Sunderland and Newcastle United’s fortunes – and ‘fortunes’ is the appropriate descriptor here – have varied wildly in recent years.
The biggest inflection point, of course, was the Saudi Public Investment Fund’s (PIF) arrival in the North East.
Sunderland’s Kyril Louis-Dreyfus and Juan Sartori are no paupers. One is the heir to a familial fortune worth billions upon billions, while the other is the son-in-law of Russian oligarch Dmitry Rybolovlev.
Incidentally, Rybolovlev is the owner of AS Monaco, who a group linked to PIF and the Saudi state is reportedly keen on taking over.
Photo by MI News/NurPhoto via Getty Images
Photo by MI News/NurPhoto via Getty Images
Saudi Arabia’s involvement in football is nothing new. But since Sunderland were relegated from the top flight in 2017, it has gone into hyperdrive.
Now, with Sunderland on the verge of returning to the Premier League, football’s financial landscape has changed almost beyond recognition.
If Regis Le Bris’ side beat Coventry City at Wembley on Saturday, Sunderland will be guaranteed a minimum of £240m in Premier League revenue, with at least one year of TV money and, if the worst happens, two years of parachute payments.
But even as one of the so-called ‘bigger’ clubs in the country, Sunderland are re-entering a division where an arms race in the transfer and wage markets – which, in some people’s view, is partly due to the distorting influence of state-backed clubs – means only the most ambitious clubs can compete.
Newcastle’s owners have been stifled by Profit and Sustainability Rules (PSR) but are probably the most ambitious of the lot.
Since the takeover in October 2021, their annual squad cost spending (wages plus transfer fee amortisation) has obliterated the £300m barrier, a benchmark historically reserved for the so-called ‘Big Six’.
Chart showing the squad costs of Newcastle United and Sunderland, comprised of wages plus amortisation, with EFL Analysis logo
Sunderland vs Newcastle squad cost Credit: Adam Williams/EFL Analysis/GRV Media
Sunderland’s squad cost meanwhile is less than 10 per cent of their counterparts at St James’ Park. In those terms, there was no shame in their 3-0 defeat in last season’s FA Cup third round.
That’s the cliff edge that Rick Parry and the EFL are trying to address with a ‘new deal’ for English football, which could see parachute payments scrapped in favour of increased flat solidarity payments to Championship teams.
In any case, Sunderland hope they won’t be concerning themselves with the inner machinations of the Premier League’s distribution to EFL clubs for some time.
But, from a financial perspective, would they be able to compete in the Premier League?
EFL Analysis spoke to University of Liverpool football finance expert Kieran Maguire for his take.
Kyril Louis-Dreyfus can tap into family fortune to finance Sunderland, says Kieran Maguire
Commercially, Sunderland are a sleeping giant.
And in a PSR environment when capacity to spend in the transfer market is tied to income, that’s significant.
Sunderland’s club-record annual commercial income was £26m. In the last financial year, it was a far more modest £16m. If they’re promoted, you can bank on that doubling.
Photo by Robbie Jay Barratt - AMA/Getty Images
Photo by Robbie Jay Barratt – AMA/Getty Images
Matchday income will soar too.
“It is a very competitive environment in the Premier League,” Kieran Maguire tells EFL Analysis.
“If we go back to when they were last in the top flight, I think it’s noticeable that they have never had more than £15m in matchday income. It might need a revisit in terms of the strategy there, though the owners need to be careful not to disenfranchise the loyal fanbase who have propelled the club to the brink of the Premier League.
Chart showing matchday income and stadium capacities of Premier League clubs, with EFL Analysis logo
Premier League matchday income chart Credit: Adam Williams/EFL Analysis/GRV Media
“Historically, commercial income has been modest, but I think there is a lot of upside. They have had the success of the documentary and international ownership which they could leverage with some partners connected to his family. Everybody wants a slice of the Premier League.”
Louis Dreyfus Company generated revenues of £38bn in the last financial year.
The firm is not typically hot on the sponsorship market, though many subsidiaries of its primary shareholder company, the Abu Dhabi sovereign wealth fund ADQ, are involved in football sponsorship
How far can Sunderland go in the Premier League?
The revenue gap between Sunderland and Newcastle – and indeed the rest of the top two-fifths of the Premier League – is enormous.
Even with top-flight media income, Sunderland will have a challenge to eat up the ground on the Magpies and the rest of the clubs knocking on the door of the Big Six.
“The stadium will be full and it will be noisy, and those are positives when you are trying to sell the package,” says Maguire.
“At the same time, would I expect them to get close to Newcastle? Well, they have accelerated because of the new ownership and are looking at being a £300m-a-year club. Sunderland will have some way to go to catch them up, but you can certainly see that they would have advantages over some of the smaller clubs as far as the Premier League is concerned.
“It’s whether they have got enough time to establish themselves given the qualitative gap in terms of player recruitment between the Championship and the Premier League. Getting past 12 months in the division is as much as an achievement as getting there in the first place.”
Double-edged PSR sword awaits Sunderland if they win play-offs
If Sunderland beat Coventry and go up via the Championship play-off final, they will be subject to a new set of Profit and Sustainability Rules with a greater allowable loss limit.
Most Premier League clubs are allowed to lose £105m over a rolling three-year period, excluding investment in infrastructure, the women’s team and the academy.
Infographic explaining PSR (Profit and Sustainability Rules) for the Premier League, EFL Championship, and UEFA competitions
PSR infographic Credit: EFL Analysis/GRV Media
However, as Sunderland will have spent two of the last three seasons in the Championship, they will be limited to losing £61m.
On the other hand, because they – unlike Leeds United and Burnley – do not have a Premier League-level wage bill, they will have plenty of room to manoeuvre within that £61m cap.
In 2023-24, Sunderland lost just less than £9m, which is very modest by Championship standards. This season, it will likely be something similar, or perhaps better thanks to the sale of Jack Clarke.
Chart showing the profit and loss of Sunderland in recent years, with EFL Analysis logo
Sunderland profit and loss figures Credit: Adam Williams/EFL Analysis/GRV Media
Yes, promotion bonuses may eat into their final figure. But with PSR-exempt expenses considered, they could enter the Premier League with £40-50m worth of headroom.
In layman’s terms, they could afford to lose £40-50m without breaching their PSR limit. Given that any incoming transfers are amortised over five years, that gives them the capacity to spend well over £100m without any immediate concerns about PSR.
Whether Louis-Dreyfus and Sartori sanction that kind of investment is a separate issue.