It looks as if American businessman Mark Campbell is set to become the new majority shareholder at Sunderland. Due diligence has been completed and he looks set to take something between a 54 per cent and 74 per cent stake in the club: Summer revamp
The authoritative Swiss Ramble has taken a look at Sunderland's 2017/18 accounts when the club was in the Championship, arguing that such an examination is an important means of understanding their fall from grace which saw them plunge from the Premier League to League One. Having failed to gain automatic promotion as many commentators anticipated, they were beaten in the play off final at Wembley by a last minute goal scored by Charlton Athletic.
Following relegation, the club's loss almost doubled from £10.2m to £19.9m, as revenue basically halved from £123.5m to £63.7m and profit on player sales fell £26.5m to £6.6m.The £60m revenue decline was largely driven by broadcasting’s £47m (49%) fall from £96m to £49m, as the £42m parachute payment was much lower than the Premier League £93m distribution. Commercial slumped £10.7m (56%) to £8.3m and gate receipts were £2.4m (27%) down at £6.6m.
The club managed to significantly cut costs: wage bill was down £36m (43%) from £83m to £47m, mainly due to relegation clauses and released players. The Black Cats reported just £7m profit on player sales. As Khazri, Lens, Borini, McNair, Osoro and Steel all left in the accounting period, they must have gone for knockdown prices. Furthermore, there were many free transfers, while expensive signings, Ndong and Djilobodji were dismissed.
Following relegation, the wage bill was cut by 43% (£36m) from £83m to £47m, pretty much in line with 48% revenue reduction, as headcount fell by 51. This figure presumably includes payoffs to sacked managers, Simon Grayson and Chris Coleman. This is the club’s lowest wage bill since 2008.
As a rule, Sunderland do not make much money from player sales. In fact, the £33m in 2016/17, mainly Pickford to Everton, was more than the profits from this activity for the previous five seasons combined. It was back to 'business as usual' in 2017/18 with just £7m.
Although the £20m loss was obviously not great, it was by no means the worst in the Championship with the promoted clubs 'leading the way' (though adversely impacted by hefty promotion bonuses): Wolves £57m, Fulham £45m and Cardiff City £39m. In fact, only five clubs reported profits.
The last time Sunderland made a profit was way back in 2006. Since then, they have reported losses for 12 years in a row, totaling £235m (annual average £20m). The club has predicted a £10-11m loss in 2018/19. The Swiss Ramble's revenue estimates are: 18/19 £50m, 19/20 £30m, 20/21 £15m.
While in the Premier League, the only real revenue growth came from the new, centrally negotiated TV deals. Revenue fell from £124m in the top flight to £64m in the Championship. Due to lower parachute payments, it is likely to have fallen to around £50m in League One in 2018/19 [still high by League One standards]. Indeed, it was five times as much as the next highest clubs: Rotherham United £10m, Blackburn Rovers £9m, Portsmouth £9m and play off rivals Charlton Athletic £7m.
Despite the fall, the club's £64m revenue was still the second highest revenue in the Championship, only behind Villa £69m, but just ahead of Boro and £62m. This underlines the extent of Sunderland’s under-performance, as they somehow contrived to finish way down in 24th place.
Disillusionment among fans was reflected in a fall in gate receipts. They fell by around a quarter (£2.4m) to £6.6m, a long way below the £14.6m peak in 2014, despite two more home games, as average attendances plummeted from 41,287 to 27,635. The income was mid-table in the Championship, but only around half of Villa £12m. Average attendances were consistently above 40,000 in the Premier League, but dropped to fewer than 28,000 in the Championship, before bouncing back to over 32,000 in League One, due to a combination of better performance, new owners and cheaper prices. The average attendance of 27,635 was the fourth highest in the Championship in 2017/18, only behind Aston Villa 32,097, Leeds United 31,521 and Wolves 28,298. League One 18/19 ticket prices were cut by up to 40%, though most are around 15% lower.
Commercial income more than halved by £10.7m (56%) from £18.9m to £8.3m, mainly due to sponsorship falling by £7.9m (81%) from £9.8m to just £1.9m in the lower league. Nevertheless, this was still the ninth highest in the Championship, though only half of Leeds £16m.
The Swiss Ramble notes, 'Many Sunderland fans might be surprised to see they had the highest paid directors’ remuneration in the Championship of £2m. Most of this went to Martin Bain, who trousered £1.9m (including a £1.1m severance payment). That makes a total of £3.1m for overseeing two relegations in a row.'
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