Financially ignorant!!

[Carport]

That’s me when it comes to understanding Burnley’s finances. Can anyone explain please these in an ‘idiot’s guide’? To those who do understand, this will no doubt come across as naive, but why do we need to sell players when we will have been given a huge parachute payment? Thanks

[Guller Bull]

You can only have a squad size of so many. Players aren't going to be happy being cut from and wasting a years playing time. (Well the vast majority wont)

[ArmchairDetective]

That’s me when it comes to understanding Burnley’s finances. Can anyone explain please these in an ‘idiot’s guide’? To those who do understand, this will no doubt come across as naive, but why do we need to sell players when we will have been given a huge parachute payment? Thanks

You're not the only one carport my guess is that we need to be confident that we can continue servicing the debt we've had since the takeover, and it'll be harder to do that it we don't get promoted? I suppose it's also their model (regardless of debt) in the absence of a billionaire backer to buy low and sell high.

There's clearly some very knowledgeable people on the takeover thread on this messageboard but if you don't read it regularly I find it impossible to keep up!

I think Chester Perry and Co should provide a six monthly briefing for us lay people

[SirBob]

Players and agents know we have parachute payments, when we get relegated they still want a slice of this money. They might have a wage cut but our weekly wage total is ridiculous and pretty much eats away the entire payment.

If you were a player would you sign a contract reducing your wages to terms similar to players at say Preston or Blackburn knowing we have tens of millions in the bank more than then?

One of the main reasons for the payment is to cover wages we of players we can’t get rid of etc

[beeholeclaret]

I think parachute payments are to cover the extortionate wages that Premier League players receive even when a club is relegated. It would be a dangerous model to rely on those to continue whilst playing Championship football over say 2 or 3 years. Trim the size of the squad and trim the wage bill. Readily saleable assets such as Odobert Will all be considered if the big clubs come knocking. The club can’t survive on gate money nowadays and relies on either rich benefactors (clubs with billions not just millions) or a prudent model of lower cost recruitment and decent profit upon sale of assets.

This can work but too many sales can reduce the quality of the team and player (and manager) morale can falter.


As for what’s going on at the club regarding overall financing is anyone’s guess. We just have to hope that they have established a decent net work of financial backers to call upon if things got really tough. I am confident that Alan Pace and co know what they are doing and despite a leveraged buy out things will smooth out over a few years cycle. It’s all ‘smoke and mirrors’ with money being switched around from companies around the world. They will be making the most of tax breaks / offsetting tax by creating debt in some companies and drawing profit on others. Just hope they can keep it legal and cosher.

[Holtyclaret]

Following relegation and after parachute payment we have a hole in our income of £50m this year.

This can be filled by player sales (well on way to covering now) or additional finance.

Coupled to that as mentioned above our squad is too big in numbers. Few more loans and sales will sort that.

Probably then a couple of loans/purchases in to balance squad.

[Foshiznik]

Also we are selling because clubs are offering fair bids for our players so far. Unfortunately for us, the players they are bidding for appear to be our better players.

In an ideal world we would get more bids for our fringe players but the reality is your better players get scavenged by the other clubs when you are relegated.

[Hipper]

... and then there is our debt servicing. Somewhere on here I'm sure someone has explained what effects this might have but I can't find it at the moment.

[GetIntoEm]

We are certainly not at a critical point financial wise at the moment, but cashing in on our overstock of players is the right thing to do they won't be worth any more than they are now if they don't make the squad this year. Then there's the wages on top that they'll still be earning.

Income drops naturally with our relegation, but our wage bill is still relatively low especially with how many first team players we have.

If we sell, and go straight back up the club will be in fantastic shape.

[GodIsADeeJay81]

Buy low.
Sell high
Keep doing that but gradually increase the price you’re buying players for, meaning we get better players

Those players will be sold for bigger fees again

Eventually we end up being able to remain in the PL for longer but also not have debt at a level like Brighton, for example

It doesn’t always work, but ultimately that’s what it should be like in football
Instead, clubs have decided that running at a loss and relying on an owners money is the best way to operate

[bfcjg]

Mr. Micawber is a character in Charles Dickens' David Copperfield (1850). He is often in debt and has been to debtors prisons, but he has an optimistic outlook and frequently says, "Something will turn up". Here are some quotes from Mr. Micawber:
Annual income
"Annual income, 20 pounds. Annual expenditure, 19 pounds. Result? Happiness". He also says, "Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery". This quote is often called the Micawber Principle and is said to be relevant to young people today who don't understand the effects of spending decisions.

