Sunderland may have to pay a hefty amount of bonuses at the end of this current financial year.
Sunderland under current co-owner Kyril Louis-Dreyfus have started to spend quite well.
On deadline day alone, the Black Cats spent a reported £7.5million on the signings of Salis Abdul Samed and Milan Aleksic, with nine new players having arrived at the Stadium of Light in total this summer.
The club’s impressive deadline day haul came shortly after the sale of Jack Clarke to Ipswich Town.
Previous reports suggested that Sunderland were receiving £20million for Clarke, with a quarter of that being in add-ons.
Soon after, it was revealed that Sunderland are actually receiving an initial £13.5million for Clarke, given Spurs’ 25% sell-on fee.
Sunderland though have agreed a 15% sell-on fee for Clarke, and so the eventual sum they receive for Clarke could still go up.
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Sunderland could pay out £25m in bonuses this year, says finance expert
Commenting on Clarke’s sale, football finance expert Adam Williams explained to Sunderland AFC New how the Black Cats may eventually have to pay out close to £25million in bonuses in this current financial year.
In the same way that Sunderland have covered themselves with a sell-on fee for Clarke, Sunderland may have to pay out similar fees for those they’ve signed this year.
Williams said: “This kind of gerrymandering of transfer fees is increasingly the norm.
“Profit in terms of both PSR and the bottom line are actually a lot more complex than many fans realise.
“For PSR purposes, you also have to subtract Clarke’s amortised book value – the fee Sunderland originally paid for him divided by the years remaining on his deal – to work out the profit they have made on him as an asset.
“Generally speaking, a sell-on clause will be related to profit on a player sale. So if the club makes a loss on the player, they are then protected from taking a hit from the sell-on.
“By negotiating a sell-on in the deal taking him to Ipswich, Sunderland also have what’s known as a contingent asset. That means they can profit in future if certain conditions are met – his future sale, in this case.
“This is just one element of the club’s finances that keep cash flow ticking over.
“We don’t have the breakdown of contingent assets in Sunderland’s accounts, but we can see their contingent liabilities.
“Contingent liabilities are basically bonuses Sunderland might pay players or other clubs based on performance. If they sign a player and he reaches 10 goals for the season, that might trigger a pay-out to the selling club or the player himself, for example.
“Sunderland could pay out as much as £24.7m in the current financial year through contingent liabilities.
“In reality, the actual figure will be much, much smaller as the chances of some of those conditions being met are very remote. But it is interesting to see the detail.”
Why Sunderland fans shouldn’t worry about bonus payouts
Sunderland fans may hear this £25million figure and immediately panic.
That’s a huge amount for any club, let alone a Championship club, but like Williams points out, the chances of clubs ever paying out maximum bonus payments is very small.
And it’s a natural part of how the game works now, like with how Sunderland will eventually get a sell-on fee for Clarke should he leave Ipswich Town.
It certainly seems like Sunderland under the current owners and Kristjaan Speakman are moving forward, with their current transfer strategy paying dividends.
