and the results underlined why Louis-Dreyfus' stated aim of sustainability for the club will be so difficult to realise in League One.

The impact of COVID-19 was dramatic, undoubtedly.

Matchday and ticketing revenue dropped to £1,222,000 from £5,658,000, while conference and banqueting plummeted from over £2 million to just £12,000.

The club were able to use the government furlough scheme to recover a small proportion of these losses, and a £7 million drop in operating expenses reflected the fact that in the previous campaign they had been forced to pay another significant sum in the long-running Ricky Alvarez saga.

Sunderland's most significant slump in revenue, though, was not related to the pandemic. Television and media revenue slumped from £17,195,000 to £5,378,000 as parachute payments from the Premier League ended.

It was the combination of these two factors that made for such an eye-watering set of accounts, where wages were accounting for 125% of income and losses were at £224,000 every week.

While Sunderland's matchday revenue has quickly recovered this season, and over 20,000 have already signed up for next season, those losses in TV income will not be easily recovered outside of the top tier and certainly not in League One.

Though the wage bill and cost base at the club fell again, breaking even outside of the Premier League will be heavily dependent on player sales as overall costs and expenses at a club of this size and with such impressive facilities remain high.

The accounts also serve as a reminder of off-pitch sagas still far from settled.

As of July 31st last year the club was indebted to shareholders to a sum of just over £2 million, which has likely grown given an injection over £6.5 million since.

Though the accounts make clear that this debt will be converted to equity at some stage, it is uncomfortable to say the least when the obligation to repay the debt to the club from the previous ownership group was removed, and the process of repaying those funds is still ongoing. These matters will be debated extensively in the summer, a successful end to the season or otherwise and finding a resolution to Madrox’s ongoing presence will be crucial to Louis-Dreyfus unlocking the club’s clear potential.

Louis-Dreyfus speaks extensively in his notes of the importance of a long-term vision, but his appointment of Alex Neil earlier this year, from which point onwards it has been all about the short term, substance over style, promotion over everything, reflects the numbers released today.

He has a strong vision for the club, but one that can only be executed in part at this level and with this muddled ownership structure.