Life has certainly been more of a rollercoaster for Clarets fans since Alan Pace took over the club in December 2020, when his company ALK Capital purchased an 84% majority shareholding, as his tenure has so far included two relegations and two promotions.
The last available accounts for Burnley are from the 2023/24
season, which means that they are a full year out of date, but they are still
relevant for our analysis, as they neatly illustrate the club’s financial
status in the Premier League.
Despite promotion to the Premier League, Burnley still lost
£28m before tax, though this improved from a £36m loss in the Championship.
Revenue more than doubled from £65m to £134m, while profit from player sales
increased from £11m to £15m. Burnley have rarely generated
big money from player trading, only twice making more than £15m in the last
decade. Indeed, their profit was £7m or less four times in this period. However, this was largely offset by a steep
increase in operating expenses, which rose £56m (51%) from £110m to £166m,
while net interest payable shot up from £7m to £17m.
The main driver of Burnley’s revenue growth was
broadcasting, which rose £63m from £48m to £111m, due to the far more lucrative
TV deal in the Premier League. The year-on-year increase would have been even
higher if Burnley had not benefited from a parachute payment in the
Championship. There was also good growth
in commercial, which increased £5.7m (69%) from £8.4m to £14.1m, though match
day was only slightly higher, up £0.2m (2%) from £8.7m to £8.9m. broadcasting remains the most important
revenue stream, accounting for 83% of total revenue with commercial and match
day only contributing 11% and 7% respectively.
Burnley’s £28m pre-tax loss was in the bottom half of the
Premier League in 2023/24, in stark contrast to the other two relegated clubs,
who both posted net profits, Luton Town £49m and Sheffield United £4m. That said, many clubs reported much larger
losses, led by Manchester United £131m, Aston Villa £86m, Bournemouth £66m and
Liverpool £57m.
Burnley’s £28m loss was one of the worst results for a club
in its first season after promotion to the Premier League, only better than
Aston Villa (2019/20) £99m, Fulham (2020/21) £94m and Nottingham Forest
(2022/23) £67m.
Burnley have lost money two seasons in a row, adding up to
£64m, which is a major change from the club’s traditional sustainable model. In their last six years in the Premier
League, they only posted a loss on one occasion – and that was just £3m in
2020/21, a season ravaged by COVID. In that period the club generated an
impressive £111m profit.
As always, Burnley’s average attendance was higher in the
Premier League, rising 6% from 19,953 to 21,153, which we believe was the
club’s best for over 60 years. Nevertheless,
Burnley’s attendance was the fourth lowest in the Premier League, only above
Brentford 17,082, Luton Town 11,276 and Bournemouth 11,108. Their crowds are
very small for the top flight, where no fewer than seven clubs enjoyed
attendances over 50,000, led by Manchester United with nearly 74,000.
Burnley’s £14m commercial income was the third lowest in the
Premier League, only above the other relegated clubs, Sheffield United £12m and
Luton Town £10m. The gap to the Big Six
clubs is absolutely huge, as four clubs earned more than a quarter of a billion
Pounds, namely Manchester City £345m, Liverpool £308m, Manchester United £303m
and Tottenham £255m.
The jury is very much out on whether acquisition of a
minority stake by former NFL star JJ Watt and his wife, Kealia, a professional
soccer player, will help the club to replicate the commercial success of Ryan
Reynolds and Rob McElhenney at Wrexham.
Wages
Following promotion, Burnley’s wage bill wages increased by
£35m (62%) from £58m to £93m, but the underlying increase was even higher, as
the previous season would have included a significant promotion bonus, which
was likely to have been at least £10m. Even
after this steep growth, Burnley’s £93m wage bill was the third lowest in the
Premier League, only above the other relegated clubs, Sheffield United £64m and
Luton Town £57m. These figures were all depressed by not paying a survival
bonus.
Of course, the elite clubs were out of sight, e.g. the top
five clubs all had wage bills more than £300m (Manchester City £413m, Liverpool
£386m, Manchester United £365m, Chelsea £338m and Arsenal £328m).
Burnley’s performance on the pitch was pretty much in line
with their wages, as their 19th place in the league was one worse than their
wages ranking of 18th.
Burnley have ramped up their activity in the transfer
market, as their £203m outlay in the last three years was more than twice as
much as the £81m in the preceding 3-year period. While Burnley’s gross spend was around a
quarter of a billion Pounds in the last five years, this still only placed them
17th in the Premier League. In this period, four clubs spent more than £900m: Chelsea
£1.7 bn, Arsenal £992m, Manchester City £970m and Manchester United £918m. So far this summer, the club has brought in
Loum Tchaouna, Bashir Humphreys, Marcus Edwards, Jaidon Anthony, Quilindschy
Hartman, Zian Flemming, Kyle Walker, Max Weiss and Jacob Bruun Larsen for
around £70m.
Debt and interest
payments
Burnley’s gross financial debt further increased by £10m
from £102m to £112m, comprising £92m bank loans, up from £70m, and £20m
factored debts (secured on transfers receivable), down from £31m.
Having been debt-free for many years under the former
owners, Burnley took out a £65m loan with MSD, Michael Dell’s investment firm,
in December 2020 “following transactions linked to the acquisition of the
club”, i.e. akin to a leveraged buy-out.
The £92m bank loans are mainly short-term in nature with £82m due to be
repaid within a year.
In addition, the loans have been taken out at fairly
horrific interest rates: 8.5% fixed, SONIA + 7.5% and 12.75%. The interest on
the latter £30m loan was particularly high, as it was unsecured, though was converted
into a secured loan in September 2024.
Burnley’s debt is entirely owed to third parties, so they
had the fifth highest external debt in England, only behind Tottenham, Everton,
Manchester United and Liverpool.
Looking at Burnley’s cash flow since Pace arrived is quite
instructive. In the last four years, almost all of the club’s £125m available
cash has either come from dipping into cash reserves £72m or by taking on bank
debt £47m.
The majority has gone on £51m player purchases (net), though
£30m has gone to other group companies. Another £22m was shelled out on
interest payments, which is much more than the £13m invested in infrastructure,
while £9m was used to cover operating losses.
Burnley’s auditors have noted a “material uncertainty”
around the club’s ability to continue as a going concern” if player sales and
receipts from the group are materially less than forecast. This is clearly not
ideal, though many clubs include such a comment in their accounts without
ending up in administration.
Burnley remain a club that has to overcome many financial
challenges. It will therefore be tough to
survive in the Premier League, where their budget will again be one of the
smallest, though Burnley will fight hard to avoid picking up the tag of a
“yo-yo” club.
Realistically speaking, they will have to invest a fair
amount this summer to give themselves a reasonable chance of being competitive
in the top flight, but at the same time they already carry a lot of debt, so
they cannot afford to go crazy.
It’s a tough one, but I have always enjoyed my visits to
Turf Moor, an authentic ground, and wish the Clarets well.
Comments
Post a Comment