Sunderland continue to lose money

Sunderland posted a pre-tax loss of £8.6million ($11.12m) in their annual accounts for the year ending July 31, 2024, a figure that would have almost doubled had the club not sold striker Ross Stewart to Southampton.  It is the 18th consecutive year Sunderland have recorded a deficit, with pre-tax losses since 2006 now totalling £276.6m.

Stewart’s sale on transfer deadline day in summer 2023 banked the Wearside club just under £7m once Stewart’s former side Ross County took their 15 per cent of the profit on the deal. That reduced the club’s operating loss of £16.9m, though they still lost just under £9m for the second year running, reflecting the difficulty of achieving sustainability — an aim of majority owner and chairman Kyril Louis-Dreyfus — in the EFL Championship.

The operating loss was 82 per cent higher than 2023, as increased wages, transfer fee amortisation and non-staff expenses swamped the club’s £2.7m revenue increase. Even so, Sunderland’s operating loss is the 10th-best result in the Championship based on most recent figures, with over half of the league booking more than £20m in losses before player sales.

Despite the losses, the club’s annual accounts show that it has no issues complying with the EFL’s profitability and sustainability rules (PSR).

Sunderland’s combined pre-tax loss over the three-year cycle was £24.7m. That was more than the lower loss limit of £15m, which applies to Sunderland as they have received no ‘secure funding’ from their owners in recent years.  Pre-tax losses are not equal to PSR losses though, which allow for several deductions. After those deductions, most notably the high estimated cost of running a Category One academy, The Athletic projects Sunderland had at least £20m in PSR headroom last season.

Player trading

After years of poor transfer dealings, Sunderland’s focus shifted to putting player trading at the centre of their business model following Louis-Dreyfus’ arrival.  The 2023-24 accounts are the first to show that strategy bearing fruit: the club banked £8.9m from player sales, more than the last four seasons combined and the highest single-year figure since their 2017-18 Championship relegation season. 2024-25 will be higher again following the sale of Jack Clarke to Ipswich Town last August.

Sunderland’s revenue in 2023-24 rose to £38.1m, a £2.7m (eight per cent) annual uplift.

The disparity between relegated clubs and the rest of the Championship, however, remains stark. Sunderland’s total revenue last season was less than the £47.8m Leeds United, Leicester City and Southampton each received via Premier League parachute payments, as well as the £39.1m second-year payments Norwich City and Watford enjoyed.  Of clubs without such payments, Sunderland’s income was the second-highest in the division, only trailing Bristol City (£42.4m).

Sunderland’s wage bill rose by £5.8m (22 per cent) in 2023-24, pitting them ninth in the Championship based on most recent figures.

Unclear from the accounts is where the costs of removing both Tony Mowbray and Michael Beale from the dugout have been recorded. Their departures may account for some of the wage bill increase.

The club’s wages-to-turnover figure jumped 10 per cent to 82.2 per cent, the ninth-best wages-to-turnover number in the second tier. Eleven of 24 clubs spent more than 100 per cent of income on wages at last check.

Sunderland received £1.8m in funding from their ownership in 2023-24, taking the total amount received from shareholders since Louis-Dreyfus’ arrival to £19.8m. 

The club’s wage bill has roughly doubled in two years of Championship football, and precedent dictates that the cost of competing at the top end of the second tier will only continue to increase. Of 106 Championship clubs to submit accounts since the beginning of the 2019-20 season, just 15 posted a profit and three of those suffered relegation.