Burnley accounts reveal importance of Premier League survival
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If relegated to the Championship, the club would need to pay back what is described as ‘a significant proportion’ of a £65m loan which was taken out as part of ALK Capital’s takeover of the club, which was completed on New Year’s Eve 2020.
And that would likely mean a firesale of the club’s most valuable players, which could include the likes of Dwight McNeil, Nick Pope and Maxwel Cornet.
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Hide AdThe club released their accounts to July 31st, 2021 on Wednesday, with a £3m pre-tax loss, after seeing turnover drop £19m from £134m to £115m, mainly due to the absence of supporters in stadiums during the pandemic, and last season’s 17th place Premier League finish – one above the drop zone.
However, within the figures lie bigger headlines, revealing that £102m in debt has been taken on through two of the club’s holding companies, £65m to Burnley FC Holdings Ltd and £37m to the Burnley Football and Athletic Company.
While with the £65m loan, that was taken on with 8% annual interest, with payments made on that interest until December 2025, when the entire loan is to be repaid.
But upon the event of relegation, which remains very much a possibility, with the Clarets two points above Everton, who have a game in hand, and above Leeds only on goal difference, the repayment date is significantly brought forward, along with further "significant reduction of the loan balance" in the event of “a continuing relegation scenario", should the club fail to bounce back to the Premier League.
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Hide AdThe club does have £50m in reserves, £30m down from last year’s accounts, and the accounts explain: "The balance can potentially be settled by various means, and the group's reserves are sufficient to enable a significant proportion of the balance to be settled by way of dividends if required.”
Should the club be relegated, they are "satisfied" they would retain the support of its lenders.