Burnley – keep calm and avoid the tabloids
Posted on April 11, 2020
ACCORDING TO some red top papers, Burnley are going to be bankrupt in August. There’s no denying that football at all levels is going to face a financial squeeze in the coming months as revenue streams dry-up, but Burnley’s position is arguably no different than many clubs and indeed better than most.
“Football clubs should be bailed out…the government bailed out the bankers in 2008,” said one misinformed person on a radio phone-in. The UK government actually bailed out the economy, not necessarily banks and their employees, for more people lost their jobs in banking than any other industry and banks lay-off thousands of staff each year, most of which goes under the radar.
Football clubs are not essential to the economy, no matter how important fans think their club is and how vital we believe the game to be. However, nobody wants to send a football club to the wall, it is bad PR to be connected with such an event.
As for Burnley, their chairman, Mike Garlick, one of the most respected leaders in the game, said the club’s money would run out in August. That does not mean Burnley will go bust, but it will mean they will face some challenges. Burnley are one of the best-run clubs in the UK and their achievements are astonishing given their size and stadium capacity.
Football clubs spend a lot of their income on wages and don’t appear to keep much in reserve. Burnley have cash reserves of £ 40 million, but the longer the suspension of football goes on, the more that buffer erodes. The crisis will undoubtedly reveal that clubs need to be more cautious about the prospect of “rainy days”, but in some ways, this reflects how many people run their own finances.
Burnley pay a lot of their income out in players’ salaries – some 63% in 2018-19 – which is basically the cost of staying in the Premier League. In 2014-15, Burnley’s wage bill was £29 million, in 2018-19, it was £ 87 million. The club has made a profit in four of the last five years, largely due to the lucrative broadcasting fees paid to Premier clubs.
The TV money is absolutely vital to Burnley, for their matchday revenues have more or less flatlined and in 2018-19 totalled £ 6.3 million, around £ 700,000 more than 2017-18. 2018-19 was a season in which Burnley had a run in the UEFA Europa League, their first European campaign for half a century. Turf Moor has a modest capacity of 22,500 and the club has averaged around 20,000 in each of their last three seasons – a utilisation rate of 91%. This makes Burnley less reliant on matchday income than many clubs even though they have one of the best average gate-to-population ratios of any English club – about 27%.
Where Burnley differ from some clubs in terms of their ability to withstand shocks is in not having a rich benefactor to bail them out. Garlick has said they could be facing a £ 50 million loss but relief may come from early payment of Premier League TV and merit money.
Burnley are a good example of a small/medium-sized club outperforming and going head-to-head with bigger and richer opponents. We should all want the Burnleys of this world to prosper and flourish because it is all too easy for wealthy clubs to be successful and buy their way out of problems. For Burnley, it is hard work and sound financial management that has renabled them to remain in the Premier League.
It is doubtful whether Burnley can really change their financial position unless an oligarch flies over that part of Lancashire and decides the old mill town is the place to be. The alternative is for Burnley to move grounds, but you sense Turf Moor is a much-loved home of football. As for neutral opinion, Burnley remind us that English football is not just about the “big six” and the game belongs to the whole nation, not just London, Liverpool and Manchester. There would certainly be no schadenfreude if a club like Burnley was to fold.