Why Sunderland have taken out a loan and what it means for the club

Documents published at Companies House on Monday showed that Sunderland have taken out a new loan with the Macquarie banking company.

- by Phil Smith

Kyril Louis-Dreyfus and Kristjaan Speakman

So why have they done it and what does it mean?

The documents have shown that Sunderland have borrowed money from the bank, secured against the television revenue they will earn between January and April from the Premier League. It's basically a simple mechanism to improve the club's cashflow position in the short term. They get access to the money they know they'll receive in a few month's time, and will pay it back when it lands. It's a short-term loan with relatively little risk as it's secured against revenues the club is already guaranteed, rather than against assets such as the stadium or training facility.

Is it normal practice?

It's not unusual, and is an approach used by many Premier League clubs to help manage their cashflow. Macquarie, for example, have previously loaned money secured against broadcast revenues or transfer instalments to Sheffield United, Wolverhampton Wanderers, AFC Bournemouth, Leicester City, Middlesbrough and in a very similar arrangement just a month ago, to Tottenham Hotspur.

Premier League clubs benefit from vast revenues, but they land in instalments over the course of the campaign. In the meantime, clubs have significant overheads not just in player costs but also in their infrastructure and facilities. These arrangements can help them invest proactively or cover outstanding costs, knowing that they have a guaranteed income further down the line.