MAKING THE MOST OF A BAD SITUATION



ALS’ financial expert, Giles Mooney, looks at the positives of the enforced break that the club finds itself in…


When it comes to business and football it is almost inevitable that major change happens while everyone is already trying to spin more plates than they can manage.


Managers rarely get a job following a successful, happy periods on the pitch and senior business appointments are almost never made in companies when everything is ticking along nicely. It means that there can be a long period after a takeover on or off the pitch where it’s mainly fighting fires rather than genuine new beginnings. Ideally, what is needed is a pause. A re-start. A window for people to deal with whatever needs dealing with, get rid of the old, prepare the messages and then deliver them. And Sunderland AFC, in very unfortunate circumstances, have been given just such an opportunity to restart.


Kristjaan Speakman has an empty Academy of Light to set up as he wants it, to look at what needs to be done without the phone ringing and without the games coming thick and fast to distract him. Lee Johnson has time to prepare, to review the stats for the season to date, decide what is needed to move us forwards and, quite simply, get his feet under his new desk when many other clubs are playing two or three times a week and running to stand still.


But can the club also use this window to sort out off field matters once and for all? I suspect there are two things the current owners need to accept to make a sale happen and, if they do, a deal can be done, possibly even in this enforced break from action but, if they will not, we will find ourselves in this position long after any pandemic is a distant memory.


There have been a number of leaks, stories and public interviews suggesting due diligence is proving a difficult time for prospective buyers. The in-depth review process will always produce questions to be answered by owners and directors with most easily answered, some result in a correction or clarification being made and some will result in a slight change to the offer or in extreme cases the cancellation of an offer.


Any deals being discussed at the moment are made more difficult by the uncertainty in the world. Valuation models should look at the future potential of a business as much, if not more than the history and predicting the future is currently almost impossible – will there be full crowds this season? Or any crowds? Or games? Will the EFL pay money to clubs? What conditions might be attached to any payments? Do these issues increase the risk of demands on loans or rights held over assets?


This all adds pressure during the due diligence phase. Such issues are generally resolvable as long as neither party cling to their extreme starting positive or negative view. No one sells a company refusing to compromise and no one buys at the price first discussed. The first thing the owners need to accept is to compromise to get a sale over the line. Possibly over the current uncertainty, possibly over their starting valuation, but either way, step one is compromise more generously than has happened to date.


The second issue I imagine is causing a sticking point is the agreement of roles and responsibilities going forwards. Stewart Donald doesn’t strike me as someone who walks away easily from a business that hasn’t gone to plan. I suspect the potential for growth and the appeal of promotion is hard to walk away from too, especially if there’s a suggestion he could still be involved in some way, able to earn in the future and be part of the magical journey he dreamed off two years ago.


Equally, I imagine anyone thinking of taking over is hopeful of as clean a break as possible, reaping any future rewards themselves without sharing them with hanger on minority shareholders. I’m sure a compromise can be done in terms of involvement as well as finances, but I worry that, in trying to stay involved, Donald might prevent any deal happening at all. Perhaps the most profitable way for him to sell is to walk away completely.


In the same way as we need Speakman and Johnson to use the next few days to resolve concerns and help the club move forwards, it is also the time for the current owners to reach out to prospective owners and, through compromise on finances and involvement, find a resolution to the situation we currently find ourselves in. There is a lot of work to be done to turn this club around and we can’t afford to delay any longer. Equally, with every passing day, the club becomes slightly less attractive than it did the day before that. How long can that go on with any hope of a favourable outcome.


So, come on Stewart, let’s make sure we go into January with a well-prepared Academy and First Team set up but also some big changes in and around the boardroom. Only you can make it happen.