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2510
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`Daily Telegraph

Post by 2510 » Tue May 24, 2022 8:26 am

Burnley's problems go back further than ALK Capital - but takeover has been a disaster for the club
Though former owner Mike Garlick must take his fair share of the blame, Burnley’s new hierarchy are gambling with the club’s future

By
Tom Morgan
and
James Ducker
23 May 2022 • 10:15pm
Burnley will play in the Championship for the first time since 2016 next season
Burnley will play in the Championship for the first time since 2016 next season CREDIT: REUTERS
Over the four years since Burnley reached the heights of European qualification, the decline of the Premier League's "best-run club" began gradually and then, in recent months, went into freefall.

Here Telegraph Sport dissects how the risky and contentious American leveraged buyout of a locally owned club leaves the Clarets facing the most expensive relegation in English football history.

Boardroom inertia immediately before the takeover
Mike Garlick's ownership of Burnley was hailed as a beacon of footballing overachievement. Analysis by the University of Liverpool's Centre for Sports Business Group concluded in 2019 that Burnley were the "most sensibly run club in the Premier League financially".

In June 2020, six months prior to the ALK takeover, there was £80million in the bank and minimal long-term debt. However, as he brokered a sale, the club's ability to bounce back from the Championship became a good deal more brittle than it had been after previous Premier League relegations in 2010 and 2015.

Those close to the club say alarm bells began ringing in the weeks after the club enjoyed one its happiest days – May 5 2018, when the Clarets secured seventh spot and a return to European football for the first time in 51 years. To some disappointment there would be no ambitious signings that summer to build on the record arrival of the previous season, Chris Wood.

As a result the squad's average age gradually rose and cumulative values fell, with pleas for renewal falling on deaf ears as Garlick put an apparent brake on spending while the prospect of a sale grew and negotiations with potential buyers took place.

The lack of Premier League safeguards
With a £65million millstone now hanging around the club's neck, Burnley fans can quite rightly claim to have been failed by the system. Telegraph Sport reported a fortnight ago how the Football Association and Premier League are in talks about clamping down on leveraged buyouts as part of a new directors' and owners' test.

But that will be of no comfort for a club which must now immediately start repaying a relegation clause connected with the takeover. The £170million deal secured by ALK Capital in December 2020 loaded the club with eye-watering levels of debt. Accounts published earlier this month show the fall to the Championship triggers the immediate repayment of “a significant proportion” of a £65million loan from US equity firm MSD Holdings. As a result, the initial parachute payment that gives most recently relegated clubs a head start will be of little help.

Alan Pace has been Burnley chairman since December 2020
Alan Pace has been Burnley chairman since December 2020 CREDIT: REUTERS
Burnley are due to receive £42million in the first year from the top tier but that appears almost certain to be swallowed up, with Alan Pace’s ALK Capital also borrowing £37million from the club’s own bank to help finance the takeover. For a club now facing life without the Premier League TV money that currently accounts for 90 per cent of revenues, there will also be concern over interest rates for the debt within the club.

The London Inter-bank offered rate is plus eight per cent and US private equity firms tend to use six or 12-month deals. The six-month rate is currently 1.8 per cent, which would make Burnley’s interest rate 9.8 per cent – around £6.5m a year.

Unanswered questions for ALK Capital
Pace, a former Wall Street financier who led the US consortium ALK Capital, has described the exact details of the takeover as confidential. The level of debt within the club was only laid bare earlier this month in the annual accounts, which detail how, in the event of relegation, "steps to reduce costs and borrowings to a level which are more sustainable for a Championship club" will be required.

"In the event of relegation, the directors are satisfied that the group will continue to have the support of its lenders," the accounts add. However, there remains some confusion over how much a club with a proud history of retaining cash reserves has in the bank as it stands.


Earlier this month, for example, it emerged Burnley had taken out a £12.5million loan from Australian firm Macquarie Bank in order to effectively claim up front the second half of a transfer instalment from Chris Wood's sale to Newcastle. The striker had moved to St James' Park in January after Newcastle activated a £25million release clause, but the second £12.5million instalment is not due until February 2023.

