Sunderland's slow January transfer window, how they compare financially in Championship and FFP explained
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With just over a week of the transfer window to go, Sunderland are yet to make their first addition.
Head coach Michael Beale offered a brief update after the defeat to Hull City, saying that the club were working hard to add to the group but adding that they ‘might have to be patient’. Of equal concern for supporters, he also suggested that the club ‘do not have the biggest pockets in this division in this window’. So what’s going on? Here, we outline the club’s current position to try and explain the delay in new arrivals, and where they stand financially compared to their divisional rivals…
So why is it so quiet with just over a week of the transfer window remaining?
Sunderland’s approach to this transfer window is slightly different to what we have seen recently. While most of the transfer windows since the arrival of Kyril Louis-Dreyfus and Kristjaan Speakman have seen the club focus on acquiring young talent, the primary focus this time around is on improving Michael Beale’s starting XI.
Generally Beale is happy with his squad, and feels that there is a lot of talent for the long term within it. Jenson Seelt and Nectar Triantis are two examples of players acquired who the head coach and club feel will push for more regular inclusion as they settle into their new environment further over the next year or so. Injuries have forced a rethink in some positions, the left side of defence being most notable, but Beale has suggested that broadly he is happy with the squad depth and does not feel that signings for the sake of it are required.
They’re primarily targeting players who will immediately be ready for Championship exposure, and that means they are inevitably looking for players with more experience in ‘two or three’ key positions. Those players are more expensive, and more in demand. It leaves the selling club in a strong position, knowing that they can wait until the end of the window to try and force clubs into making the best possible financial offer. In some cases, Premier League clubs are also delaying any outgoings until they have made their own reinforcements - with the African Cup of Nations a further complication in temporarily reducing their squad size.
None of this is to say that Sunderland won’t add young players to their group, they’ve been pretty clear that they’ll always do so if the right deal is on the table. But their ideal scenario is adding a couple of players who can take the burden off some of the youngsters who clearly need more time to acclimatise to the club and the Championship, with the ongoing striker struggles the most obvious example of that.
Why has Michael Beale hinted that Sunderland are struggling to match their rivals in the market - are funds available in this window?
There are, but there’s a couple of factors to consider.
First and foremost, what they are willing to commit to each deal depends on its individual circumstance. What they will not do is commit to significant fees and a large wage burden on a player who they feel offers little chance of recouping that investment down the line. Part of that is to protect the pathway for the younger players they want to develop, and part of that is because they believe such risky investments are part of the reason why many clubs in the division have run into long-term issues with Financial Fair Play and other financial matters - in some cases even where the owners is seen as benevolent (as we'll come to later, this is a long-term rather than a short-term factor).
So while they would push their wage budget to land a player who can impact the team now, it would more than likely be on a short-term loan basis. And while they would invest in a transfer fee in this window, that would be for a player who they believe provides value in the medium and long term as well as the here and now.
As for why they’re struggling to match the bids some of their rivals are putting forward, the answer is two-fold. One is that many of the clubs they’re competing with have an in-built advantage due to their parachute payments - six of the other nine clubs in the top ten benefit as it stands.
Secondly, and perhaps more pertinently for Sunderland supporters, is that some clubs in the division are operating in a very different manner. Put short, their owners are willing to fund losses in a bid to reach the Premier League to an extent that Sunderland’s are not.
This of course impacts transfer fees, but most significantly it impacts wages. Sunderland have a strict wage budget which at this stage remains a long way off many of the teams they are competing with. They’re committed to raising this over time and have handed significantly improved terms over the last year or so to many players, but are falling well short of Premier League or even top-end Championship level. Hence Ross Stewart’s departure, and the current impasse with Jack Clarke.
Sunderland’s argument is that lifting the budget too quickly will lead to racking up the kind of losses that would derail their progress from the double relegations that were in no small part down to making bad-value additions in the transfer market. The gamble pays off immediately if you reach the Premier League, but is ruinous if you do not. Competing against teams backed by parachute payments, there are no guarantees.
The question and the challenge for Sunderland is about balance. While most supporters back the drive towards sustainability given the club’s recent history, it’s clearly the case that very few clubs can turn a profit and win promotion from this division. Even Brighton and Brentford, the two very best examples of clubs who gradually grew their squad through player sales, were heavily reliant on owner investment and registered a loss in their promotion campaigns.
