By David Owen
May 3 – Sunderland, the Wearside club battling hard to escape relegation from the Premier League under Sam Allardyce, have rounded off the annual financial results season in the English top tier by reporting a £25.4 million pre-tax loss for the year to 31 July 2015.
The loss, which compares with a loss of £17.1 million a year earlier, was incurred on turnover which edged down from £104.4 million to £101.1 million, with both gate receipts and television and media income declining.
The club – which says it committed gross transfer fees of up to £43.2 million in the summer transfer window on the likes of Fabio Borini from Liverpool – did manage a £3.9 million profit on player sales in the period under review. But this was dwarfed by the operating loss, including amortisation, of £23.3 million. Staff costs climbed to £77.1 million from £69.5 million.
Interest costs also rose to more than £6 million, from £2.3 million, following major changes to the company’s borrowing arrangements.
According to the accounts for Sunderland Limited, in August 2014, the group received loan financing of £70 million from an entity called Security Benefit Corporation (SBC). The loan, secured on freehold property including the Stadium of Light, expires in August 2019 and carries an annual interest rate of 7.5% plus LIBOR (or 1% if LIBOR is lower).
This loan was used to repay another loan and a £38.6 million overdraft facility. In addition, a £15 million revolving credit facility was also taken up with SBC.
Terms of the new loan include warrants entitling the lender to purchase a minority interest in Sunderland.
The accounts indicate that the group’s borrowings at the end of 2014-15 amounted to £141.3 million, including more than £58 million due to a parent undertaking.
The accounts also disclose that the group may be required to make payments of £7.6 million, depending on the outcome of “certain legal cases”. Sunderland’s legal counsel have estimated that the outcome is “more likely than not” to be agreed in the group’s favour.
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