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New buyers put off by £20 million hole in accounts

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Ashley In!! said:
When the article says that Madrox have put in a further £11.5m in since the accounts were done, is that all their own money or is £10m of it actually the American cash, so its £1.5m net from them? Can't really tell from the article or the quotes?
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The quotes very specifically say that Madrox have put 11.5 million into Sunderland. £10 million of the shareholder funds came in after FPP loaned Madrox £10 million. The absolute arseholes
 

Grumpy Old Man said:
Can't say anything till I've got something to look at. As you say, bad crack, but not illegal. The argument will undoubtedly be that it was club money used to pay a club debt (technically true). Just goes to show the mess you get in if you bollix up the structure of a deal through assumptions that don't work. The club will be more worried about who's leaked the accounts.
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Except Donald said he would pay it back....
 
wackyjacky said:
Stewart Donald could sell Sunderland without repaying more than £20 million in parachute payment money that is owed to the club, according to documents seen by The Times.

It emerged last year that Donald financed the £39.6 million purchase from Ellis Short in May 2018 by using broadcast income that is paid to clubs relegated from the Premier League. While Donald disputed the precise figures, evidence suggested he used as little as £5 million of his own money to complete the initial takeover of a club he was actively looking to sell on within a year.

While it was not a breach of any rules, it raised certain concerns because parachute money is paid in instalments over three years and is meant to finance a club’s attempts to return to the top flight.


Donald and the now former director Charlie Methven have consistently claimed that the parachute money will be repaid over the course of their tenure. Indeed, the club has maintained that position in their responses to The Times this week, adding that the “total investment” by the holding company that owns the club is “around £25 million to date”.
However, draft accounts that have been distributed to prospective buyers of the club reveal that a debt of £20.5 million has in fact been written off as an “exceptional operating expense”, with financial experts suggesting there is now no legal obligation to reimburse the League One club.

The Times has also seen documents that show in August 2018 the Uruguayan businessman Juan Sartori paid just £1 for his 20 per cent shareholding in Madrox Partners Ltd, the holding company which owns Sunderland Football Club. It had been reported that Sartori paid £3 million for a fifth of the club.
When asked if Sartori’s payment was received by Sunderland, the club replied on Thursday that he “invested in Madrox shares”. When asked, more specifically, how much he paid for his 20 per cent stake, Sunderland replied: “The club is not privy to the detail of arrangements between the shareholders and directors of its parent company. This is a matter for Madrox.” According to Companies House documents, Donald, Methven and Sartori are listed as directors of Madrox.
Sunderland have admitted to The Times that a debt in excess of £20.5 million owed to the club has been written off as an exceptional operating expense. This can be seen in the draft of the club’s accounts for 2018-19, which have been delayed.
The club claim the sum was written off because they were obliged to do so when they borrowed money from American backers FPP, who reportedly lent the club about £10 million in October 2019. Sunderland said that writing off the debt was a “condition placed on Madrox when entering into the investment from FPP”. The draft accounts are for the year ended July 31, 2019.
Sunderland maintain they will repay the money, although their explanation as to how is unclear. They claimed this week that the “process has already begun” and that it will be paid “as either shareholder funds or as a gift”.
A financial expert who has examined the documents told The Times: “When you have an exceptional item, you’re meant to say what it relates to. That £20.538 million, which has been designated as an exceptional expense, is a big amount by anyone’s kind of reasoning.
“Essentially, they are writing off what is owed to the club. Madrox only exists to own Sunderland Football Club. It doesn’t generate money. The only way it can afford to pay is if the people who own Madrox put money in.
“It appears what has happened here is that money has essentially been taken out of Sunderland. On day one they said they spent £40 million. They said the parachute money was used as security, which meant if they didn’t pay Ellis Short, he got to take that.
“Then it changed to an explanation that he was always due the money and that they will pay it back when required. Now it looks like they have removed the obligation to put the money back in.”
Sunderland said in a statement: “Madrox has continued to invest funds as required, (which will be reflected in next year’s figures) and in a way to ensure the club remains debt free, as promised. This has resulted in SAFC receiving around £11.5 million since the year end, from Madrox. The funds are interest free and replace a significant portion of the parachute monies. This takes the total Madrox investment to around £25 million, to date. This investment, two years into their five-year plan, is ahead of schedule.”
Donald and Methven are the unwitting stars of the second Netflix series Sunderland ‘Til I Die. Donald, who made his money in insurance, officially put the club up for sale in December last year and this was confirmed by the Sunderland board in January.
He remains the club’s majority owner, with 74 per cent, while Methven has six per cent and Sartori has a 20 per cent shareholding. If they sold for what potential buyers have told The Times is about £35 million, they would stand to make a significant profit; a possible situation which, in conversations with The Times, potential buyers have said gives them concerns.
Sunderland, who lay seventh in League One when the season was suspended, claim to “have received a number of acceptable offers from various groups, who have matched our asking price” and blame the coronavirus crisis for a deal not being completed.
Methven, who brokered the deal between Donald and Short, is understood to have received his stake for the services he provided during the negotiations and subsequently as executive director. After resigning from the board, The Times revealed that he had
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by suggesting that people in the northeast lacked good business sense compared to southerners. “It was an off-the-cuff riposte, which I regret,” he admitted.
The Times revealed in August last year that the American investors,
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, were on the brink of completing a full takeover of the League One club. Donald and Methven were keen to be kept on at the club in different roles, but after lengthy due diligence, the deal was not concluded and Fuhrman, Phelan and Platek, who had registered a new company at Companies House on September 16, 2019, called FPP Sunderland Limited, instead sought to invest in Sunderland.
The £10 million loan paid into Madrox Partners in October was secured against the club assets, namely the Stadium of Light and the Academy of Light, and the majority shareholding of Madrox.
Significant cuts have been made to club costs with multiple redundancies, while big-earning players such as Lee Cattermole, Jack Rodwell and Bryan Oviedo have left the club after coming to financial settlements.
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That seems suspiciously similar to the first article. Almost like they were written by the same person.

