Sound finances at Burnley

Posting from his Zurich fastness the authoritative Swiss Ramble examines the 2018/19 financial results of Burnley. Profit before tax dropped from a club record £45m to £5m, mainly because profit on player sales fell £24m from £31m to £7m, though revenue was also slightly lower at £138m and expenses increased £15m. Profit after tax was down from £37m to £4m.

Despite the decrease, Burnley FC pre-tax profit of £5m is still highly creditable, given that half of the clubs in the Premier League lost money, including two with deficits above £100m (Chelsea and Everton).

Profit is all the more impressive, as they only had £7m gains on player sales, mainly Sam Vokes to Stoke City. Prior year profitability boosted considerably by £31m from sales of Andre Gray and Michael Keane. The Clarets have rarely made big money from player sales, though annual average has increased to £13m in last four years against £3m in previous six years. Only made profits above £10m twice in last decade. This year will include Tom Heaton to Aston Villa and Nakhi Wells to Bristol City.

The club have made profits for three years in a row, aggregating £77m over that period. In fact, they have been profitable in each of their seasons in the Premier League, including 2010 and 2015. Losses reported in the Championship in 2014 and 2016 were driven by promotion bonuses.

The £1m (1%) revenue fall was very largely driven by broadcasting’s £7m (5%) decrease from £122m to £115m, due to lower prize money for finishing 15th (against 7th prior year). In contrast, commercial rose £4.6m (39%) to £16.5m and match day was up £0.7m (13%) to £6.3m.

A massive 83% of Burnley's revenue came from TV (£115m out of £138m), though this is 'only' the fifth highest reliance on broadcasting in the Premier League. Furthermore, it should be noted that no fewer than 13 of the 20 clubs in the top flight are above 70%.

Commercial revenue surged £4.6m (39%) from £11.9m to £16.5m, comprising other commercial £12.1m, catering £2.6m and retail £1.8m. Growth due to new sponsorships and European qualification. Now up to 15th in the Premier League in terms of commercial income. In 2018/19 Burnley had LaBa360 as new shirt sponsor (£5m a year) plus AstroPay as sleeve sponsor. From this season, both deals replaced by LoveBet, reportedly worth £7.5m. Also a new 3-year kit deal with Umbro, replacing Puma who have been club supplier since 2010.

Even though revenue fell slightly to £138m in 2019, it was still £17m more than £121m reported two years ago in their first Premier League season back after promotion. All revenue streams have increased in this period: TV £10.0m, commercial £6.1m and match day £0.5m.

The £138m revenue is the 16th highest in the top flight, only ahead of the three relegated clubs and Bournemouth. The gap to the Big Six is enormous, as they are £257m below Arsenal £395m. As manager Sean Dyche said, 'We’re not wealthy in Premier League terms. We’re the minnows of the PL.'

That said, the club's £138m revenue is only £16m below the £154m needed for a place in the Deloitte Money League, which ranks clubs worldwide by revenue. If the Clarets had made it to the Europa League group stage, they would have been very close to being in the top 30. Burnley failed to benefit from their Europa League experience, as they did not manage to qualify for the group stage.

Average attendance fell slightly from 20,688 to 20,534, but this still represents an increase of almost 4,000 compared to the last season in the Championship. The attendance of 20,534 is third lowest in the Premier League, only ahead of Watford and Bournemouth.

The wage bill rose £5m (6%) from £82m to £87m, though underlying growth was probably higher, as prior year included bonuses for 7th place finish. In the last two years, wages have grown £25m (42%), partly due to staff increasing by 60, mainly recruitment and scouting. The wages to turnover ratio increased from 59% to 63%, which is still perfectly reasonable, although it was only 37% in 2015.

Burnley are completely debt-free, having used Premier League cash to repay directors’ loans and external loans. In fact, the club has £42m net funds, which is testament to their sound financial management. They are in the best debt situation in the Premier League with nine clubs owing more than £100m.

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The Political Economy of Football V2

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