Is Sunderland's back five here to stay after Chelsea win?
Sunderland took out a new loan secured against forthcoming TV revenues last week
Documents published at Companies House on Monday showed that Sunderland have taken out a new loan with the Macquarie banking company.
So why have they done it and what does it mean? Here, we take a closer look...
What is the loan and why have Sunderland taken it out?
The documents have shown that Sunderland have borrowed money from the bank, secured against the TV revenue they will earn between January and April from the Premier League. It's basically a simple mechanism to improve the club's cashflow position in the short term. They get access to the money they know they'll receive in a few month's time, and will pay it back when it lands. It's a short-term loan with relatively little risk as it's secured against revenues the club is already guaranteed, rather than against assets such as the stadium or training facility.
Is this unusual and why do Sunderland need money?
It's not unusual, and is an approach used by many Premier League clubs to help manage their cashflow. Macquarie, for example, have previously loaned money secured against broadcast revenues or transfer instalments to Sheffield United, Wolves, Bournemouth, Leicester City, Middlesbrough and others. They have also loaned money to Premier League giants Spurs in a very similar arrangement just a month ago.
Premier League clubs benefit from vast revenues, but they land in instalments over the course of the campaign. In the meantime, clubs have significant overheads not just in player costs but also in their infrastructure and facilities. These arrangements can help them invest proactively or cover outstanding costs, knowing that they have a guaranteed income further down the line. Exactly why Sunderland have taken out a loan now is not clear but they are just coming off the back of a vast summer of investment, not just in the playing squad but also in the Stadium of Light. Promotion brings with it a huge spike in revenues right across the board, but that doesn't necessarily land on day one and in the meantime there is a lot of work to do to get up to speed.
So what's the downside?
Well, it costs money. Sunderland will incur interest on the repayments, which means it will ultimately cost them money that could otherwise have been invested in the club.
Does this impact Sunderland's arrangement with Akira BV?
Akira BV is a company owned by the Louis-Dreyfus group, of which Margarita Louis-Dreyfus is Chairperson. This is a slightly different arrangement to the Macquarie loan in that this credit facility is secured against the Academy of Light and some associated land. This is a longer-term arrangement and was initially used to clear the club's banking overdraft. It's not clear why Sunderland have taken out a new loan with Macquarie rather than extend their arrangement with Akira BV, though again this is not necessarily unusual.
So what is Sunderland's current debt position?
The level of external debt is not yet known, though fans will get an update when the accounts for the 2024/25 season are released, most likely in March or April next year. As previously explained, though Macquarie loan is a short-term arrangement that is unlikely to have any long-term impact or repercussions.
Sunderland have some internal debt to Mercator, which is the holding company through which Kyril Louis-Dreyfus and Juan Sartori own the club. At the time of the last set of publicly available accounts, which covered the 2023/24 campaign, this had risen to just short of £20 million. This debt is very different as the club are not paying interest on it, and the owners have long insisted that they will eventually convert this debt into equity.
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Does this mean extra spending in the January transfer window?
Not really, though in theory it could help. Very few transfer deals nowadays are paid fully up front, and are instead staggered in instalments over a much longer period of time. As such, an improvement in a club's cash position doesn't necessarily indicate that a big transfer spend is imminent. Speaking more broadly, Sunderland still have scope within the PSR regulations to invest in January and speaking at a recent meeting of the supporter collective, Chief Business Officer David Bruce hinted that the club have the capacity to invest in the squad if deemed necessary.
So what's Sunderland financial position like more broadly?
Despite the rise in debt, better than it has been for a very long time. Sunderland were promoted with a very lean wage bill compared to most Championship clubs, and with modest losses for second-tier standards. That gave them huge scope to invest this summer, and the sales of Jobe Bellingham and Tommy Watson only strengthened that position. They've spent heavily, but not recklessly when you consider that even in a worst-case scenario where they are relegated this season, they are likely to earn around £170 million in broadcast revenue alone over a three-year period. Sunderland's position is also strengthened significantly by the fact that they have significant playing assets within the squad. External debt in particular is never ideal and to be closely monitored, but speaking broadly the club has a far more sound financial footing than it has had for much of the last decade or so.
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