Charlie Methven interview courtesy of FC Business Magazine Q: What made you bid for Sunderland? A: SAFC is a very rare opportunity for conventional football club buyers – old-school, if you like – to acquire a true “Top 10” club. The rest have mostly been hoovered up by foreign entities, so SAFC’s descent into the third tier provided a once-in-a-decade opportunity to get our teeth stuck into a really big club with huge potential without having to compete against people who can pay hundreds of millions. Q:What was the total financial deal, how did you raise the money, and is the club now debt-free? A: The club is free of debt to Ellis Short (the club's former American owner) and the banks, but there are major outstanding trade liabilities – probably around £30 million net. We agreed to pay Ellis £15 million upfront this summer, with a further £25 million spread over the next year or so. We do have the parachute payments, which total £45 million or so, I believe. The majority of those will be taken up dealing with the outstanding liabilities, leaving – we hope – a nice little ‘pot’ at the end to help us drive up the playing budget for a few seasons while we grow the club’s overall revenues. Q: Was morale at the club worse than you expected? A: It was terrible. Fear, delusion, denial, lack of direction, confusion. The lot. Stewart and I had never come across such a broken business. We performed very major surgery in the first few weeks, reducing the non-playing wage bill from £8.5 million to £5 million. The levels of over-staffing were horrendous. SAFC was employing almost twice as many people as Newcastle! There are some fantastic people at the club, but the cumulative failures of leadership over a protracted period have had a scarring effect that will take a while to heal fully. Q: What is the business plan now, and did you consult anyone else in about how to tackle such a fallen giant? A: I spoke to David Bernstein, who did a similar rescue job at Manchester City 20 years ago. His good advice was chiefly to perform the necessary surgery swiftly and to appoint a manager who would be in it for the long haul.It was good to get such a respected figure to confirm our instincts. The business plan is straightforward: increase revenues and reduce costs until we reach sustainability. It really is that simple. When we took over, the club’s revenues minus the parachute payments were about £16 million a year, and the costs around £45 million, so an operating loss of £30 million. Because of the parachute payment of £34 million, they reckoned that made the club profitable, but it doesn’t, of course. Those payments are supposed to give you a bit of breathing space to restructure. They are not an ongoing part of the club’s revenue base. We went on a major marketing plan aimed at driving up season tickets. These had been projected at 17,500, but we have now sold 22,000. We have already brought in a number of new sponsors. SAFC had hardly bothered with this. Despite recent hundreds of people doing all sorts of things elsewhere when we arrived there was not a single person in the entire business whose job was to sell sponsorship!! No commercial director; no head of sponsorship sales… nothing. We appointed Tony Davison from Tottenham Hotspur, and by the time the season starts Tony will already have more than paid his own salary with new deals. Overall, we are currently projecting revenues of £18.5 million this year. Next year, with a better ‘run-up’ at the new season we would want to see that rise to £20 million. Meanwhile, we are intent on reducing costs to circa £22 million or maybe £23 million. That would see the club lose £5 million this year and maybe £3 million next year. That is a manageable sum, and if the Category 1 Academy is functioning as it has done, and should continue to do, the funding gap will be met when the odd player gets sold, as Jordan Henderson and Pickford were in the past. If for whatever reason that doesn’t happen it is a level of loss Stewart and Juan can afford to bear. For me, that is a sustainable achievable model which would still give SAFC easily the largest wage budget in League 1. If we were fortunate enough to get promoted then revenues in the Championship would increase by circa £10 million - £5 million extra TV revenue, £2 million extra ticketing and corporate hospitality and £3 million extra in uplifts that have been built into our commercial deals. That would make SAFC’s wage budget in the Championship firmly in the top 10, which is as it should be. But if we stayed in League 1, the club would still be stable and sustainable. We aren’t just ‘owners’ – we are custodians of an institution. Risking the future of that institution on some insane gamble on short-term success is irresponsible, and Stewart, Juan and I aren’t going to do it. What is ironic is that despite the club having almost collapsed under debts which meant Ellis was advised to put it into administration there are still Sunderland fans who want us to repeat the mistakes of the past. It’s as if they cannot comprehend a club living within its means; as if to do so is somehow a bit lower-class. But look at Burnley; look at quality clubs like Southampton. Both are smaller than SAFC in terms of natural revenues, but both have been far more successful on the pitch whilst adhering to sustainable models. A healthy organisation is not one that is living one step ahead of the administrators. Q: Have you put a financial cap on transfer fees and wages, and how many players did you identify as having too be moved on to achieve stability? A: The turnaround in players this summer is enormous, probably unprecedented. We are probably going to see around 20 players leave the club, and about 14 newcomers out of a first-team squad of 22. We have a very clear understanding of the wages being paid by our League 1 rivals and those at the lower end of the Championship. So we know where we stand. We have had to be quite firm – make a point almost – because so many people in football had become used to taking the Mickey out of the club that it had almost become habitual. So we are being sensible in what we offer, I would say, whilst trying to ensure that we bring the right calibre of player to the club those aren’t going to be established Premier League stars, or even the next big thing from Latin America. It is mostly going to be a mix of local lads and other British players at