Again they're saying £20m has been "written off" while quoting the club as saying that Madrox have invested £25m into the club so far.
 
Grumpy Old Man said:
Can't say anything till I've got something to look at. As you say, bad crack, but not illegal. The argument will undoubtedly be that it was club money used to pay a club debt (technically true). Just goes to show the mess you get in if you bollix up the structure of a deal through assumptions that don't work. The club will be more worried about who's leaked the accounts.
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If that’s the case, we’ve definitely the wrong people in charge of our club
 
Grumpy Old Man said:
Can't say anything till I've got something to look at. As you say, bad crack, but not illegal. The argument will undoubtedly be that it was club money used to pay a club debt (technically true). Just goes to show the mess you get in if you bollix up the structure of a deal through assumptions that don't work. The club will be more worried about who's leaked the accounts.
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Well apparently the accounts were sent to prospective buyers so I assume they've been leaked from one of them, obviously the club will know who they've sent them too, I wouldn't have thought that list would be too long. Maybe they've been leaked from one of them to put exactly the kind of pressure on the owners the backlash from the fans will do.
 
Methven let slip at the time that they weren't obliged to put it back and and lo and behold, it seems they haven't
Duncan H said:
How much smoke do you need before you realise there's a massive fire , a serious danger to our football club .
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You'll still get their acolytes though, unbelievably
The Sheepfolds End said:
If that’s the case, we’ve definitely the wrong people in charge of our club
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I would say that is absolutely the case
 
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Mr David said:
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Unfortunately, this is something I heard from a very good source yesterday.
He said he wasn’t 100%, but sadly it’s looking to be so.
I really hope something gives soon, as this may just be one of many shit things coming up for the club.
He should just sell up for 30m if he has any takers on that price, he’ll still have doubled his money, and we might get someone competent to run the club.
 
fyl2u said:
That seems suspiciously similar to the first article. Almost like they were written by the same person.

Again they're saying £20m has been "written off" while quoting the club as saying that Madrox have invested £25m into the club so far.
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My guess is one party has seen the actual accounts (my guess is The Times reading their words) and the other have ran a story reflecting some of what they've heard. Both are north-east journalists, Martin Hardy and Craig Hope, probably mates, one with the full story and the other running from snippets he's been given.
 
fyl2u said:
That seems suspiciously similar to the first article. Almost like they were written by the same person.

Again they're saying £20m has been "written off" while quoting the club as saying that Madrox have invested £25m into the club so far.
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The total investment by Madrox includes the money paid to Short for the shares I think? They haven't put £25m in for the club to spend have they @Grumpy Old Man?
 
LD19SAFC said:
Joking aren’t you? Our so called supporters haven’t given him the REAL abuse he deserves and I doubt it’ll come now. People are past caring, we’re a joke club.
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That's what I mean Donald thought people were being abusive before when a statement got released....
 
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