It’s also the case that the longer Sunderland are in this division, the more the expectation will be that they put together a team capable of competing for promotion. That will require a balance of experience and stature in the side, given that the recruitment record of young players (often arriving from different leagues) has been increasingly mixed over the last 18 months.
Beale’s comments this month suggest that Sunderland are looking to find that blend, but it may well be that some flexibility is required if they are to land it.
Is Financial Fair Play a factor in this window?
In short, not really. It’s hard to pin down Sunderland’s exact position with regards to FFP rules (known as 'profit and sustainability rules' in the EFL case, as their accounts for last season will not be made publicly available until around April, with their accounts for this season publicly released a year later.
However, a look at their most recent accounts already in the public domain show they are more than likely in a relatively strong position on this front. The EFL rules limit Championship clubs to losses of around £13 million annually, assessed over a three-year period (or £5 million if the owner does not inject equity to cover losses as is currently the case on Wearside). Sunderland’s average loss in their last three released accounts (covering the final three years of their time in League One and in two cases heavily impacted by COVID-19) is in the region of £7.5 million. This is a very simplified view of the picture, worth noting too that COVID allowances were made by the EFL in those years mentioned and that the figures are 'adjusted' to ensure that clubs aren't punished for spending in certain areas, such as in the academy. Taking this into account, Sunderland's position is strengthened and credit where it's due, to finish sixth in last season's Championship was an impressive achievement with this in mind.
The club may well argue that it underlines why they are focusing on players with resale value, as it would not take a substantial number of bad signings in terms of transfer fees and wages to hamper their future investment into the squad under the current rules - but there is clearly scope at this stage to make more acquisitions. As an aside, the current rules are expected to change in the next few seasons, though there is no set time frame at this stage. EFL Chair Rick Parry has previously suggested that the Championship will likely follow Premier League clubs if, as expected, the vote to change the rules and limit clubs to spending a certain percentage of their turnover on wages.
This would suit Sunderland given the size of their fanbase (though clearly significantly more could be done to maximise this advantage with the off-field operation as it stands leaving much to be desired), though there are fears that if parachute payments remain in place it will serve only to widen the financial chasm between relegated clubs at the rest of the division. As it stands, the Premier League and the EFL remain at a complete impasse on that issue.
Regardless of where you stand on Sunderland’s strategy and ownership, there’s no doubting that the sheer scale of losses across the Championship underline the long-term challenges clubs in the division face.
Surely the sales of Ross Stewart, Lynden Gooch and Isaac Lihadji mean there is room to invest significantly?
It certainly underlines our previous point about the club’s FFP position being relatively strong as it stands. Those deals were of course structured, meaning not all of the money is injected into the club up front, but it’s certainly a major boost to the plans going forward.
It’s also worth pointing out that Sunderland did make a number of investments in their squad either side of those three sales. Nazariy Rusyn, Jenson Seelt, Jobe Bellingham, Hemir, Adil Aouchiche, Timothée Pembélé all commanded a fee which could grow over time depending on performance, with Eliezer Mayenda and Nectar Triantis also signed for undisclosed fees.
Sunderland were pursuing deals until the very end of that summer window, though, and so there is clearly room for more additions. Kristjaan Speakman confirmed as much in his reflections on that summer window, and so Sunderland fans understandably expect to see the squad strengthened with their team’s play-off push faltering in the last couple of weeks.
Can Sunderland realistically win promotion without a change in approach?
Sunderland’s ownership have a stated aim to win promotion by the end of the 2025/26 campaign, and so there is a commitment to raise the budget accordingly. As it stands it seems like the occasional player sale will be important to bringing funds into the club that can be reinvested in fees and most importantly, raise the wage ceiling. That’s unlikely to be in this window, though, with Speakman making clear that they don’t want to jeopardise the play-off push by losing a central part of the current team.
The challenge is to how quickly they can improve the side and address its obvious deficiencies within their currently imposed budget restrictions, given the understandable desire amongst supporters to see the team kick on. It means the pressure is on in the final days of the window, particularly given the discontent with the recent head coach change and the debacle over the Newcastle United fixture. The latter issue in particular and the long-term frustrations of fans with the off-field operation are as big a factor in the current discussion about the club’s direction as transfers - though that’s not to underestimate the importance of the next week by any stretch.