National Newspaper & BBC Sport Review Clarets Takeover
Burnley host Fulham on this evening knowing victory will take Sean Dyche’s side eleven points clear of the relegation zone and leave them well placed to secure a sixth successive Premier League campaign. Meanwhile, new owner Alan Pace is making an impression at Turf Moor. Last week the American confirmed Burnley would be fully integrating their women’s team into the Barnfield training complex. Before that, Pace unveiled their plans for a global talent search using a mobile phone application.
Despite the takeover and the introduction of new teams and processes at Turf Moor there are still a number of supporters, sponsors and small shareholders uneasy about the clubs current position. They are worried about what the future holds for the club who are one of the orginal football league clubs and last remaining ‘town teams’ in the Premier League.
The Deal That Puts Burnley In Debt – But Is It a Bad Thing
The detail contained in Burnley’s most recent set of accounts to 30 June 2019, it is clear the club is well run. Despite being among the lowest ranking top-flight clubs for matchday income (£6.32m) and commercial revenue (£16.48m), Burnley’s wages were contained at a healthy 63% of turnover. More importantly, they had zero debt and £41.65m cash in the bank, a figure that is now thought to be higher.
Nevertheless, major shareholders Mike Garlick and John Banaszkiewicz had been looking to sell the club for some time and on 31 December confirmed Velocity Sports Partners had taken a controlling 84% stake, which is understood to have cost £2000m. The unease comes from the structure of the deal, which is the same as when the Glazer family took over at Manchester United, borrowing money that will be repaid through club funds.
According to a source who has knowledge of the contract and is supportive of it, £65m has initially been borrowed from MSD UK, the investment arm of American billionaire businessman Michael Dell with further finance still required for the remainder of the deal likely to be raised through agreements with additional funders. MSD UK, the source said, was not a lender that would panic at the first sign of a problem, but would be supportive of Pace and his partners, Michael Smith and Stuart Hunt, who all have registered addresses in the US state of Delaware.
It is debatable how much scope there is for growth at Burnley but Alan Pace who has returned to the US but is committed to living in the area is described as being driven to make his plan work. While it is unnerving for some that a club that previously owed nothing should now be saddled with huge debts and associated finance costs. It has been described as being better than having one wealthy owner who at a moment’s notice, could pull the plug on funding as was the case with Portsmouth and Wigan Athletic.
BBC Sport has been told Pace’s business plan involves continuing the tight financial controls used by the previous regime. Even relegation, it is claimed, would not be a disaster as long as the club stuck to its present model because a combination of cash and player sales could ease the financial pain of a drop into the Sky Bet Championship.
Local Concern & Shareholder Questions
The club are adamant their business plan is solid, a Burnley spokes person said, “ALK Capital reiterates that its financial approach is reasonable and sustainable. Burnley Football Club’s cash reserves remain in a healthy position following the takeover and compare favourably to other Premier League clubs. It is well-placed to thrive under its new ownership. ALK Capital’s business plan is about securing top-flight football in Burnley for decades to come, but its financial model considers all economic circumstances both on and off the football pitch.
The new owners of Burnley are committed to investing in this club, the team and facilities over the coming years. Their actions will speak louder than any words.” However, some fans with a lifelong association to the club are less positive. One local businessman, who had a gentleman’s agreement in December to reduce his sponsorship payments by half in light of games being played behind closed doors, felt let down when he was told last month full payments were now required.
When the sponsor resisted, believing an agreement had been reneged on the adverts were covered up. It is understood the sponsor now intends to take his business elsewhere. In response, the club pointed to Pace’s recent programme notes, where he said a review of the club’s commercial strategy was a “key focus” to change the current position of the club having one of the smallest commercial revenues in the Premier League.
Club Had Simple Structure – Now It Has a Complex Structure In Jersey
It is estimated there are 1,709 small shareholders in Burnley, who between them own around 6% of the club. Most bought their shares over a decade ago when the club was struggling for money and have never received a dividend. They are yet to be contacted by the new club chairman, either about an offer for their shares or even a recognition they exist. BBC Sport has been told by one that they intend to ask to see all the records around the takeover, having been alarmed at the paper trail of Burnley FC Holdings, which controls the football club and the training ground.
Burnley FC Holdings was on 30th December, placed under the control of Calder Vale Holdings Ltd, which itself is controlled by Kettering Capital Ltd, which is in turn controlled by Jersey-based Velocity Sports Ltd, which has three shares, one of which described as a management share in the name of ALK Capital LLC. One source told BBC Sport, “Since 1882 everybody has known who owns Burnley, the club had a very simple corporate structure that enabled us to be successful. Now we have a complex structure that ends in Jersey.”
A trail of controlling companies is not considered unusual in football ownership and there is also nothing illegal about a leveraged buyout while their supporters may not like it, financially the Glazers have been a phenomenal success at Manchester United whose value according to the current share price is $2.5bn (£1.8bn). However, those who are arguing for an independent football regulator believe that deals at Turf Moor and Old Trafford are exactly the kind that should be closely checked amid concerns about the consequences if the business plan fails.
Dyche Not Expecting Big Change
In the meantime, Dyche and his players will continue to try to push forward, knowing victories against Fulham and then again on Saturday against West Brom will go a long way towards preserving their top-flight status. After more than eight years at Burnley, Sean Dyche is the longest serving manager in the Premier League.
Speaking about his time at Turf Moor the manager said, “It is easier for some clubs, they can put enough money in regardless. This club hasn’t been like that and I don’t think it is going to be like that going forward. There might be a bit more money around but we won’t know until the next window. But this is a town club. It is a hell of an achievement for a club this size to be in the Premier League for as long as we have.”