Putting Austerity On Hold...

Perhaps it has become all too familiar, all too comforting. Sunderland are yet again propping up the league table, and despite the fact they find themselves bottom of the Championship, staring relegation to the third tier for just the second time in their history square in the face, the club appears to be remarkably sanguine about the current state of affairs. The old adage goes that familiarity breeds contempt; for Sunderland, it is difficult to wonder whether or not the opposite has become true.

Saturday’s second half crumbling at the hands of Cardiff City should have been shocking. It should have aroused anger, inspired soul-searching, evoked vows to do better. But, so common have such collapses been in recent times, none of the above applied. Indeed, wonder would only have arisen had anyone dared to suggest that they had been surprised by what unfolded in south Wales. Even Chris Coleman, a Wearside resident for less than two months, was unable to proffer that it was anything dissimilar from what has now become the norm.

Far from jerking the club into action, the events of the last month have seen little in the way of change regarding the club’s overall strategy. Coleman has inspired an uplift in overall form and showed gradual signs of improving a porous defence and yet, even amidst that improvement, four of the last five games have been lost. Two of them, Saturday’s capitulation and the Boxing Day mauling at the hands of Sheffield United, have been downright embarrassing.

They have also served as an indicator that the club is now firmly set in its ways. After years of flux, of chopping and changing and finding short-term solutions where lengthier ones were needed, the club has chosen its path and appears to be sticking rigidly to it.

This should have been commendable. The decision to hire Martin Bain back in the summer of 2016 coincided with a clear shift in Sunderland’s priorities; after years of waste and churn, which led to galling levels of debt, the club would now seek to get itself on even financial footing.

It was a goal which Bain and chairman Ellis Short refused to be swayed from even as the club plummeted out of the Premier League last season and it is one which they have continued onward with.

After over a decade of splurge, now Sunderland are resigned to thrift. The summer saw a paltry £1.25m expended on six first-team players, boosted - in the loosest sense of the word - by four loanees. The sole new face this month has been another temporary one in the guise of Jake Clarke-Salter, albeit one that comes highly regarded.

Few expected the club to challenge at the top of the Championship this season, but plenty felt the squad was sufficiently equipped to be comfortable in mid-table. Though this would not have set many pulses racing, it was deemed a necessary evil for the club to get its affairs in order. A couple of years of inertia would be just the tonic, giving time to reduce the sizeable levels of debt as well as allowing the club to move on those players whose pay packets far outstrip their contribution to the cause.

Now, such a scenario looks wildly optimistic. Instead of lingering tediously around the middle of the league, the club finds itself holding everyone else up. A squad that looked uninspiring yet capable has proven to be wholly the former and nothing of the latter. Even the almost universal approval of the latest managerial appointment has done little to stem the steady surge downward.

And it is for this reason that it is difficult to understand just why the club now refuses to change course. For several seasons, Sunderland gambled on survival - and, until 2017, won the house - dispensing with significant sums to ensure their Premier League status remained in place. Such short-term measures ultimately proved ruinous, and would likely be cited by the club’s hierarchy as a reason why they should not take another such gamble this time around.

The difference is that ‘this time around’ does not concern relegation from the Premier League. Not since 1985 has a club finished bottom of the top two divisions of England in consecutive seasons. Sunderland currently look odds-on to joining Wolves in an unenviable club.

Much is rightly made of the heavy costs of relegation from England’s top division, but there are several ways in which the blow can be softened. For example, in one of the few far-sighted moves the club has made in recent years, most of the playing squad received an immediate 40% pay cut once last season ended.

Moreover, parachute payments from the Premier League itself help to limit the risk to demoted clubs. Exact figures are unknowable as yet, but reasonable estimates suggest that, should Sunderland fail to return to the top tier in the next three years (and if anyone thinks they will, please locate the nearest straightjacket immediately), the club will receive in the region of £90m between the summers of 2017 and 2020. Had relegation occurred when the financial situation was not quite so dire as it is now, it is reasonable to argue that the events of this season would not have transpired.

But transpired they have. Whilst successive demotions are rare and raise questions over what happens with those parachute payments, a reasonable presumption is that the Premier League payments will continue to be made if the club finds itself in League One next term and, as well as that, the club will receive a parachute payment from the EFL too.

The downside is that the amount in question is indicative of the stark reality of football below the Premier League. Parachute payments for relegation from the Championship comprise just 11.1% of the ‘basic award’ that is given to all clubs in the division. Based upon last season’s basic award, Sunderland’s demotion to the third tier would see them offered just £233,000 to use to fight impending financial battles. That’s about half a James Vaughan.

