Cast your mind back to the summer of 2018. SAFC had just been relegated to the third flight but their supporters didn’t care. The hated owner, Ellis Short, had sold the club and they were embarking on a new era.  After years of Premier League football, spending hundreds of millions on internationals, 6 in a row and being 45 minutes from winning a major trophy, they were now “getting their club back” by getting rid of the man who had financed it all. Nobody knew much about the new owners. But who cared? They were saying all the right things. “We’re an international consortium who has wiped out all the club’s massive debt”. “Newcastle are an arrogant club”. “The piss taking party ends here”.  “Do you want brown or red sauce with that burger?” It was all captured for posterity on Netflix.

And Sunderland fans lapped it up.

As usual True Faith was the first to challenge the perceived wisdom. We wrote an article soon after they had bought the club questioning their backgrounds, wealth and motives.

The backlash from Sunderland fans was predictable. Donald and Methven, we were told, were the new messiahs who had saved their club from oblivion. They were going to lead them back to the promised land of the, er, Championship. 

Fast forward two years and Donald is being advised to hire bodyguards as a result of death threats to him and his family. What has caused such a turnaround in such a short space of time? The main reason of course is on-field failure as they look set to suffer a third term in League One. But behind the team’s performance, little by little, more is being revealed about the owners and the deal they struck to buy the club which is leaving SAFC fans doubting their motives behind the purchase. 

So what do we know? Put simply, Donald and Methven used the SAFC parachute money to buy the club. It was not security as they’d previously intimated. The club loaned the parachute payments to Madrox (Donald, Methven and Satori’s parent company set up to buy SAFC) and they used that to partly finance buying the club from Short. Satori, it has been revealed, only paid a pound for his 20% share! A print copy of True Faith is worth more than 20% of Sunderland Football Club. 

It was similar to the Glazer leveraged buyout of Manchester United albeit on a far smaller scale. Whilst the Glazers used Man Utd as a vehicle to borrow money to finance the purchase, Madrox used SAFC’s main income stream (parachute payments) to buy the club.

But that isn’t the worst part. It has now been exposed that Donald & Co do not have to pay that loan back to SAFC. The Daily Mail have revealed that the legal obligation to pay back that money, over £20m, has been removed by way of an ‘exceptional operating expense’.

Sunderland have told the Daily Mail that the money will be repaid by way as a “gift” or through “shareholder funds”. But there is absolutely no legal requirement for them to do so. Would be purchasers of the club are now reliant on a ‘promise’. Indeed, it’s suggested that this is one of the reasons that they are walking away from Sunderland. Apparently, during negotiations they are being given no guarantee that the money would be repaid. Would you buy a club where Charlie Methven promised “yeah, of course we’ll repay everything we borrowed. Honest”. 

Sunderland have attempted to explain the debt write off as a condition of the £10m loan they obtained from US investors FPP. But the timeline does not add up. The debt write off is included in the accounts for the financial year ending July 31, 2019. The FPP loan was made in October 19. That means that FPP insisted on the debt being written off more than three months before making the loan agreement when we were told that they were in negotiations to buy the club. It just doesn’t add up. 

FPP walked away after doing due diligence on the club’s finances (they would have had an early view of the 18/19 accounts). Whilst these have yet to be made public – click –  True Faith did their own analysis of the 17/18 accounts.

Methven accused SAFC fans of being “unbelievably uneducated” in business terms so we at True Faith have done our best to help them understand why their club is a financial basket case which was always going to implode. We’ve received little thanks for them for our efforts.

However, it does not take a business genius, or even our exposes of their accounts, to see why potential buyers are walking away.  Writing off a debt by way of an “exceptional operating expense” may pull the wool over the eyes of the average football supporter but it’s meat and drink to the professional accountants paid to undertake due diligence. 

Donald has been in talks to sell Sunderland since last summer and publicly reiterated his intention in January when an alliance of leading fan groups called for him to go after losing trust in his ownership. He has been accused of being a carpet bagger looking to flip Sunderland for a quick profit. That may or may not be the case but what is unarguable is that he is a gambler. He bought the club in 2018 for about £5m from his own pocket with a further £10m to be paid in instalments to Short. The £22m parachute payments were “loaned” to Donald and then also paid to Short (who in turn used it to pay off some of the outstanding debt). A total sum of about £37m. 

Donald assumed that SAFC would be promoted back to the Championship at the first attempt and he’d have been able to flip SAFC at a considerable profit. Now that gamble has failed, Donald has to look at what he can now reasonably expect for SAFC. It’s reported that he want’s £35m. It’s unclear whether that will include repaying the FPP loan and the parachute payments. 

But it would be interesting to see whether anybody is prepared to meet that asking price. It doesn’t look very attractive to an outsider. The club’s income is about to plummet next season, most of their first team squad are out of contract from 30/6/20, they have an academy that failed to win a single game in 19/20 and a support that is revolting. No wonder Methven has walked from the day to day running of Sunderland Football Club 

Mike Ashley waited 13 years before he finally got the price that he was asking for Newcastle United from the Staveley-led consortium. Sunderland may be stuck with Stewart Donald for a while yet if he refuses to budge on his price.

Let’s see if Sunderland fans can go 13 years of Donald without a “Mag-like” protest.

DAVID O’BRIEN 

Interestingly, the Mackems appear to have latterly woken up to the shit-show Donald and Methven have visited upon their club. The enclosed blog in the not at all ironically named Sunderland fans’ website (ha ha) WISE MEN SAY  – who some readers will recall led the backlash-cum-hissy-fit to our warnings about the two chancers now running their club into the ground, might have been written by us. Though we’d always be less mournful than this lament. Fair play though to Sunderland fan Chris Weatherspoon who has done a good job summarising a litany of “misspoken” (I know, me as well) bullshit to come from these two chancers. You will recall how these two whoppers were welcomed uncritically into the R&W fold less than two years ago. You will remember how this lot and others rolled over and had their bellies tickled by Donald and Methven because they deigned to give them interviews for podcasts etc.  That worm turned some time ago it seems. Anyway, click here – and witness Mags and Mackems get on the same page about the people running the Wearside club. Try not to laugh too hard though.