the right stage of their careers with a hunger for success. Despite having sold some of our higher earners there are still a few more who will eventually need to go. But they will go when we decide the moment is right, not because they force us into a move. They are assets that the club has paid dearly for – indeed, that we are still paying for right now – and they have a market value and that market value has to be realised. End of. Q: Why was Jack Ross appointed manager given his lack of English league experience and has he been given a strict set of financial regulations to keep the club stable? A: I went through all the applications then passed on six names for Stewart to interview. Jack Ross was the third on that interview list. But after they had spent two hours together Stewart told me not to bother with the rest of them. He had found his man. Right from the start Jack was very upfront about his lack of knowledge of the English market, so we hired Tony Coton to work with him on that. The way he has gone about his task since has been wonderful: clear-minded; high standards; hard work; but also just that bit of flair and imagination that all the references from Scotland talked about when we asked around about him. He’s the first manager I’ve ever worked with who doesn’t obsess about his wage budget. Jack sees it as his job – and the challenge he enjoys – to get the best out of what he has. It makes for a genuine collegiate atmosphere between us all, as opposed to the antagonistic relationship that often develops between Board and manager. As an economics graduate that’s not Jack’s style. He understands finance and sees sustainability as part of his job. It’s that sort of panoramic vision that set him apart.. Q: What are the realistic targets - on and off the field - for this season? A: First to start to win more games than we lose as this very new team starts to gel. Then to keep progressing through the January window and end up in the mix come March. It’s a heck of a job but that is the target. Would we be surprised if we did not achieve promotion this year? No. But are we targeting it? Absolutely yes. Off the field I have spoken about sustainability, but the other target is the full re-engagement of the fans with their club. Results on the pitch will affect that, but it's also about involving fans, respecting fans, communicating with fans, listening to fans. We are passionate about those themes and I hope that SAFC fans can feel the love already! All three of us owners are fans ourselves, unlike most owners of major clubs. Q: How is the club coping with life in League One and how much do you reckon it could cost for Sunderland to regain former glories? A: There are quite a few people at the club who still need reminding that we are now in the lower leagues. But for Stewart and me this is no great shock because it’s where our hometown club, Oxford United, has been for almost 20 years. League 1 is a cracking league. As Manchester City found out at Wigan last year, a strong League 1 side can be a formidable outfit! In terms of what it will cost to regain former glories, the first thing to talk about is humility. We will not get promoted by walking about as the Billy Big Balls of the lower leagues. We need to front up, relish the challenge, roll our sleeves up and compete. Q: What is your message to Sunderland's long suffering fans ? A: This is your club as much as it is ours. If we are all fighting hard to achieve our goals together, then our superior numbers will mean that we will very likely win through in the end. If, on the other hand, we are arrogant, fractious, divided and entitled, then we could sell 40,000 season tickets and still not achieve our ambitions. See https://cloud.3dissue.com/6374/7271/131371/fcbusiness111/ for the full magazine read.
Belting read that. Love the way he's dropping Sartori into the conversation now as well as that is huge.
Good read, straight to the point and none of the usual ****e platitudes. And prepared to stick it to the entitled, fickle fans Jack Ross does seem like a great appointment the more I read about him.
It's a great read with a lot of wisdom spoken. One thing that stuck in my brain was a comment from my son, who used to work with sky football, and who compared the casual couldn't care approach to the sky team when at Sunderland with the respectful treatment when he worked at Newcastle ... unprofessional was the conclusion even then. I want to support a well managed team that treats its support with respect and works hard on the pitch and off it. Maybe we will be getting there.
He's great isn't he - love this guy I went down to the tunnel at the final whistle on Saturday. He was hugging all of the players as they left the field. He jumped in to us, shaking everyone's hands, and he was the last man back down the tunnel. We are sooooooooo lucky to have him
If you think of our club as being sick and in need of help, you couldn't put together a better course of treatment than we're getting from these blokes. Hard to believe how far we fell and still landed on our feet but I'm certainly not complaining.
Sounds like a top bloke and what he says makes sense, I think at last the club are in safe hands. The officials, players and fans have to stick together this season and try and ensure that we get the end result that we all desire.
Brilliant, brilliant read. Points wonderfully explained and I buy every word from the fella. I feel if we are all patient the 3 of them will give us back a club to be proud of, I genuinely do.
For me the most telling quote is ‘We aren’t just ‘owners’ – we are custodians of an institution. Risking the future of that institution on some insane gamble on short-term success isirresponsible, and Stewart, Juan and I aren’t going to do it.’ Great read overall - think we’re in good hands here.
The new regime have a clear financial model which they believe will be both sustainable and enable the club to achieve moderate success. With this model we are unlikely to find ourselves amongst the Premier League's top clubs, but nor will we risk the long term future of the club with a massive gamble for glory. I like the way these guys talk. They understand what a football club is and that is a huge improvement on the previous owner.
Great read and exactly what I want to hear, its not going to be a cakewalk, but as long as these boys are in charge we will get there I am sure of it .