There was no immediate explanation for why Burnley had taken the money as a loan now, rather than wait 12 months for Newcastle to cough up the rest of the cash. Pace, who is a committed Mormon, has repeatedly declined to go into extensive details about how the private investment firm purchased a controlling 84 per cent stake for about £170million. However, outlining his vision, he said in January 2021: "To be super clear, this is not Moneyball."

‘False economies’ under the new regime
Pace arrived at the club with a long list of ideas and there has been much activity behind the scenes, which one source describes as: "A lot of fiddling around while Rome is burning."

ALK, which embraces data and analytics, would help the club win an innovation award for its use of AiScout, an artificial intelligence-based platform for identifying player talent. Modernisation of Turf Moor has included revamped hospitality suites, new LED big screens and a new stand sponsor, Utilita.

There are also new kit sponsors and a TikTok live stream for women’s team matches. New jobs behind the scenes included the appointment of Russell Ball as head of matchday operations, Harriet Harbridge as fan experience manager, Lola Ogunbote as business lead on the women's team, and Gurpri Bains as equality, diversity and inclusion lead.

Wout Weghorst, Burnley's big January signing, shows his disappointment following their relegation
Wout Weghorst, Burnley's big January signing, shows his disappointment following their relegation CREDIT: REUTERS
In other areas, however, positions have taken longer to fill. Mike Rigg, the technical director since 2018, left last year.

The club was for some time without a chief executive, technical director and head of academy. But ultimately it is the lack of player recruitment that has hampered a team which was close to the brink for more than a year.

In 2021, Burnley had the lowest points-per-game total of all 92 Football League clubs. Pace flew to Croatia to try to tie up a deal for Mislav Orsic from Dinamo Zagreb in January but it fell through, leaving Wout Weghorst, a £12m buy from Wolfsburg signed as Wood's replacement, as the only mid-season arrival.

Owners now need to fill managerial vacuum
Whether Dyche still had fresh enough ideas to keep Burnley up is debatable. His relationship with Garlick, once rock solid, had become increasingly strained during their final two years together and there was exasperation at the lack of investment in the squad. Tensions remained in the wake of the change of ownership.

Despite declaring initially that Dyche was central to their plans, ALK gradually seemed to be moving in a different direction to the manager, not least over the age and profile of players they wanted to target, and concern began to grow over results and performances. The four-year contract Dyche signed last September was described as a "marriage of convenience" by one insider.

Despite his previous success on such a meagre budget, some of the players were also said to be supportive of a refresh when his shock sacking was announced in April. For some of the older players, in particular, there was frustration at Dyche's refusal to modify training schedules to help them cope with the demands of two matches a week.

However, a month on, Burnley are no closer to finding a long-term replacement. Results initially improved under caretaker Mike Jackson, but the ownership were targeting Vincent Kompany, the current Anderlecht manager and ex-Manchester City captain, for the summer.

Given the tall order facing Burnley now, there are serious doubts over whether Kompany would still consider the job. Whoever takes over faces a much tougher task building a squad than Dyche did in 2012, insiders point out.

Player recruitment has become much more sophisticated among rivals over the past 10 years, and, despite a dip post-pandemic, there has also been heavy inflation on player values for youngsters in League One and the Championship.

Enforced player clear-out to come
The biggest worry of all is a potential struggle in the Championship, with the vultures already swooping to snatch Burnley's best talent. Everton and Aston Villa are already doing battle for the signing of defender James Tarkowski, who is out of contract this summer.

Tarkowski is among nine players at the end of their deals and able to leave, with little incentive to stay given salaries will be automatically reduced. Company accounts all but confirm that a change in personnel is required: "In this scenario [relegation] the group has forecast a significant reduction in wages and salaries which will be largely achieved by contractual means existing in player contracts."

Nick Pope could be among the players snapped up by Burnley's competitors
Nick Pope could be among the players snapped up by Burnley's competitors CREDIT: AFP
The England goalkeeper Nick Pope, winger Dwight McNeil and the forward Maxwel Cornet, who has a £17.5million release clause, would be high on the list of targets for rival clubs. Weghorst will also attract interest.

