sport news Burnley's Premier League hangover could last years - no manager, a £65M debt ... trends now

sport news Burnley's Premier League hangover could last years - no manager, a £65M debt ... trends now
sport news Burnley's Premier League hangover could last years - no manager, a £65M debt ... trends now

sport news Burnley's Premier League hangover could last years - no manager, a £65M debt ... trends now

Burnley have punched above their weight in the Premier League for six consecutive seasons, but financial gravity has finally caught up with the Clarets and at the worst possible time.

The east Lancashire club was relegated on Sunday after losing 2-1 to Newcastle United at Turf Moor, while rivals Leeds United won 2-1 away at Brentford and survived.

Any side dropping out of the Premier League faces an immediate hit on income to the tune of around £60M, as they lose the £100M-plus in TV money and pick up a £40M parachute payment in the first year, to soften their fall.

Burnley's relegation from the Premier League was confirmed on Sunday after their defeat

Burnley's relegation from the Premier League was confirmed on Sunday after their defeat

Even so, in the past, relegation held far less fear for Burnley, who steadfastly refused to rack up debt in the top flight, and even turned a profit.

But that is not the case now. The Turf Moor outfit were the subject of a leveraged buyout by US investors ALK Capital in December 2020, which has loaded them with the kind of debt they were previously desperate to avoid, and it has also eaten away their savings.

As first reported in Sportsmail, and confirmed in the most recent accounts, a significant proportion of a £65M loan from MSD Capital falls due on relegation, with the rest payable the following year.

ALK said after the takeover that their plans accounted for relegation, but even so the figures alarm analysts.

The Clarets' intermin management team, headed by Mike Jackson, slmost kept them up

The Clarets' intermin management team, headed by Mike Jackson, slmost kept them up

'Any club that is relegated has a £60M hit in revenue and that has to be managed but the issue with Burnley is the leveraged take over,' said Dan Plumley, a football finance expert at Sheffield Hallam University.

'There is the £65M repayment that will now be drawn upon. That is the bigger issue on top of falling out of the Premier League.'

The issue is not just the debt, according to Plumley, it is the fact it has be paid off so quickly to an external lender. Most clubs owe money to their owner, who is unlikely to call in the debt.

'From what we can see in the accounts…. That has to be dealt with and it is in the short term. If there is no budging [on the terms of repayment] it is clear what will happen,' added Plumley, who anticipates the £40M parachute payment in year one [after relegation] will have to fund that £65M loan repayment.

It was a harrowing day for Burnley fans at Turf Moor after six consecutive season in top flight

It was a harrowing day for Burnley fans at Turf Moor after six consecutive season in top flight

But the financial challenge is not the only one Burnley face, under the stewardship of chairman, Alan Pace, who completed the £170M takeover from former owner, Mike Garlick, in December 2020.

Nine players, including star defender James Tarkowski, are out of contract at the end of the season and there is no management team in place on the playing side after Sean Dyche was unexpectedly sacked in April departing with four senior coaches. Furthermore, up to 20 members of staff have gone from the business since ALK came in, sources previously told Sportsmail, including the chief executive.

After two years of struggle (the Clarets finished 17th last season) and increasingly gritty performances, resulting in part from a lack of investment in Garlick's final years in charge, some fans see relegation as an opportunity for a fresh start.

Chairman Alan Pace has a huge amount of work to do to stabilise the Clarets in Championship

Chairman Alan Pace has a huge amount of work to do to stabilise the Clarets in Championship

However, Pace and his partners, have a huge amount of work to do to avoid the Clarets falling through the fiercely competitive Championship into League One.

Interim manager, Mike Jackson and the players almost pulled off a great escape after Dyche was sacked. 

Burnley fans would be the first to agree

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