Burnley FC Accounts 2022/23

[Big Vinny K]

The accounts are to year end July 23.
But the first payment was made in the previous year so I agree it does not relate to JJ Watt.

[Chester Perry]

On whether the fee involved JJ Watt is unlikely as his involvement with the club was announced on 1st May 2023 which was after the period of the Accounts under current debate.

The Accounts had a period end of July 31 2023

[Yorkshirelad]

Question for Chester Perry
Please excuse my ignorance but am I correct in assuming if our owners had dipped into their back pocket to buy the club

Would that cost / expenditure not have counted against us in our latest set of accounts regarding financial fair player

Thanks for your help

[Chester Perry]

Question for Chester Perry
Please excuse my ignorance but am I correct in assuming if our owners had dipped into their back pocket to buy the club

Would that cost / expenditure not have counted against us in our latest set of accounts regarding financial fair player

Thanks for your help

don't see how that would work, buying the club/shares has no impact as it is shares and nothing to do with FFP.

What does affect FFP assessment are operational cost items like:

- getting the club to borrow money from a third party, then borrowing that same money from the club to buy shares, leaving the club with the debt and servicing (interest etc) costs

- using the club's money to pay off over £32m of MSD loans in the summer of 2022, affects the club as it had to sell players to do so - a number of those outgoing transfers were factored to Macquarie to meet the cash demand - this took away cash flow from future years. Also £12.2m of that MSD repayment was considered early repayment and likely contained a penalty at a similar ratio to the one mentioned below (which is circa 20%)

- refinancing the remaining £32m+ of the MSD loan in November 2022 required borrowing an almost £7m additional sum to cover penalty costs of early redemption, but offered significantly lower interest at a fixed rate of 7.5%, which actually meant less money going out - however

- that £39.7m loan appears to have been refinanced and increased by one for £70 in June 2023 that has interest of SONIA + 8% (a combined total of 11.23% at the account date) with a repayment of £4.4m this season and to be paid down over its 5 year lifespan. It also included enforced early repayments if we were relegated and any subsequent years out of the Premier League. Which is why the directors statement on measures it could take upon relegation included the factoring of any outgoing player transfers.

The combination of the model of the takeover, that groups choice to use further club funds to carry on funding their share purchase liabilities and the consequences of the on the pitch failures that have led to one relegation and possibly a second have and will see the club consistently chasing cash to meet the outflow demands the owners are significantly responsible for creating, There a cost of borrowing and factoring (around £5m in the last accounts), before we even consider what taking incomes from future seasons do, when revenue is already falling significantly from relegation and perhaps failing to gain immediate promotion. Clubs quickly find themselves on a treadmill of cash advancing and it is very difficult to get off if you do not do so quickly.

[forzagranata]

I thought these were the accounts covering the financial year ending July 31, 2023?

Watt's involvement was announced in May 2023 - within that financial year.

Or am I missing something here?

[Bordeauxclaret]

I thought these were the accounts covering the financial year ending July 31, 2023?

Watt's involvement was announced in May 2023 - within that financial year.

Or am I missing something here?

I think they are saying there was another payment, albeit smaller, on the previous years accounts before he joined so speculating it’s for the same thing.

[pushpinpussy]

I'm writing a book called 'Stop Overreacting.' If no one buys it I'm going to kill myself.

[NewClaret]

I'm writing a book called 'Stop Overreacting.' If no one buys it I'm going to kill myself.

If you advertise it on here you’ll be a millionaire

[ClaretPete001]

I'm writing a book called 'Stop Overreacting.' If no one buys it I'm going to kill myself.

Great incentive not to buy it. No offence....!

[Corway]

Are we sleepwalking to oblivion? Always doubted Paces motives and things are not looking good.

Kieran Maguire says

Burnley will have to take action to avoid future financial breaches after their 22-23 accounts revealed that their debt has grown to £81million after a £27m loss. Only two years of parachute payments means It is “essential” for Burnley to be part of the Premier League to handle their debt levels and avoid a potential points deduction.

“I think there has been concern with regards to Burnley since day one of the acquisition by ALK,” Maguire told Football Insider’s Sean Fisher

“There are concerns about the leveraged buyout and how it has effectively dumped a load of debt onto the club.

https://www.footballinsider247.com/burn ... 1m-reveal/

It feels like the future of the club is at stake and is time for fans to be asking testing questions.