While the club’s revenue will drop considerably this season, a tumble into League One would see it just about fall off a cliff - the need for a ‘parachute’ could not be more apt. Where Championship clubs can expect to reel in around £10m from television revenues, in itself a dramatic fall from the league above, the amounts dispensed to those in League One are comparatively tiny.

Revenue is allocated on an equal share basis, with no performance-related merit payments made. Last year, this saw clubs collect just £1.3m each, fully £92m less than Sunderland received for finishing bottom of the Premier League. If they are relegated and Jack Rodwell remains on the club’s books, the entirety of next year’s television revenues will be subsumed by the midfielder’s wages in less than five months. Had Rodwell been a League One player in 2015/16, his wages would have accounted for over 3% of the wage bill of all twenty-four clubs in the division combined.

Such a dramatic squeezing of Sunderland’s earnings will be, in part, soothed by those factors mentioned. Parachute payments will help the club transition to a lower income world. The club’s scything of the wage bill is well-known; sources suggest that the weekly amounts owed to the playing squad have been more than halved since Bain arrived eighteen months ago. Furthermore, the cost-cutting that is clear for all to see - the closed bars on match days, the redundancies made a year ago - will have given the club a little more breathing room.

But, no matter how much the club’s recent austerity has been undertaken with the long-term in mind, it is difficult to imagine that the strategy seriously took into account a dip into the third tier. Even if wages have been trimmed down to around the £30m mark (in itself an optimistic estimation) this would account for around a quarter of the usual wage bill of the whole of League One. Parachute payments would help - some £33.5m or so would be due next year - but the feeling that the club is straying all too close to the edge is unavoidable.

All this goes without really touching upon the club’s outstanding debts. At last check, at the end of the 2015/16 season, the club owed around £70m to external lenders. That facility is due for repayment, or renewal, in 2019. It doesn’t take a rocket scientist to work out that dropping another division will significantly weaken the club’s bargaining position.

If Ellis Short is to be afforded any credit it should be for his willingness to keep the club ticking over. Short has confirmed himself that he continues to fund shortfalls where necessary, effectively keeping the club afloat. But that is now undoubtedly the extent of the chairman’s goodwill.

If Short’s desire to sell the club in the summer was not a clear enough signpost, his subsequent decision to relocate to Florida, and effectively install Bain as Sunderland’s chairman, spoke volumes. Whatever love the owner once felt for the club has dissipated, much like the millions he has injected over the last decade or so. He is now an owner in name only, one desperate to get out, and whose intentions cannot be hidden by empty words that bordered on delusion in an interview given to the club’s website last autumn.

In that sense, it stands to reason that the owner will no longer seek to fund the buying of players. He has been burned plenty in the past. He has employed Martin Bain to do a wholly undesirable job; Bain is now, to all intents and purposes, the public face of a regime that is simultaneously hoping to arrest a downward slide whilst cutting expenditure to the bone. It is a thankless task, and one for which Bain - who has made mistakes, no doubt - receives too much opprobrium.

It feels, however, that now would be the critical point at which a slight diversion must be undertaken. The willingness to get the clubs finances in order is long overdue, but the risk of relegation has become so pressing that to stand by and do nothing could simply see the whole situation become even worse still. Short is desperate to sell the club, and presumably wishes to receive as much money as he can for it. Allowing Sunderland to drop yet further would be entirely counter-productive in that regard.

The plan is likely to ensure all high-earners are moved off the books quickly, but what if that doesn’t transpire? What if Rodwell remains employed by a League One club? Or Lamine Kone? Or Didier Ndong? Or all of the above? The wages of those three combined would feasibly be enough to just about ruin the club.

And that is why investment is needed now. It need not be a fortune. But something is needed. The gaps in the current squad are so glaring they could fairly be described as chasms. Chris Coleman has at his disposal two goalkeepers who couldn’t catch a cold and no senior striker to speak of. He remains reliant on a central defender in John O’Shea who, for all he has been a loyal servant to the club, is so far past it he’s nearly overtaken himself.

Competing at the top of the Championship now takes tens of millions, but surviving at the bottom need not. Even the slightest loosening of the pursestrings should allow Coleman to cast his net into more plentiful waters than are currently available to him. The manager has already proven himself able to work with shabby tools. Gift him the resources necessary to ensure survival and, in the long run, it will be money well spent.

Ellis Short is keeping the club afloat in a financial sense. Even as an absentee owner, he refuses to let the club go to the wall. Martin Bain is overseeing a project that, should the club remain in the Championship, it will slowly begin to builder steadier foundations. He, at his chairman’s behest, will likely argue that the club could survive another relegation too.

It is not a risk that should be entertained. Continued Premier League survival was attained recklessly; what is needed to achieve Championship survival may be deemed equally reckless, but it is also infinitely more important. Sunderland’s owner needs to realise that, and realise it now.