Sunderland: A confusing time to be a Black Cat
Posted on August 5, 2020
SUNDERLAND’s financial report for 2018-19 reflects, to a certain degree, a club that remains one of English football’s great enigmas – an institution with a strong heritage, fanatical support but a barren trophy cabinet. Sunderland, since 1970, have been promoted eight times and relegated on 10 occasions.
After the disastrous double relegation of 2017 and 2018, Sunderland find themselves in a worrying place. Their finances dwarf their League One rivals, but also highlight the fall of the club since Premier League when Sunderland’s turnover was £ 123 million.
The current owner, Stewart Donald, who was previously owner of non-league Eastleigh, wants to sell the club and is looking for £ 37.6 million to end the relationship. He stepped down as chairman on July 18 2019 and is more than aware of the fans’ feelings towards him, and it hurts. According to media reports, Donald is now in a “period of exclusivity” with a potential new owner. Nobody is counting their chickens, for the North-East of England recently saw how a possible buyer can suddenly pull out of a deal.
One of the investors seen as a likely buyer is Hong Kong businessman Sammy Yu, who was previously involved with Birmingham. It is probable he regards Donald’s asking price as too high after two seasons in League One in a climate where club valuations are going down.
Sunderland is still a club that could be successful, though. When they were in the Premier League, were averaging 41,300 at the impressive Stadium of Light stadium, which made them the seventh best supported club. Relegation in 2016-17 saw that figure drop to less than 28,000 in a torrid campaign. The day Sunderland were relegated to League One was an angry afternoon as fans displayed their frustration at the club’s freefall. The atmosphere was toxic.
A club of Sunderland’s size is out of place in the third tier of the game, but the impact of falling two rungs on the ladder is very clear – turnover is now down to £ 58.7 million and, understandably, wages have decreased from £ 82.7 million in 2017 to £ 26.7 million in 2019. Sunderland’s wage-to-income ratio is 45%, the lowest in the division (Scunthorpe United’s ratio, for example, was 158% in 2019). This underlines the size of the club, for their wage bill, at £ 26.7 million, is the highest in League One by some distance.
Sunderland struggle to be profitable and have made losses for over a decade. In 2018-19 this was due to an “exceptional operating expense” of £ 20.5 million. This hole in the club’s accounts is, reportedly, deterring possible buyers. This hole is basically the club’s money used by Donald to purchase Sunderland from Ellis Short, the previous owner. Donald has removed the obligation to return that cash to the club, but he has committed to repay in the future. One other concern is the loan made to Donald by FFP, a group of US investors that includes Michael Dell. If there is a default on the £ 9 million loan, control of Sunderland goes to FFP.
Since relegation in 2017, the club has embarked on a cost-cutting regime, taking expenses down from £ 150 million to £ 66 million (of which £ 20.5 is the exceptional item). This helps to get a hold on losses and also cushions the blow of lower revenue streams and the absence of Premier football. It may also be a case of getting the club in order before a sale. Sunderland are effectively debt free.
But nobody anticipated that it would be three seasons before Sunderland got back to the Championship, let alone the Premier, but after finishing fifth in 2019 and eighth in 2020, the club is still on the outside looking in.
Phil Parkinson, appointed in October 2019, was the seventh Sunderland manager in five years. So far, he has a poorer record than his predecessor, Jack Ross, but he is currently trying to overhaul his squad and has targeted a number of priorities. The club has pledged to improve its youth development and also to adopt an analytical and date-driven process for acquiring talent.
Sunderland’s recruitment head, Tony Coton, along with Richard Hill, head of football operations and the head of the Academy of Light, Paul Reid, all recently left the club. Reid departed after two years in which Sunderland lost a number of promising youngsters and their development teams struggled. Hill and Reid were both at Eastleigh when Donald was chairman of the club.
Sunderland would figure many lists of the top 25 clubs in England, but the glory days are now firmly embedded in the past – even the FA Cup win of 1973 is almost half a century old, as the statue of Bob Stokoe outside the stadium testifies. The last league title was in 1936.
The club should be in a far better place, but with the right ownership model, a long-term vision, managerial patience and local support, Sunderland could be in a position to look their traditional peer group in the eye once more.
Although the area has often been badly hit when there have been economic downturns, the value that a successful football club could bring to a place like Sunderland is significant. A crowd of 40,000 in a city of 271,000 is a high percentage of people holding an interest in the club. English football needs a successful team from the north-east in order to provide balance and alternatives to the London-Manchester-Liverpool axis. Perhaps the sale will herald a new era, but how many false dawns have Sunderland AFC envisaged over the past 50 years?
Photo: PA Images