[Boss Hogg]

If there are financial issues as highlighted above it does beg the question why the club were so ready to accept relegation so early in the season. If the project isn’t working what’s the point of persisting with it ? I thought the idea of accepting relegation was because we had a robust plan in place for the finances which including making profits on player sales in the event of relegation.

[Goliath]

Most rational fans have been saying it since day one. I couldn't understand why people were blinded by the promotion, it was close to as sh*t or bust as the Coyle season and it looks like it will be the same again next season.

[Paul Waine]

Are we sleepwalking to oblivion? Always doubted Paces motives and things are not looking good.

Kieran Maguire says

Burnley will have to take action to avoid future financial breaches after their 22-23 accounts revealed that their debt has grown to £81million after a £27m loss. Only two years of parachute payments means It is “essential” for Burnley to be part of the Premier League to handle their debt levels and avoid a potential points deduction.

“I think there has been concern with regards to Burnley since day one of the acquisition by ALK,” Maguire told Football Insider’s Sean Fisher

“There are concerns about the leveraged buyout and how it has effectively dumped a load of debt onto the club.

https://www.footballinsider247.com/burn ... 1m-reveal/

It feels like the future of the club is at stake and is time for fans to be asking testing questions.

If you read the article, Maguire also states that Burnley won't have financial difficulties in the next season or so because they made a profit of £26m in 21-22. So, even £big loss this season, 23-24, will not put Burnley over PSR limit.

I understand Chester Perry has written many times about the Premier League's plans to scrap the current PSR regulations and switch to another set of rules. Of course, if Burnley are playing in the EFL they will be subject to EFL rules with lower limits. But, lower revenues also mean lower wages for players, some through the relegation clauses in their contracts (if they aren't sold) and others through new players being brought in on EFL wages.

Yes, we want Burnley to be playing at the top level. If Burnley are in the Premier League all financial issues are manageable. If Burnley are in Championship/EFL, again, financial issues are manageable.

[jedi_master]

How are financial issues manageable Paul if Burnley fail to get promoted in either of the next two seasons? Is there something I am missing? From where I am standing we have to be in the Premier League at least once every 3 years for the rest of time (unless we decide to do the prudent thing and start paying our loans off) otherwise we will be unable to fulfil our debt obligations/interest payments with ticketing revenue and Championship TV money alone?

I still don’t quite understand what the end game is here if ALK have no intention of reducing the loans against the club. At some point we will go three years without getting promoted after relegation - could be this time for all we know, but I think not. What is the contingency for that scenario which will quite obviously (at some point for a small club like Burnley) come to pass?

[NewClaret]

How are financial issues manageable Paul if Burnley fail to get promoted in either of the next two seasons? Is there something I am missing? From where I am standing we have to be in the Premier League at least once every 3 years for the rest of time (unless we decide to do the prudent thing and start paying our loans off) otherwise we will be unable to fulfil our debt obligations/interest payments with ticketing revenue and Championship TV money alone?

I still don’t quite understand what the end game is here if ALK have no intention of reducing the loans against the club. At some point we will go three years without getting promoted after relegation - could be this time for all we know, but I think not. What is the contingency for that scenario which will quite obviously (at some point for a small club like Burnley) come to pass?

To your contingency question, I imagine there’s a number of them:

- I still think there is money at ‘group’ level somewhere up the chain, given the £88m/£80m deposits in September. I’m not saying that’s found its way down to the club, just that it’s money that will likely still exist somewhere in the structure or with the shareholders who could then deploy it.

- Player sales. At the moment it’s hard to imagine those covering the debt but we’ve all see Gyokeres, Wharton, etc go for £20m from the Championship recently and I think we have a fair number of younger players who might fetch good fees like that.

- Further fund raising from shareholders (i.e. dilution to ALK). There’s no shortage of interest in investment in sports teams, particularly in the US given how wildly lower English sports team valuations are compared to the US.

- Takeover by a more wealthy owner (probably hard to achieve but I still hold out some hope that our recent Premier League exploits would make us attractive to someone).

