Sunderland's accounts in context: What they mean and what they tell us about the stark challenges ahead
The notes from the boardroom accompanying Sunderland's 2018/19 accounts, published today, begin by paying tribute to Jack Ross and his coaching staff for their performance.
An early and neat reminder of just how much has changed since the period in question.
It's apt, too, as these accounts, which show a loss of £11.2 million, appear to have been signed off in January.
It is not clear, then, why it has taken seven months for them to be made publically available, with the club taking advantage of a government scheme to delay the publication for three months.
Had it not been for the revelations in the Daily Mail and The Times in May, today would have been the first that Sunderland supporters would have learned of the £20.5 million parachute payment money used to purchase the club being written off as an 'exceptional operating expense', with no accompanying explanation offered in the accounts.
In this, much can be understood as to why an atmosphere of unity at the start if this accounting period has changed so dramatically two years on, with distrust and anger now very much the prevailing mood.
As it is, Madrox told The Echo in response to the revelations that this figure reflected the balance of payments between their company and Sunderland AFC as of July 2019.
So, essentially, £20.5 million was the remaining balance between the money taken from the club to pay Ellis Short via Madrox, and the money put back in at that point.
Madrox’s accounts, also published today, show a profit for the period of an almost identical number.
They told The Echo that in the subsequent period, of which information is not yet publically available, the balance had been reduced to £11.5 million. How much of this money relates to injections from the FPP remains unclear due to 'confidentiality'.
Donald recently told supporters at a meeting that he 'hopes' the 2019/20 accounts, which would highlight this injection, will be available by November.
Today's numbers won't come as a surprise to supporters, though the anger with what lies behind them remains.
What we’ve learned from the numbers
The picture at Sunderland has changed significantly in the twelve months since the end of the accounting period in question, but they are nevertheless instructive when it comes to the challenge ahead, whether it be for Madrox or any potential new owner.
The accounts underline the success of the initial drive to win the backing of supporters, and the enduring loyalty of those who continued to put their hands in their pocket whenever asked to do so.
Despite dropping into the third tier for only the second time in their history, gate receipts rose (two trips to Wembley help here, too).
The club also manage to increase income in areas such as sponsorship, conference and banqueting, a not insignificant achievement given the nadir the club had reached as it plummeted through the Championship.
One of the starkest changes from the 2018 accounts was the drastic drop in the club's cost base, something which Madrox have regularly pointed to as one of their biggest successes since taking over the club.
A wage bill of almost £47,000,000 dropped to just under £27,000,000 in a year.
This is, of course, down mostly to the decline in the club's player wages. Many players from the Premier League era departed (and it's worth noting that as far as The Echo understands, money used to settle player contracts is not included in the profit & loss figures), while many also saw a reduction in their contract due to relegation from the Championship.
The club remained wedded to some onerous contracts, such as the eye-watering figures paid to Bryan Oviedo for what can at best be described as an occasional contribution across the campaign.
The drop in cost base also owed much, however, to a dramatic reduction of staff right across the business and that process is reflected in the figures.
Full-time staff at the club (football and administration staff) dropped from 316 in 2018 to 206 in 2019, with matchday staff down from 222 to 157.
One of the key frustrations for many supporters is that so many of the departments (such as recruitment) have not been built back up sufficiently since.
Director's pay also declined drastically, from just over £2,000,000 in 2018 to just under £300,000 in 2019, though supporters will be curious as to the £320,000 that was invoiced to the club for 'key management personnel'.
The playing wage bill has of course reduced significantly again from that first season in the third tier, and will do so again moving into the next (significantly, the club now has no players on a deal signed in the Premier League or Championship seasons).
But these numbers highlight some key points.
What they tell us about the road ahead
The club's turnover was still dominated by parachute payment income, and Sunderland are moving into an era where they will no longer receive anything in that regard.
This is a major challenge to Madrox or any new owner, given the significant fixed costs that a club the size of Sunderland incurs.
It underlines the importance of the club's supporters, which is something that has not been reflected anywhere enough in some of the club hierarchy’s recent actions.
The impact of the COVID-19 pandemic will affect all clubs but these accounts simply serve to underline the impact that potentially losing a third of the club's attendance would have.
The writing off the parachute payment (and the confusion surrounding it) had always been the key headline from these figures and that regard, so much damage has been irreversibly done.
Combined with other statements that have ultimately misled, a failure to implement a long-term footballing strategy and many other promises that have not been delivered upon, it has served to make Madrox's position at the club untenable.
The figures also underline the radically changing nature of Sunderland as a League One club, and the challenges that face any new owner in this most uncertain period.
Above all else, they highlight the scale of investment required for any new owner who assumes control of the club. To steer it through the current climate and fund likely losses in the third tier, to build key departments of the club back up, and to invest in the playing squad if and when it was to return to the second tier.
This is perhaps the most pressing issue of all, when you consider the asking price currently stands at £37.6 million.