Charlie Methven on Sunderland's financial health and how the new regime are cutting losses

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Charlie Methven hopes that Sunderland can cut their losses to around £5 million this year.

The club's last publicly available accounts, covering the final Premier League season before relegation, showed a loss after tax of around £9 million.

Charlie Methven and Stewart Donald

Charlie Methven and Stewart Donald

Back-to-back relegations have continued to take their toll, despite the assistance of parachute payments and those losses are certain to have grown.

Those payments will end next season but Methven hopes that the work done in an exhausting summer can put the club back on a path towards financial stability and says that the projected losses are at a level that Donald and new director Juan Sartori can manage.

Methven told FC Business magazine: "I spoke to David Bernstein, who did a similar rescue job at Manchester City 20 years ago. His good advice was chiefly to perform the necessary surgery swiftly and to appoint a manager who would be in it for the long haul. It was good to get such a respected figure to confirm our instincts.

"The business plan is straightforward: increase revenues and reduce costs until we reach sustainability. It really is that simple.

"When we took over, the club’s revenues minus the parachute payments were about £16 million a year, and the costs around £45 million, so an operating loss of £30 million. Because of the parachute payment of £34 million, they reckoned that made the club profitable, but it doesn’t, of course. Those payments are supposed to give you a bit of breathing space to restructure.

"They are not an ongoing part of the club’s revenue base.

"We went on a major marketing plan aimed at driving up season tickets. These had been projected at 17,500, but we have now sold 22,000. We have already brought in a number of new sponsors.

"SAFC had hardly bothered with this. Despite recent hundreds of people doing all sorts of things elsewhere when we arrived there was not a single person in the entire business whose job was to sell sponsorship! No commercial director; no head of sponsorship sales… nothing. We appointed Tony Davison from Tottenham Hotspur, and by the time the season starts Tony will already have more than paid his own salary with new deals.

"Overall, we are currently projecting revenues of £18.5 million this year. Next year, with a better ‘run-up’ at the new season we would want to see that rise to £20 million. Meanwhile, we are intent on reducing costs to circa £22 million or maybe £23 million. That would see the club lose £5 million this year and maybe £3 million next year.

"That is a manageable sum, and if the Category 1 Academy is functioning as it has done, and should continue to do, the funding gap will be met when the odd player gets sold, as Jordan Henderson and Pickford were in the past. If for whatever reason that doesn’t happen, it is a level of loss Stewart and Juan can afford to bear."

Methven added that the new regime would not 'gamble' to try and force short-term success.

He said: "For me, that is a sustainable achievable model which would still give SAFC easily the largest wage budget in League 1. If we were fortunate enough to get promoted then revenues in the Championship would increase by circa £10 million - £5 million extra TV revenue, £2 million extra ticketing and corporate hospitality and £3 million extra in uplifts that have been built into our commercial deals.

"That would make SAFC’s wage budget in the Championship firmly in the top 10, which is as it should be. But if we stayed in League 1, the club would still be stable and sustainable.

"We aren’t just ‘owners’ – we are custodians of an institution. Risking the future of that institution on some insane gamble on short-term success is irresponsible, and Stewart, Juan and I aren’t going to do it.

"What is ironic is that despite the club having almost collapsed under debts which meant Ellis was advised to put it into administration there are still Sunderland fans who want us to repeat the mistakes of the past. It’s as if they cannot comprehend a club living within its means; as if to do so is somehow a bit lower-class. But look at Burnley; look at quality clubs like Southampton.

"Both are smaller than SAFC in terms of natural revenues, but both have been far more successful on the pitch whilst adhering to sustainable models. A healthy organisation is not one that is living one step ahead of the administrators."

The full interview can be read here.