New financial highs at Burnley

The authoritative Swiss Ramble has analysed the latest financial results for Burnley. He comments, 'Profit before tax improved by £18m from £27m to £45m, as revenue rose £18m (15%) from £121m to £139m and profit on player sales was up £29m to £31m. After tax, profit increased from £22m to £37m. The club set new record highs for both revenue and profit. Only Spurs, Liverpool, Arsenal and Chelsea had bigger profits, all driven by player sales.'

Burnley have made good profits each time they have been in the Premier League with last season’s £45m even better than £35m in 2014/15. They kept losses low in the Championship and even delivered a small profit in 2012. In the last four years, they have £102m cumulative profits.

The £18m revenue growth was very largely driven by broadcasting’s £17m (16%) increase from £105m to £122m, largely due to increased prize money for finishing 7th, while commercial also increased £1.5m (15%). TV money from the Premier League increased £19m from £101m to £120m, due to a higher merit payment from finishing 7th instead of prior season’s 16th. However, they were adversely impacted by only being shown live 10 times, the contractual minimum (facility fees).

The £139m revenue is very nearly £100m higher than the £40m they generated in the Championship two years ago. The vast majority of this growth (£92m) came from TV, which now accounts for 87% of total revenue (the third highest dependency in the top flight), though commercial grew by £6m (doubled). However, the gap to the Big Six is enormous, as they are £240m below Spurs £381m.

Match day revenue slightly fell by £0.2m (4%) to £5.6m, as they had two fewer home games. This is the third lowest in the Premier League. For some context, Manchester United and Arsenal earn more from this revenue stream in two games than Burnley do in an entire season. Average attendance rose slightly from 20,558 to 20,688, which represents an increase of almost 4,000 compared to season 2015/16 in the Championship, but is the fourth lowest in the Premier League. These are the highest crowds of any Premier League season, just ahead of 20,654 in 2009/10.

The wage bill increased by a third (£20m) from £61m to £82m, mainly due to bonus payments for the high league finish. Since promotion, it has tripled from £27m in the Championship (and up from £29m in 2014/15 PL). It is the third lowest in the Premier League and will probably fall in 2018/19 due to lower performance bonuses. The wages to turnover ratio increased from 51% to 59%, which is still perfectly respectable.

Burnley have recently made more money from player sales: annual average increasing to £15m in last 3 years against £3m in previous seven years. Player purchases totalled £44m. the lowest in the Premier League to date.

If the club do end up being relegated this season (I think they will stay up), the financial blow would be cushioned by £91m of parachute payments (year 1 – £42m, year 2 – £34m, year 3 – £15m).

The Clarets are essentially debt-free (except for £77k of finance leases), having used money from previous period in Premier League to repay directors’ loans and external loans. In fact, the club has £34m net funds, which is testament to their sound financial management. They are in the best debt situation of all Premier League Clubs.

The Swiss Ramble concludes, 'Burnley have done well to survive (and be competitive) in the Premier League, while still maintaining a sustainable model, despite their financial challenges.'

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The Political Economy of Football V2

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