Burnley head into the Championship and face a perfect storm of trouble after a leveraged buyout

With falling earnings, a loan to repay, no manager and a squad to rebuild, Burnley is paying a heavy price for relegation.

GB About: Burnley Publish: 05/24/2022 Edit: 05/24/2022 Author: Gardener


BurnleyWith falling earnings, a loan to repay, no manager and a squad to rebuild, Burnley is 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. That wasn't the case in 2015 when they were relegated earlier. Burnley are a very different club to the ones that were relegated seven years ago and this time around the built-in advantage relegated clubs have in the Championship from the Premier League's parachute payments doesn't seem likely to do them much good, so quick returns are everything other than guaranteed. In fact, if we can get a glimpse of the club as they tumble into the Championship, it's just how hollowed out they could look in just a matter of weeks. Burnley are without a manager, an aging squad with a number of unsigned players and a few more who will almost certainly remain in the Premier League. And on top of all that there is the small matter of the debt that was taken on to finance the club takeover in January 2021 and has to be repaid. Despite a reasonable record (which was a significant improvement on his predecessor's score), Mike Jackson doesn't seem particularly likely to be offered the leadership position on a permanent basis. The team finished its two seasons there in third and fourth place; His time could be described as "a mixed game" and it has also been suggested that he would only be interested in going to Turf Moor if they stayed in the Premier League. Whether Kompany's interest in the position survives relegation from the Premier League, who takes it on, has a lot of work to do. Burnley already had an aging squad due to Sean Dyche's reliance on their players' loyalty and experience, and better known players such as James Tarkowski and Maxwell Cornet are also widely expected to leave this summer while contract negotiations with others are due. And if anything, Burnley will need a slightly larger squad in the bloated Championship than in the Premier League if they are not to run out of fuel due to a tight schedule. None of this is helped by the club's financial position, which has managed to find its way from unusually rosy to quite dismal in a span of less than 18 months. When Burnley was sold in early 2021, it was reported that the sale would net the club up to £90m out of pocket as the cost of the takeover itself would fall on the club itself, as had happened at Manchester United in 2005 .That would have been bad enough if Burnley had stayed in the Premier League, where £90m is not far from a year's worth of television and prize money. Against the background of relegation and drastically reduced income, it looks a bit like a disaster. Relegation often finds a way to compound all of a club's problems. The lion's share of that debt was due to be repaid in 2025, but exiting the Premier League is said to have triggered a clause in the £65m loan deal with MSD UK Holdings (Michael Dell's company, which appeared to be spending much of the debt to throw lockdown money at football clubs) , which now means that this payment must be made immediately. The Premier League's parachute payment money is reportedly already earmarked for this purpose, but even that is unlikely to be enough to fully stabilize the position and it's likely more cost-cutting must now follow as well. ALK Capital's Alan Pace's optimistic comments following the completion of the sale now seem particularly hollow, especially as the move is such an expensive proposition that layoffs are likely. The good news for supporters of other clubs is that what appears to be a new independent regulator is likely to crack down on in-game leveraged buyouts. These takeovers seem like a symptom of a fundamentally broken financial system. The fact that they remain allowed in professional football – where the money that the clubs generate is usually urgently needed because their very highly paid employees are also their product, and where sudden and drastic drops in income are quite possible – seems all the more perverse. The ban on leveraged buyouts will come too late for Burnley and the EFL is littered with the bruised bodies of clubs that once dwelt among the elite and of those who burned their fingers trying to buy in. There is nothing impossible about them returning to the club in the Premier League as they previously did in 2016 or about repositioning the club to bring financial health and stability back to the thought of moving back up battle. There is nothing certain about what will happen next. But this isn't a zero-sum game, and perhaps the key point is that even if Burnley can weather this descent without serious problems, this loss of money - including interest - will flow into the pocket of Michael Dell, who is already a multi-billionaire and the 39th richest Man of the World - makes this fundamentally more difficult than it would otherwise have been or need to be. This is no way of treating a historical and socially cherished institution engraved in a city's identity and the history of the world's most popular game, and it is an institutional and structural failure of football governance that businessmen can risk such (often risky) business to buy this business yourself. And Burnley deserve better because all football clubs deserve better. The article Burnley going into the Championship with a perfect storm of problems after leveraged buyout appeared first on Football365.com.


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