Sunderland on solid foundations

Ellis Short, Chairman of Sunderland AFC
Ellis Short, Chairman of Sunderland AFC
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ON FIRST glance, an annual loss of £23million looks distinctly ominous.

Considering the financial catastrophe which has befallen scores of clubs who have dropped out of the Premier League, Sunderland’s annual accounts don’t bode well if the Black Cats succumb to the relegation trapdoor.

But delve under those headline figures and Sunderland are making progress in bringing their house in order.

The club’s annual expenditure fell by £9m to £95m – with the majority of those savings stemming from cuts to the wage bill.

Wages are an area that Sunderland have looked to proactively address, particularly offloading those players providing little value for money with their salaries.

Neither do the figures take into account any players sold after July 31 last year, so the £5m on Stephane Sessegnon, £1m for James McClean and £500,000 for Ji Dong-won aren’t included, albeit they will be largely offset by the money invested during January in Liam Bridcutt and Nacho Scocco.

Most crucially of all though, the club’s accounts don’t include the huge rise in income stemming from the new TV deal.

The 20-odd million of extra money stemming from the global rights to the Premier League would have seen Sunderland roughly break even.

Rather than use the money from the TV deal to splash out on transfer fees and wages, Sunderland have earmarked that income to pay off their overdraft.

That was why Sunderland have been far more financial prudent in the last two transfer windows. While there have been plenty of players coming in, those costs have been largely offset by those going out.

It’s one of the reasons why owner Ellis Short was a big proponent of the Financial Fair Player rules and it was a strategy set out by chief executive Margaret Byrne in an interview with the Echo 12 months ago.

“This TV deal gives the club a chance to get our books in order,” she said.

The clear problem with this financial progress is if Sunderland are suddenly left facing a financial black hole in the Championship.

The £26m a year parachute payments – available for the first three years out of the top flight – don’t come close to compensating for the lost revenue from the TV deal.

Inevitably, gate receipts will drop, while office staff will be made redundant – the saddest and most painful aspect of falling out of the Premier League.

But Sunderland may not be in such financial peril as other top flight clubs, if they fall into the Championship in May.

Every player at the Stadium of Light has a 40 per cent wage reduction clause built into their contracts. That has been standard since Sunderland returned to the Premier League seven years ago.

And with eight players out of contract in the summer, plus another five on loan deals, the wage bill will immediately face a hefty drop, before any player sales are even made.

Short is understood to be prepared for the financial catastrophe of falling out of the Premier League too and Sunderland would not be expected to follow in the footsteps of a Leeds or Portsmouth.

But the likelihood is that the club would simply become more and more reliant on the American to finance the players needed for a promotion push.

Sunderland have been trying to move away from constant approaches to Short’s cheque book. UEFA’s plans for a football financial minefield makes that essential.

They are heading in the right direction for that self-sufficiency though. If – and it’s still a big if – Sunderland can beat the drop, then they will be in a far healthier position in 12 months’ time.