Dr Rob Wilson, head of Sports Business Management at Sheffield Hallam university, has said relegation could be even more costly than it was for Sunderland, given the debt involved.

Telegraph Sport revelations last week that Burnley's academy is set to lose its category-one status add to the sense of despair over the club's future prospects. The Professional Game Board (PGB) is expected to formally ratify a revokement this week, meaning that the club will no longer have the highest ranking for what will be an increasingly crucial talent pipeline.

Burnley were one of a number of clubs, along with Leeds, Crystal Palace, Nottingham Forest and Birmingham City, who were provisionally afforded category-one status in the summer of 2020 during the Covid pandemic on the understanding that a comprehensive audit would be undertaken once it was safe to do so. But, after failing checks carried out by the Professional Game Academy Audit Company (PGAAC) during a full and thorough review earlier this year, it was recommended that Burnley’s academy is downgraded. There are minimal levels of investment expected in coaches, pitches and facilities to meet Cat 1 status.


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RVclaret
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Re: `Daily Telegraph

Post by RVclaret » Tue May 24, 2022 8:28 am

Zzzzzzzzz falling asleep at these regurgitated, non analytic articles
These 5 users liked this post: tarkys_ears Jörmungandr Nori1958 NewClaret burnleymik

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Re: `Daily Telegraph

Post by jedi_master » Tue May 24, 2022 8:42 am

‘Fiddling about while Rome is burning’ is the perfect description of Alan Pace from what we know so far.

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Re: `Daily Telegraph

Post by Lancasterclaret » Tue May 24, 2022 8:52 am

"Whoever takes over faces a much tougher task building a squad than Dyche did in 2012"

There is a lot in the article that is true, but this particular line stands out as the most obvious that is total ********

We didn't have a pot to p**s in when Dyche took over, which makes his promotion all the more remarkable

RVclaret
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Re: `Daily Telegraph

Post by RVclaret » Tue May 24, 2022 8:54 am

Lancasterclaret wrote:
Tue May 24, 2022 8:52 am
"Whoever takes over faces a much tougher task building a squad than Dyche did in 2012"

There is a lot in the article that is true, but this particular line stands out as the most obvious that is total ********

We didn't have a pot to p**s in when Dyche took over, which makes his promotion all the more remarkable
Exactly - he had to scramble 400k together to buy Barnes in January if I’m correct.

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Re: `Daily Telegraph

Post by onewillieirvine » Tue May 24, 2022 8:55 am

Dyche inherited some good players when he arrived, as will the next incumbent. Hopefully our owners have a plan B to enable a reset.

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Re: `Daily Telegraph

Post by Zlatan » Tue May 24, 2022 8:58 am

It’s almost as if Burnley are a story now because of relegation - whodathunkit

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Re: `Daily Telegraph

Post by daveisaclaret » Tue May 24, 2022 8:59 am

When Dyche was first building his squad he 1) had a ready-made replacement for the only player he lost (Ings for Austin) and 2) realistically would have been lauded if we finished 12th in the Championship. Don't think it's remotely unreasonable to say the new man faces a much harder task given those circumstances.

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Re: `Daily Telegraph

Post by Lancasterclaret » Tue May 24, 2022 9:07 am

daveisaclaret wrote:
Tue May 24, 2022 8:59 am
When Dyche was first building his squad he 1) had a ready-made replacement for the only player he lost (Ings for Austin) and 2) realistically would have been lauded if we finished 12th in the Championship. Don't think it's remotely unreasonable to say the new man faces a much harder task given those circumstances.
Ings had done the square root of f**k all up till then though

He had no choice but to go with the Ings/Vokes partnership, and the rest, as they say, is history

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Re: `Daily Telegraph

Post by ClaretLoup » Tue May 24, 2022 9:25 am

There is a difference in the two situations re squad building though, Dyche had a more than half a season to assess his squad and locate suitable additions in the shape of Heaton, Arfield, Jones and later Barnes.

The new incumbent will have to assess what he's got, and plug what he perceives to be the gaps without seeing them close up in the match scenario or training. That's why it is really vital to get somebody in a.s.a.p.

