SUNDERLAND’S accounts for their first season in League One confirm the extent to which costs have been slashed under Stewart Donald, but the club still incurred a hefty loss after £20.5m of parachute money was written off as an “exceptional operating expense”.

As expected, the accounts released yesterday show that a £20.5m debt owed by Madrox Partners, the ownership company Donald set up when he replaced Ellis Short, was written off. Madrox’s accounts, conversely, reported a profit of £20.5m, although Donald continues to insist the money will be paid back in full before he sells up. As of May, the Sunderland owner was claiming the outstanding balance stood at around £11.5m, although that figure will not be confirmed until next year’s accounts.

With the £20.5m expense factored in, Sunderland posted a loss of £11.2m in the year to July 31, 2019, which means they would have made a profit of around £9m had Madrox’s debt remained on the books.

The Black Cats’ turnover fell by around five per cent to £58.7m, although £34m of that sum came from parachute payments. Matchday revenue rose slightly to £8.6m, and income from sponsorship, conference and banqueting and retail also increased.

There was a huge drop in expenditure as a result of the cost-cutting measures introduced by Donald and Charlie Methven when they took over at the Stadium of Light.

The club’s wage bill fell from around £47m to £26.7m – it had already fallen by 45 per cent in 2017-18 - another massive reduction but still a sum that represents the biggest seasonal wage expenditure in League One history. The number of full-time staff employed by the club was slashed from 316 to 206, with the number of matchday staff falling from 538 to 363.

Player trading between August 2018 and July 2019 just about broke even, with the club spending £4.8m on transfers, the vast majority of which was committed to the signing of Will Grigg.

Payments to directors were just over £285,000, reduced significantly from around £2m the year before, with the highest-paid director receiving a salary of £123,883.

Sunderland did not make a public comment on the figures, but they highlight just how difficult it will be to operate profitably in League One without any parachute payment income.

While the wage bill will have reduced further last season, and might well fall again this summer, Sunderland remain saddled with a number of high fixed costs in areas such as the Stadium of Light infrastructure and category one academy that make it extremely hard to break even on a League One income.