[G0foste]

The parachute payment are to help clubs transition from a Prem club to a championship club without going bankrupt, although they are a large amount of money, it's still less than you get for being in the premier league.

You have to cover the shortfalll some how.

[Pearcey]

Players asking to leave is also a factor. Kompany said players were concerned about relegation before signing. Some just go about it better than others.

[Big Vinny K]

That’s me when it comes to understanding Burnley’s finances. Can anyone explain please these in an ‘idiot’s guide’? To those who do understand, this will no doubt come across as naive, but why do we need to sell players when we will have been given a huge parachute payment? Thanks

When we buy players it’s commonplace to pay the transfer fees to the other clubs over a 3 or 4 year period. So that basically means we still have the majority of the £150m to £200m we have spent in the last couple of years still left to pay. When we sell a player like we did yesterday the fee we get is also usually spread over 3 or 4 years too.

The parachute payment is significant but it’s much less than the money we would have got for remaining in the PL. With the Sky money making up the vast majority of our total revenue / income then that has a big impact.

Our total wage bill will have very probably reduced from last season because of relegation clauses in players contracts.
The wage bill is our biggest expense but there are other significant operational expenses and loan interest / finance costs that will likely to be the same this year as they were last.

We don’t know exact figures for a lot of the above - especially the total wage bill this year but it’s safe to assume that when you spend money like we did last season that the need to cut our squad and sell players is because without it we would be losing money that the owners / board are not prepared to subsidise. We don’t have sugar daddy owners who are prepared to cover large losses.

[ClaretPete001]

That’s me when it comes to understanding Burnley’s finances. Can anyone explain please these in an ‘idiot’s guide’? To those who do understand, this will no doubt come across as naive, but why do we need to sell players when we will have been given a huge parachute payment? Thanks

It's very simple and all here:

https://find-and-update.company-informa ... y/08335231

Just scroll down to the top figure turnover

The last time we were in the Prem we had a turnover of £123 million (31/07/2022) this went down to £65 million (31/07/2023) in the Championship after relegation.

Effectively the PL broadcast revenue halved from £108 million to less than £50 million.

Just imagine being a businessman - any businessman - and having to cope with a loss of almost £60 million in one year - almost half your turnover.

It's as simple as that...!

[dsr]

We borrowed loads on Premier League income to buy the players. Now we're on Championship income we can't afford the loans any more, so we need to sell.

It's a bit like having an expensive house mortgaged to the hilt, and then your income falls and you need to sell up and find somewhere cheaper.

[JR1882]

Wages reduce on relegation so some will want to leave & we will want to get the best price of course, so it’s not all “needing money”

Some we may not want to sell but are offered money that can’t realistically be refused at a point in time (probs Odobert).

We have debts to service.

We have a higher wage bill than last time I’d expect.

I don’t think we have a great deal of liquidity so sales may be nessescary to a point to fund some incomings & financial obligations.

[Stproc]

I think the whole purpose of the convoluted arrangement of companies that own us is to make sure nobody really knows what on earth is going on or who owes what to who. Add to that the fact that every sale / purchase is ‘undisclosed’ and we are kept in the dark.

[Carport]

It's very simple and all here:

https://find-and-update.company-informa ... y/08335231

Just scroll down to the top figure turnover

The last time we were in the Prem we had a turnover of £123 million (31/07/2022) this went down to £65 million (31/07/2023) in the Championship after relegation.

Effectively the PL broadcast revenue halved from £108 million to less than £50 million.

Just imagine being a businessman - any businessman - and having to cope with a loss of almost £60 million in one year - almost half your turnover.

It's as simple as that...!

Helpful thanks. And thanks to all others who have posted. I have a clearer understanding now than I did. UTC