What you’ll never hear is ALK saying is which of those they’d deploy, in what scenarios, but they’re all fairly plausible ways to raise capital if we found ourselves out of the Premier League for a sustained period.

In terms of ALK’s end game, I don’t think anyone knows but I’m just hazarding a guess that they’re banking on a) retaining premier league status (which they may now realise isn’t as easy as Dyche made it appear), b) benefiting from the growing revenues in that league, c) appreciating sports team valuations given they’re a finite commodity and also hugely undervalued compared to US peers. I don’t think they’ll need to lower debt to double their money over say a 10 year period.

[jedi_master]

In terms of ALK’s end game, I don’t think anyone knows but I’m just hazarding a guess that they’re banking on a) retaining premier league status (which they may now realise isn’t as easy as Dyche made it appear), b) benefiting from the growing revenues in that league, c) appreciating sports team valuations given they’re a finite commodity and also hugely undervalued compared to US peers. I don’t think they’ll need to lower debt to double their money over say a 10 year period.

Good post NewClaret (quoted just a portion as a response so as to not clog the thread up). Yes, I see the list you’ve given there and whilst obviously player sales will be our lifeblood to continue as we are, it’s still very much a gamble/risk that we make the return required on those to subsidise our loans/interest (as well as further payments on the players themselves as I understand most of them will have been bought with repayment plans etc, look at when we sold Nathan Collins for example).

The club are obviously confident they can yo-yo successfully (as a minimum) to keep the Wolf from the door. I’d feel so much easier about that as a strategy though if we were paying down our debts. I’d have loved us to have gone up last summer and signed THB, Tella and (say) Berge, resigned Barnes for a year and then simply paid off a massive whack of the debt as opposed to what we did do. If we’d come down, fair enough - but what a great position we’d have been in as opposed to the question marks that surround this summers strategy.

[dsr]

To your contingency question, I imagine there’s a number of them:

- I still think there is money at ‘group’ level somewhere up the chain, given the £88m/£80m deposits in September. I’m not saying that’s found its way down to the club, just that it’s money that will likely still exist somewhere in the structure or with the shareholders who could then deploy it.

- Player sales. At the moment it’s hard to imagine those covering the debt but we’ve all see Gyokeres, Wharton, etc go for £20m from the Championship recently and I think we have a fair number of younger players who might fetch good fees like that.

- Further fund raising from shareholders (i.e. dilution to ALK). There’s no shortage of interest in investment in sports teams, particularly in the US given how wildly lower English sports team valuations are compared to the US.

- Takeover by a more wealthy owner (probably hard to achieve but I still hold out some hope that our recent Premier League exploits would make us attractive to someone).

What you’ll never hear is ALK saying is which of those they’d deploy, in what scenarios, but they’re all fairly plausible ways to raise capital if we found ourselves out of the Premier League for a sustained period.

In terms of ALK’s end game, I don’t think anyone knows but I’m just hazarding a guess that they’re banking on a) retaining premier league status (which they may now realise isn’t as easy as Dyche made it appear), b) benefiting from the growing revenues in that league, c) appreciating sports team valuations given they’re a finite commodity and also hugely undervalued compared to US peers. I don’t think they’ll need to lower debt to double their money over say a 10 year period.

The worry is that they might not want to throw money into the club in hopes of getting more out. So far they have put nothing into the club, and have given no indication that they ever will. Taking money out is what they do. Hence the money at group level will not filter down.

Similar with fundraising from new shareholders. We've already seen new shareholders come into the group, but their funds have come higher up the group, into companies where ALK have control of all the funds and either don't have to disclose it, or have opted to ignore companies house disclosure rules. Either way, new shareholders' money is ALK's and not BFC's, and ALK are freezing on to it.

My worry is that ALK care basically nothing for the club and don't care if it goes bust. They have quite probably already made a profit, they are doing nicely out of fees paid to an anonymous associate, and if they only make a little profit instead of a big profit, so be it. But they aren't going to risk turning that profit into a loss. BFC may well borrow more money to pay players and transfers, but it will be on a "BFC go bust and ALK walk away" basis if it all goes wrong.

