Sunderland post £11million loss due to 'exceptional operating expense' as 2018/19 accounts are finally published
Sunderland AFC posted a loss of £11,242,000 in the 2018/19 season.
This was largely due to the £20,538,000 of parachute payment money which has been written off as an 'exceptional operating expense' in the club's accounts.
This money was used by Madrox to puchase the club from Ellis Short.
In May, the ownership group said that this money was being paid back into the club, and that the remaining balance owed to Sunderland AFC was now around the £11.5 million mark.
This period is not covered in the accounts published at Companies House today.
In May, Madrox said the money had been written off in the accounts as part of the deal that saw FPP loan around £9,000,000 to the club.
That loan was agreed after the current accounting period and is therefore not reflected in the accounts.
The club's turnover for the period was £58,693,000, down from £63,691,000 in the previous year.
The decline in of almost £10,000,000 from the previous year was offset by a rise in gate receipts and an eye-watering reduction in the club's cost base.
This was partly due to a significant cut in the club's player wage bill, but also due to the significant restructuring across all areas of the club in the first year of Madrox's tenure.
Remarkably, the club's cost base dropped from £46,834,000 to £26,668,000.
This figure will have again reduced since, but Sunderland are also now moving into their first campaign without parachute payment money from the Premier League.
Money raised from sponsorship, as well as conference and banqueting, also went up during Madrox's first season in charge.
The accounts also show that payment to directors totalled £285,102, down from £2,042,052 in the previous year.
In total, Sunderland’s gross profit for the period was £56,293,000, while the net operating expense (before the exceptional item mentioned above) was £46,289,000.
In their review of the accounts, the director's notes say: "Financially, our turnover decreased from £64 million to £59 million with an increase in gate receipts incoming enabling us to partly offset the decrease in the Premier League Parachute Payments and television income.
"Profit after tax (before the exceptional operating expense) was £9 million compared with a loss of £20 million in 2018.
"Wages reduced from £47 million to £27 million as a result of our determination to ensure we have a sustainable model post Premier League Parachute Payments. However despite this reduction we believe our player wage bill to be substantially higher than any of our league rivals which should give us a competitive edge as we look to drive the club forward.
"The club has begun investing again in playing talent, whilst trading players that we felt either wanted to leave or had expressed a desire to leave. The club had a substantial player trading deficit over the season however this has been largely offset with recent player sales As always, we continue to keep a close eye on our cash flow position, as despite a huge improvement in our figures, with poor cash management we could easily fall into a negative cash flow position given the work still to be done.
"The club has identified a number of projects over the last 12 months which we are hopeful can implemented over the coming seasons. These will hopefully not just improve facilities for the club but also for the wider community and is something the club is very passionate about.
"In closing the board would like to thank the fans for their outstanding support during the season. Ultimately, we fell short with two Wembley defeats but given the position the club was in 12 months prior, this season has seen the deterioration in clubs fortunes halted and we are hopeful that the coming years will see the club develop and progress from the strong base that is being put in place."
Following a second failed attempt to win promotion from League One in the campaign since the period covered in these accounts, Stewart Donald has said he will sell the club amid fan anger at the writing off of the club's parachute payments and concern over the club's direction.
The club's finances will also be significantly affected by the COVID-19 pandemic, though newly appointed CEO Jim Rodwell recently said that the ownership remained committed to repaying the balance owed and funding the club.
"The money that Madrox have committed to put back into the football club is getting put back in quicker," Rodwell said.
"That is why, alongside the funds from season cards, I have such confidence in saying that this is not a Wigan-esque situation.
"The furlough scheme has helped us to keep our cost base down, and the combination of season card sales and shareholder injections is what is helping us.
"The owners understand their obligations and are doing it willingly."
You can access the full accounts here.