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Re: `Daily Telegraph

Post by Boss Hogg » Tue May 24, 2022 11:05 am

Lancasterclaret wrote:
Tue May 24, 2022 9:07 am
Ings had done the square root of f**k all up till then though

He had no choice but to go with the Ings/Vokes partnership, and the rest, as they say, is history
Ings had looked a very good player previously but was blighted by injury.

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Re: `Daily Telegraph

Post by BigChaCha » Tue May 24, 2022 12:17 pm

We only had £80million in the bank and minimal long-term debt because we were fattening the goose to make us more attractive to sell and was created by the transfer strategy at the time.

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Re: `Daily Telegraph

Post by 2510 » Tue May 24, 2022 2:28 pm

RVclaret wrote:
Tue May 24, 2022 8:28 am
Zzzzzzzzz falling asleep at these regurgitated, non analytic articles
Here Telegraph Sport dissects how the risky and contentious American leveraged buyout of a locally owned club leaves the Clarets facing the most expensive relegation in English football history.

Some regurgitation.

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Re: `Daily Telegraph

Post by jrgbfc » Tue May 24, 2022 3:02 pm

Lancasterclaret wrote:
Tue May 24, 2022 8:52 am
"Whoever takes over faces a much tougher task building a squad than Dyche did in 2012"

There is a lot in the article that is true, but this particular line stands out as the most obvious that is total ********

We didn't have a pot to p**s in when Dyche took over, which makes his promotion all the more remarkable
Howe left him the basis of a pretty good Championship side tbf.

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Re: `Daily Telegraph

Post by tiger76 » Tue May 24, 2022 3:06 pm

jrgbfc wrote:
Tue May 24, 2022 3:02 pm
Howe left him the basis of a pretty good Championship side tbf.
Yes and for that we should thank Eddie, they just needed organising something Sean proved adept at.

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Re: `Daily Telegraph

Post by Paul Waine » Tue May 24, 2022 3:53 pm

2510 wrote:
Tue May 24, 2022 2:28 pm
Here Telegraph Sport dissects how the risky and contentious American leveraged buyout of a locally owned club leaves the Clarets facing the most expensive relegation in English football history.

Some regurgitation.
I do wish the sports media would get a spokesperson their finance desk to look over what they plan to publish.

Why do they all report the accounts as June? Don't they know the difference between 30th June and 31st July? It makes a difference because tv money for the next season is received in July.

Then they don't understand MSD is in the business of making loans, so a "debt" company and not an "equity" company. Which also leads them into getting confused about Libor... It's much more likely that the interest rate is 3 month Libor, plus 8% because that's the most common basis for medium term loans.

The rest of it...??? I guess they have papers to sell.

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Re: `Daily Telegraph

Post by GodIsADeeJay81 » Tue May 24, 2022 4:01 pm

daveisaclaret wrote:
Tue May 24, 2022 8:59 am
When Dyche was first building his squad he 1) had a ready-made replacement for the only player he lost (Ings for Austin) and 2) realistically would have been lauded if we finished 12th in the Championship. Don't think it's remotely unreasonable to say the new man faces a much harder task given those circumstances.
The only player he lost was Austin?
I've just checked the transfer history for that summer window and you're wrong, because that was the same summer he signed some freebies a keeper from Bristol, who'd just been relegated, a Scottish lad from Huddersfield who's fans were glad to see the back of and a one footed CM from Wigan.

https://www.transfermarkt.co.uk/burnley ... lpos=&w_s=

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Re: `Daily Telegraph

Post by 9thMay1987 » Tue May 24, 2022 4:33 pm

I went to the AGM when Dyche had just taken over. We were losing money hand over fist, the directors pockets were empty, supporters had lost interest and not turning up.

All the talk was how do we stay out of the bottom 3 in the chamionship.

I remember Dyche saying he was not here to take the club into league 1 but back into the premiership.

I remember thinking at the time, I have heard all this rubbish before. Bloke stands up wirh no knowledge of Burnley and the area and he is going to take us into the premier league.

The rest is history.

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