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Relegation would lead to loan repayment challenge for Burnley

Burnley face a significant loan repayment over the next year if they are relegated this season, reports The Athletic.

ALK Capital took over the club in December 2020 via a leveraged buyout, borrowing a substantial fee from MSD Holdings — which was due for repayment in December 2025.  From the club's official accounts the value of the loan was confirmed as £65 million.

As it stands, Burnley only have to pay interest on the loan. However, the document also explains that dropping out of the Premier League would move the repayment schedule forward — with a significant proportion of the capital loan value required shortly after the end of the football season.

Burnley are currently 16th in the Premier League but just two points clear of the relegation zone.  I hope they survive as I have always enjoyed my visits to the atmospheric, old style Turf Moor.  One Burnley fan invited me to celebrate his 60th birthday (a 2-0 win over Hull in the second tier).

That would be a significant blow to the club's finances. If Burnley are relegated TV revenue, which makes up a huge part of their revenue relative to other Premier League clubs, would decrease significantly and their cash in the bank has already decreased from £80 million to £50 million.

If Burnley remain “in a continuing relegation scenario”, according to the accounts, they would have to pay a further “significant” section of the balance.

Chairman Alan Pace has maintained throughout his time at the club that plans are in place if relegation occurs and that the takeover purchase was reasonable and sustainable.

Along with parachute payments, relegation wage cuts among players and staff as well as player sales are predicted to ease the financial burden but quick promotion back to the Premier League would be important.

Burnley posted a small loss of nearly £3 million with revenue down from £134 million to £115 million as the effects of COVID-19 continue to factor into football's finances.

Sacking Sean Dyche was controversial, but it may have encouraged the team to greater risks in attack as happened in the win over Watford.

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