Burnley head into the Championship facing a perfect storm of problems after leveraged buy-out

Date published: Tuesday 24th May 2022 10:28 - Ian King

Josh Brownhill of Burnley, during their game against Newcastle

With revenues set to fall, a loan to be repaid, no manager and a squad that needs a rebuild, Burnley are paying a heavy price for relegation.


When the full-time whistle blew at Turf Moor at the end of the season, the television cameras panned across a familiar tableau of images. Some of the players were slumped on the pitch, while others tried to summon themselves to offer a desultory goodbye to the fans who’d stayed in the ground. They lingered upon those whose emotions had got the better of them, and upon dazed-looking staff.

It hadn’t been like this in 2015, when they were relegated before. They bounced back the following season as winners of the Championship. This time, it felt somewhat different. Burnley is a very different club to the one that was relegated seven years ago, and this time around the in-built advantage that relegated clubs have in the Championship as a result of Premier League parachute payments seems unlikely to benefit them much, so a quick return is far from guaranteed.

Indeed, if there’s any impression we can take of the club as they tumble down into the Championship, it’s just how hollowed-out they may look in just a few week’s time. Burnley have no manager, an ageing squad with a number of players out of contract, and several more who are almost certain to leave to stay in the Premier League. And on top of all of that, there’s the small matter of the debt taken out to fund the takeover of the club in January 2021, which needs to be repaid.

Despite a reasonable record (which was a substantial improvement on the points-per-game tally of his predecessor), it doesn’t seem particularly likely that Mike Jackson will be offered the managerial position on a permanent basis. The name that has been repeatedly mentioned is Vincent Kompany, the former Manchester City captain who’s been cutting his coaching teeth this last couple of years in Belgium with Anderlecht.

The problem here is that Anderlecht haven’t exactly been tearing the Jupiler Pro League apart. His two seasons there have seen the team finish in third and fourth place; his time might be described as ‘mixed’, and it has also been suggested that he would only be interested in going to Turf Moor were they staying in the Premier League.

Whether Kompany’s interest in the position survives relegation from the Premier League, whoever does take it on has a lot of work to do. Burnley already had an ageing squad as a result of Sean Dyche’s dependence on loyalty and experience in his players, and it is also widely anticipated that higher-profile players such as James Tarkowski and Maxwell Cornet will leave this summer, while contract negotiations with others are due.

Some might be persuaded to stay but others such as Ashley Barnes, Phil Bardsley, Jack Cork, Aaron Lennon, Erik Pieters or Dale Stephens seem likely to exit. And, if anything, Burnley are going to need a slightly bigger squad in the bloated Championship than in the Premier League if they’re to avoid running out of gas as a result of what will be a punishing schedule.

None of this is helped by the club’s financial position, which has contrived to find a way to go from being unusually rosey to pretty bleak in a period of less than 18 months. When Burnley were sold at the very start of 2021, it was reported that the sale would leave the club up to £90m out of pocket as a result of the costs of the takeover itself being put upon the club itself, as had happened at Manchester United in 2005.

This would have been bad enough had Burnley stayed in the Premier League, where £90m isn’t that far off a year’s worth of television and prize money. Against a background of relegation and drastically reduced revenues, it starts to look a little like a catastrophe. Relegation often finds a way of compounding all of a club’s problems.

The lion’s share of this debt was due to be repaid in 2025, but dropping from the Premier League has been reported to have triggered a clause in the £65m loan agreement with MSD UK Holdings (Michael Dell’s company, which seemed to spend much of the lockdown throwing money at football clubs) which now means that this payment has to be made immediately.

The Premier League’s parachute payment money has reportedly already been earmarked for this purpose, but even this isn’t likely to be enough to completely steady the position and it’s likely that further cost-cutting will also now have to follow. The bullish comments of ALK Capital’s Alan Pace when they completed the sale now seem particularly hollow, particularly with relegation being such an expensive matter that redundancies will be likely.

The good news for supporters of other clubs is that the apparently incoming independent regulator seems likely to crack down on leveraged buyouts within the game. These buyouts feel like a symptom of a fundamentally broken financial system. That they remain permitted in professional football – in which the money that clubs generate is generally pressingly needed because their very highly paid staff are also their product, and in which sudden and drastic drops in income are perfectly possible – seems all the more perverse.

Banning leveraged buyouts will come too late for Burnley, and the EFL is littered with the bruised bodies of clubs that once lived among the elite and those who got their fingers burnt trying to buy their way in. But there is a way back, too. There’s nothing impossible about them getting back into the Premier League, as they did before in 2016, or about repositioning the club to put financial wellbeing and stability back ahead of any thoughts of trying to steamroller their way back up. There’s nothing certain about what happens next.

But this isn’t a zero-sum game, and perhaps the ultimate point is that even if Burnley can get through this relegation without serious issues, that loss of money – including interest which is going into the pocket of Michael Dell, who’s already a multi-billionaire and the world’s 39th richest person – is making doing so fundamentally more difficult than it would otherwise have been or needed to be.

This is no way to treat a historic and socially valued institution that is etched into the identity of a town and the history of the world’s most popular game, and it is an institutional and structural failure of football governance that businesspeople can put the risk associated with buying such a (often risky) business onto that business itself. Because we already know that if what happens next at Burnley does go wrong, those responsible will walk away without consequences and may never even think of it again. And Burnley deserve better than that, because all football clubs deserve better than that. No-one deserves this level of uncertainty, just because they’ve been relegated.

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