“As a business, Burnley are the best run club in the Premier League" - but future will be interesting after takeover
Football finance expert Kieran Maguire believes Burnley’s latest accounts again outline that the club is “the best run in the Premier League”.
The Clarets released their figures for 2020 on Easter Saturday, reporting a break-even net profit, in a year partly impacted by the coronavirus pandemic.
Only Chelsea (£36m), Sheffield United (£19m) and Norwich City (£2m) have reported better results in the Premier League to date.
The accounts showed turnover decreased slightly from £138m to £134m, mainly down to an £8.5m broadcaster rebate, while wages were up from £87m to £94m, taking into account that wage bill covered 13 months rather than 12.
Overall losses as a result of the pandemic amounted to around £10.5m, but the accounts showed no debt, with £80m in the bank as at June 30th, 2020 – making the club very attractive for a potential takeover.
After the accounts closed in December, ALK Capital acquired an 84% majority shareholding in the club, who insist their leveraged buyout is “sustainable”, with a mortgage-type loan – believed to be around £60m – taken out on Turf Moor and the club.
Author and broadcaster Maguire, who wrote the book “The Price of Football”, assessed the figures, pointing out Burnley’s total income of £134m was 15th in terms of the Premier League, after a 10th place finish – or nine times the income of the 2012/13 season in the Championship, when Sean Dyche was appointed midway through.
And he said of the way the club negotiated the initial hit of the pandemic: “As a business, Burnley are the best run club in the Premier League – there’s no doubt about it.
“The old owners never put a penny into the club, they gave Sean Dyche a budget, he knew what was expected of him, and he delivered year in, year out.
“I think they’ve done extremely well.
“Paradoxically, they were probably hit least bad by the pandemic than any other club, because they are so reliant on broadcast income, and, of course they had a decent season as well in terms of a final league finish.
“The money they lost through the broadcast rebate, they effectively clawed back by having a higher league position.
“The wage bill is up a bit, but it is not as bad as people might think as it is 13 months’ worth of wages, instead of 12, so it only went up by a wee bit in reality.”
A common question among Burnley fans is “where has the money gone?”, and Maguire added: “The money goes on players in two ways – it’s wages, and transfer fees, and if you put those two together, that takes up 99% of your revenues as far as last year goes.
“Last year it was only £2.5m on players, but sometimes it’s not the amount of the fees – you might get a player who is perhaps a couple of years older than you would like ideally, if you are trying to sell him on at a later date, but if you can get him at a lower fee, players can still go on to 34,35 and be good squad players.”
It remains to be seen how new chairman Alan Pace and ALK Capital build on those results, but Maguire admitted: “They are really solid results.
“You can see why ALK were attracted. They weren’t inheriting any debt, or a club that was losing money every week, and that gives them a bit more time to get their feet under the table and identify where they want to direct the club.There is always a risk, because you have to pay interest on the debt, whereas if they bought it using their own money, they’d only take dividends out perhaps if the club was making profits.
“It is higher risk, if the loan figures we’ve seen quoted of say £60m at 8/9% are true, then the club has to go and find that £100,000 a week in interest, which it didn’t have to deal with before.
“That has got to come from somewhere, but even so, if you are paying out interest of £5m and you’ve got a wage bill around £90m, it’s not a huge amount off your wage bill, although you’re probably talking the wages of two first team players.
“Alan Pace isn’t a fool, he knows how the system works in the US, and he will look at income streams – commercial and on matchdays, and development, maybe similar to what Brentford have done.
“But the next set of accounts will not be as impressive, once the club starts to pay interest, and shows a full season without income from matchdays.”