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Alan Pace (centre) became Burnley chairman following ALK Capital’s takeover of the club in December 2020

Burnley would need to pay back “a significant proportion” of a £65m loan at the end of the season if relegated from the Premier League.

The loan was taken out as part of the club’s takeover by ALK Capital in December 2020.

The information is contained in the release of the club’s latest financial accounts to 31 July 2021.

The club does say in the event of relegation it is “satisfied” it would retain the support of its lenders.

However, the information is bound to spark concern among fans given the delicate position of Burnley in the Premier League table.

The Clarets were anchored in the relegation zone until the shock sacking of long-serving manager Sean Dyche on 16 April.

Widely condemned as a panic move by chairman Alan Pace, who led the ALK takeover, the decision has so far been vindicated by a run of four matches unbeaten under temporary boss Mike Jackson, including three successive wins.

That has taken Burnley, who have four games remaining, up to 16th in the table, two points clear of Everton, who are third from bottom but have a game in hand.

The financial state of Burnley has been debated since ALK’s takeover.

In the latest accounts, it is confirmed that £102m-worth of debt has been taken on through two of its holding companies, £65m to Burnley FC Holdings Ltd and £37m to the Burnley Football and Athletic Company.

On the £65m loan specifically, it is outlined in the accounts that it attracts 8% annual interest. Only interest payments are made until December 2025, when the entire sum due is due to be repaid.

However, relegation brings that repayment date forward significantly, with a further “significant reduction of the loan balance” due in what is described as “a continuing relegation scenario” – if the club failed to return to the top flight.

“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,” the accounts say.

They add that there would be “a significant reduction in wages and salaries” upon relegation, as well as money from the sale of players, “as is common for many clubs relegated from the Premier League”.

The club has £50m in reserves – down from £80m in last year’s financial results.

Over the year to July 2021, the club’s turnover fell from £134m to £115m, which the club said was driven by “the lack of fan attendance” due to Covid restrictions “and the lower placed league finish at 17th”.

It means the club recorded a £3m pre-tax loss.

The accounts also state that following the end of the reporting period, Burnley advanced £10m to a “fellow group company”.

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