Burnley would face ‘significant’ loan repayment if relegated from Premier League

The club’s accounts reveal repayment for the capital element of a £65million loan would be brought forward if the Clarets go down.
Burnley would face ‘significant’ loan repayment if relegated from Premier League

By Ian Parker, PA

The stakes at play in Burnley’s fight against relegation have been brought into sharp relief after the club’s financial results showed they would face a “significant” loan repayment if they drop into the Championship.

Financial results for last season, during which ALK Capital completed a leveraged takeover, show the club suffered a pre-tax loss of £3million after the absence of fans during the pandemic saw turnover fall from £134million to £115million, while the club finished the season with £50million cash in hand.

But the accounts up until July 31 2021 also confirm the debt now carried by Burnley following a takeover in which former Wall Street financier Alan Pace’s ALK Capital bought out former chairman Mike Garlick and John Banaskiewicz in a deal which used much of the club’s own money.

Burnley Takeover
Alan Pace completed a leveraged takeover of Burnley in December 2020 (Burnley FC handout)

Included in that debt is a £65million loan which, as things stand, is due for repayment in December 2025 but much of which will become due imminently if the club is relegated.

Burnley sit 16th in the Premier League table, two points clear of the bottom three, having taken 10 points from a possible 12 since the surprise sacking of Sean Dyche last month.

“In the event of the club’s relegation from the Premier League, the repayment scheduled for the capital element of the loan is brought forward, with a significant proportion falling due for repayment shortly after the end of the football season in which the relegation event takes place,” the accounts state.

“This repayment would, therefore, be expected to fall due within less than one year from the balance sheet date in these circumstances. In a continuing relegation scenario, a further significant reduction of the loan balance would also take place the following season.”

The loan carries an interest rate of eight per cent.

Burnley v Southampton – Premier League – Turf Moor
Mike Jackson has taken 10 points from a possible 12 to give the Clarets hope of avoiding the drop (Martin Rickett/PA)

On top of needing to repay that loan, Burnley would face a considerable drop in incomes should they be relegated due to the loss of TV revenue.

The accounts state that Burnley’s outstanding debts stood at £102million last summer, having been nil prior to the takeover.

Pace has consistently maintained since his takeover that plans are in place should the club drop into the Championship.

The accounts state: “The balance can potentially be settled by various means, and the group’s reserves are sufficient to enable a significant portion of the balance to be settled by way of dividends if required.”

As the accounts cover the period up to July 31, they include last summer’s signing of Nathan Collins from Stoke for a reported £12million, but not the subsequent signing of Maxwel Cornet from Lyon for £13.5million, nor the arrivals of Wayne Hennessey, Connor Roberts and Aaron Lennon.

Burnley v Wolverhampton Wanderers – Premier League – Turf Moor
The signing of Wout Weghorst in January is not covered by the accounts (Martin Rickett/PA)

In January, Burnley lost Chris Wood to Newcastle when the Magpies exercised a release clause in his contract, but reinvested around half of the reported £25million fee by signing striker Wout Weghorst from Wolfsburg.

The accounts stated the net expenditure on those transfers was £1.3million.

Burnley said they were able to reduce their wage bill during the accounting period from £92million to £86million.

A statement accompanying the accounts said: “We are pleased with the results of our first 7 months of ownership as we have been able to incorporate the women’s team fully into the Burnley FC family and being long-term planning on facility improvements and player development investment.

“The strength of our team working together to overcome the challenges we have experienced this year give us hope and confidence for the coming season.”

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