Burnley’s Premier League hangover could last for years – no manager, £65m debt and sellout of players

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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 were relegated on Sunday after losing 2-1 to Newcastle United at Turf Moor, while rivals Leeds United won 2-1 at Brentford and survived.

Any team dropping out of the Premier League face an immediate revenue hit of around £60m as they lose over £100m in TV money and receive a £40m parachute payment. sterling the first year, to soften their fall .

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

Even so, in the past, relegation was far less scary for Burnley, who staunchly refused to go into debt in the top flight, and even made a profit.

But that’s not the case now. The Turf Moor outfit was leveraged buyout by US investors ALK Capital in December 2020, which burdened them with the kind of debt they had previously been desperate to avoid, and it also ate at their savings.

As first reported in Sportsmail and confirmed in the most recent accounts, a significant part of a £65m loan from MSD Capital is set to expire on relegation, with the remainder payable the following year.

ALK said after the takeover that their plans represented relegation, but even so the numbers are alarming analysts.

The Clarets' middle management team, led by Mike Jackson, barely kept them going

The Clarets’ middle management team, led by Mike Jackson, barely kept them going

“Any relegated club has a turnover of £60million and that needs to be managed, but the problem with Burnley is the leveraged takeover,” said Dan Plumley, football finance expert at the ‘Sheffield Hallam University.

“There is the £65m refund which will now be used. This is the biggest problem besides falling out of the Premier League.

The problem isn’t just the debt, according to Plumley, it’s the fact that it was repaid so quickly to an outside lender. Most clubs owe money to their owner, who is unlikely to repay his debt.

‘From what we can see in the accounts…. We have to deal with it and it is in the short term. If there is no shake [on the terms of repayment] it’s clear what’s going to happen,’ added Plumley, who foresees the parachute payment of £40m in the first year [after relegation] will have to fund this £65m loan repayment.

It was a trying day for Burnley fans at Turf Moor after six consecutive top-flight seasons

It was a trying day for Burnley fans at Turf Moor after six consecutive top-flight seasons

But the financial challenge isn’t the only one Burnley face, under chairman Alan Pace, who completed the £170m takeover of 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 player side after Sean Dyche was unexpectedly sacked in April at the start with four senior coaches. In addition, up to 20 staff members have left the company since ALK joined, sources have previously told Sportsmail, including the chief executive.

After two years of struggle (the Clarets finished 17th last season) and increasingly difficult 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 lot of work to do to stabilize the Clarets in the league

Chairman Alan Pace has a lot of work to do to stabilize the Clarets in the league

However, Pace and his partners have a lot of work to do to prevent the Clarets from falling through the fiercely competitive Ligue 1 league.

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

Burnley fans would be the first to agree they enjoyed an incredible run under Dyche. he guided the club to two promotions from the Championship and a seventh place in the Premier League, securing Europa League football.

But now the reality is that a huge amount of know-how has been lost in the dugout with more to leave the pitch – and the Clarets are looking for a new manager who has the ability to rebuild, while facing financial straits difficult.

‘How they pay salaries next season if they use parachute payment [to cover the debt]we don’t know,” said analyst Kieran Maguire of the University of Liverpool and host of the Football Podcas Pricest.

When Sunderland were relegated from the top flight in 2017, they dropped back down to League One

When Sunderland were relegated from the top flight in 2017, they dropped back down to League One

“We saw with Sunderland… their parachute payments seemed to have something to do with acquiring the club and they went straight to League 1. Could that be Burnley? It will depend on the quality of their recruitment.

Sunderland were relegated from the top flight in 2017 and on Saturday the Black Cats finally found their way back to the Championship after four years in League One.

“It could be worse than Sunderland for Burnley,” Dr Rob Wilson, head of sports affairs management at Sheffield Hallam, told Sportsmail.

“The way the ALK deal is structured, the level of debt in there, it could really sabotage them. Someone on the property needs to come out and say this is how we’re going to handle it.

Wilson and Maguire expect a discount sale of players to generate much-needed revenue.

While Tarkowski will leave for free, winger and top scorer Maxwel Cornet is believed to have a release clause in his contract for £17.5million, centre-back Nathan Collins and full-back Connor Roberts have been revealed to be efficient high-flying defenders, while midfielder Dwight McNeill and striker Wout Weghorst are also likely to attract attention.

Sean Dyche was unexpectedly sacked by Burnley this season after nine years at the club

Sean Dyche was unexpectedly sacked by Burnley this season after nine years at the club

Goalkeeper Nick Pope, who has been in stunning form this season, will also have to leave to fulfill his ambitions in England.

Maguire believes selling players will be key if the club is to stabilize in the Championship, but at the expense of promotion hopes.

“They need to come up with £65million quickly,” he said. “They have the assets to do it, but it will have an impact on the recovery next season. That’s the downside.

In favor of Burnley, they have historically controlled their costs, which will help them now.

Burnley’s experience shows the risks associated with a leveraged takeover, Maguire explained. If a club stays in the top flight and increases in value, there is potentially a big and quick payoff for the new owner; if not, the club is encumbered with debts that it cannot repay.

Ashley Barnes reacts in Clarets' atrocious loss at Turf Moor to Newcastle United

Ashley Barnes reacts in Clarets’ atrocious loss at Turf Moor to Newcastle United

For the Clarets, more than 80% of the club’s Premier League income came from TV revenue, but that is melting now and there is not much left to pay the interest on the loans, so they need to be paid back quickly, d ‘where the relegation clause. MSD asked.

Pace has yet to speak after Sunday’s result but previously insisted his financial plan was designed to cover the possibility of relegation

Asked about his plans after the £170m takeover, Pace reassured supporters at the time.

“We mean it honestly when we say we are concerned about the long-term viability of this club, as if we were part of the family,” he said. ‘So we’re not going to do anything stupid.

Burnley goalkeeper Nick Pope has been in fabulous form this season but is expected to leave

Burnley goalkeeper Nick Pope has been in fabulous form this season but is expected to leave

And the former managing director of Major League Soccer’s Real Salt Lake, added: “The loans we have involved in this transaction are absolutely reasonable and absolutely in line with what can be supported by this club and will take nothing away from the ability to function on a daily basis.’

Following Burnley’s relegation, Mike Jackson told reporters he believed the club were in good hands.

There are good people here who want to do well and want the club to bounce back, but it’s small steps and planning and making sure we have everything in place to do that.

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