Transfer error puts Sunderland in red

Sunderland yesterday reported its first loss since the football club floated on the stock market six years ago.

Reporting a £2.8m deficit for the year to 31 July, Sunderland said its financial difficulties mean the company will not pay a final dividend.

The group admitted its new manager, Howard Wilkinson, would have to lose eight members of his squad to bring down the wage bill. Sunderland said he will have no new money to buy players. The player amortisation charge doubled to £11.8m last year, in the wake of a £14.4m player acquisition spree in the summer.

Sunderland got caught out with the new transfer system, which only allows players to be traded between clubs in short "windows" in the year. So while it bought a number of players, it did not manage to sell existing members of the squad, leading to a bloated team.

Turnover in the last financial year dropped by more than £2m to £43.8m, with a wage bill of £25.8m. Sunderland said this season would see the wage bill balloon to well over £30m. The company said it would try to sell eight members of the 36-strong first team, during the next transfer window in January.

Bryan Sanderson, the chairman of Sunderland plc, said: "Key industry issues remain to be resolved; notably player wages, the transfer system and television rights, all of which will affect our financial performance.... We are confident that the new management team of Howard Wilkinson and Steve Cotterill [the assistant manager] will succeed in moving us up the league away from the relegation places and getting our playing ambitions back on track."

After finishing 17th in the Premiership last season, the club is again struggling to avoid relegation. The Premiership team's poor results led to the replacement of Peter Reid as manager earlier this month.

David Pope, an analyst at Brewin Dolphin, said: "Sunderland has been very far-sighted, in terms of building a new stadium and setting up a football academy. But in the last 12 to 18 months, the company has suffered from poor performances on the pitch, which have a direct impact on income."

The amount of money from television rights that a club receives depends on which position it finishes in the Premiership. The deal is worth £450,000 for each advance in the finishing position in the league.

Shares in Sunderland fell 7.5p to 140p.