[NewClaret]

The worry is that they might not want to throw money into the club in hopes of getting more out. So far they have put nothing into the club, and have given no indication that they ever will. Taking money out is what they do. Hence the money at group level will not filter down.

Similar with fundraising from new shareholders. We've already seen new shareholders come into the group, but their funds have come higher up the group, into companies where ALK have control of all the funds and either don't have to disclose it, or have opted to ignore companies house disclosure rules. Either way, new shareholders' money is ALK's and not BFC's, and ALK are freezing on to it.

My worry is that ALK care basically nothing for the club and don't care if it goes bust. They have quite probably already made a profit, they are doing nicely out of fees paid to an anonymous associate, and if they only make a little profit instead of a big profit, so be it. But they aren't going to risk turning that profit into a loss. BFC may well borrow more money to pay players and transfers, but it will be on a "BFC go bust and ALK walk away" basis if it all goes wrong.

Obviously that remains a risk.

Whilst obviously being investors first and foremost, I think there are many signs that offer some comfort to these concerns though:

- Alan has moved his family here and been very visible to fans and the community. It’s not like he’s invested and asked someone else to run it all for him while he’s sat in America (Glazers, Venky’s, etc).

- Alan has continually said he understands his role as a custodian of the club. That may just be lip service and it’s a fair point to say Garlick said the same and then agreed a leveraged buy-out (more on that below), but I don’t sense at all that he’s a typical hard nosed businessman with no sense of morals. He comes across as a religious, family man to me.

- JJ and Kompany are both highly intelligent sports people who have both invested in his plan/business in different ways. As have numerous other seemingly quite intelligent business or sports people. I just don’t see why they would, if they felt that a couple of years out of the PL would see financial disaster. JJ in particular has put his name and reputation right behind us.

- Back to my point about Garlick. Although I want to be furious with him for the way he handled the takeover, I’m still not sure he’d have done something that would genuinely put the future of the club at material risk. I have completely unfounded theories on what might actually have happened with the takeover and the monies that funded it. But if we assumed he wouldn’t put the club at risk, there’s hopefully some solid funding behind the scenes to support that eventuality. If he did actually expose the club to this risk, I’m not sure we were in any safer hands yesterday than we are today.

- The trading profile just doesn’t make sense (e.g. signing Esteve in Jan when we knew we were likely going down & saying he’s staying either way). It just doesn’t make a lot of sense if we’re brassic.

I for one cannot spend my life worrying about it though. Partly since we can’t control it but also because we’ve fallen before and risen again. We’ll always be here and so will the club (incredibly few clubs have ever fully folded given the precarious financial position they’re nearly all in). We’ll out live this ownership group whether they do a good or bad job.

[NewClaret]

Good post NewClaret (quoted just a portion as a response so as to not clog the thread up). Yes, I see the list you’ve given there and whilst obviously player sales will be our lifeblood to continue as we are, it’s still very much a gamble/risk that we make the return required on those to subsidise our loans/interest (as well as further payments on the players themselves as I understand most of them will have been bought with repayment plans etc, look at when we sold Nathan Collins for example).

The club are obviously confident they can yo-yo successfully (as a minimum) to keep the Wolf from the door. I’d feel so much easier about that as a strategy though if we were paying down our debts. I’d have loved us to have gone up last summer and signed THB, Tella and (say) Berge, resigned Barnes for a year and then simply paid off a massive whack of the debt as opposed to what we did do. If we’d come down, fair enough - but what a great position we’d have been in as opposed to the question marks that surround this summers strategy.

I would too.

I’m not a fan of the debt and of course would prefer we didn’t have it. And like you I’d have happily taken a lesser spend and a big debt reduction. And if we didn’t have debt I’d probably always prefer a lesser transfer spend and higher infrastructure spend (ground, etc).

I know your point was a broader one & not about players per se, but not sure THB was Prem level and I wouldn’t have spent £20m on him, Tella I probably would but would still see £20m as a huge gamble with limited upside. Berge yes. To get the strategy right I think we’re going to have to buy lower than the prices quoted for those two…

I think Koleosho and Odobert will be where the top dollar exists. They’re great signings and with a season or two might pay off that debt between them. Really just pointing out that this summers strategy looks awful now but may not prove to be in a few years. We can’t determine the success/failure after one season.