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Daily Mirror
Daily Mirror
Sport
Alan Smith

Burnley face uncertain future as Premier League relegation triggers £65m loan repayment

There is widespread expectation in the era of balance-shifting parachute payments that teams relegated from the Premier League should bounce back up a season later. For Burnley, who achieved an immediate return after their previous relegation, such a optimism feels misplaced.

Sunday's confirmation of the Clarets' demotion to the second tier after six years in the top flight has been significantly worsened by their perilous position off the field.

Key players are certain to depart, there are uncertainties in the dugout and most concerning of all is the need to repay a substantial percentage of a £65m loan that allowed ALK Capital to take over the club in a much-criticised leveraged buyout in the next few weeks.

It has already led to fears that Burnley could head down the same path as Derby County, or at least Sunderland. Rather than figuring out a process to ensure promotion, there is an unmistakable sense of worry around the off-field situation.

Nine players are out of contract, among them defenders James Tarkowski and Ben Mee plus veteran wideman Aaron Lennon. It is unclear who will be offered new deals but Tarkowski is a near-definite departure as several Premier League teams are expected to weigh up bids once the transfer window opens next month.

Sean Dyche, who was sacked last month, has admitted that having so many players out of contract may have been a distraction as the season progressed and the lack of foresight has contributed to a lethal cocktail.

Of those who remain, England goalkeeper Nick Pope will not be short of suitors while attackers Maxwel Cornet, who has a £17.5m release clause following relegation, club-record signing Wout Weghorst and Dwight McNeil should also command plenty of attention.

Burnley chairman Alan Pace is facing a difficult summer (Getty Images)

Losing so many proven performers diminishes Burnley's promotion hopes and increases the need for a more drawn-out rebuild. That will not begin until a permanent manager is appointed to succeed caretaker Mike Jackson, and the pool of interested parties may be limited by the financial concerns.

The new boss will likely have their hands tied when it comes to recruitment because it is necessary to trim an annual wage bill of about £80m when that loan needs repayment to equity group MSD Holdings. Burnley would not comment on the borrowing despite it being clearly outlined in their most recent accounts for the previous financial year.

Those accounts recorded a loss of just £3m at a time when the majority of the Clarets' rivals were losing significantly more owing to Covid-19 problems, pointing to the club continuing to be prudently run. However, they are more reliant than any side on broadcast money, with about 90 per cent of their revenue derived from television, according to the balance sheet.

Burnley have been paying eight per cent interest on the loan to MSD and while the exact amount needing repayment imminently is unclear, it will be sufficient enough for significant trimmings to be required. First-year parachute payments are worth £42m, so something must give.

ALK chief Alan Pace, who borrowed almost £40m from the club’s own accounts when taking over, has been described by Dyche as a straight shooter. Entering a period of such uncertainty, there is a need for transparency and commitment to halt the slide.

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