Burnley owners seek more loans to help club cope with crippling debt after relegation

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Burnley go back to the bank as their owners seek more loans to help them cope with crippling debt after relegation as the Clarets try to refinance under the terms of a previous deal

  • The club’s relegation will immediately cost them £55million in TV revenue
  • sports mail learned that they had recently rejected a loan offered at 6%
  • They also risk further penalties due to their highly leveraged takeover.
  • A number of their players are likely to leave in the summer transfer window

Burnley owners are seeking more loans to help them pay off their existing debt as they grapple with the financial calamity of the club’s relegation from the Premier League.

sports mail learned that Burnley had recently rejected a loan offered at a relatively modest 6% interest rate as they were confident they would stay put. They will now review the loan markets and attempt to refinance on the terms of a previous loan from MSD Capital.

Burnley’s first seven-year relegation will immediately cost them £55million in TV revenue, and the club will face further financial penalties due to the nature of their high-leverage takeover by ALK Capital he 18 months ago.

Burnley owners are seeking more loans to help pay off their debts (Above: Chairman Alan Pace)

As sports mail revealed in January relegation will trigger an early repayment clause in a £65million loan from MSD which has so far been repaid on interest only – a payment which will represent the full £42million pounds of silver they will receive in their first year at the Championship.

As well as the MSD loan, ALK Capital also borrowed £37m from the club’s bank account to help fund their takeover. Meanwhile, in February, Burnley took out a £12.5m bridging loan from Australian bank Macquarie pending the second installment of the £25m fee for Chris Wood’s transfer to Newcastle.

Burnley’s options for further borrowing appear limited, not least because the MSD loan is secured by the club’s existing assets such as future parachute payments and Turf Moor.

The club have been relegated from the Premier League and are asking for help with their finances

The club have been relegated from the Premier League and are asking for help with their finances

Pace and Co may be forced to use its other assets to help wrestlers secure another loan

Pace and Co may be forced to use its other assets to help wrestlers secure another loan

As a result, ALK may be forced to use the assets of its US media and technology companies to secure another loan. ALK have sought to bring in additional investment with little success since taking over Burnley in December 2020 but will now step up their efforts.

Burnley’s relegation plight has been exacerbated by the profile of the side, nine of which are out of contract this summer and therefore available on free transfers.

Bids of over £30million from West Ham and Leicester for James Tarkowski were rejected two years ago, with Burnley insisting the England defender was worth £50million. The 29-year-old will now leave for nothing this summer, leaving behind a squad with few salable assets.

Ivory Coast winger Maxwel Cornet, 25, will almost certainly leave but has a £17.5million release clause in his contract.

Maxwel Cornet is set to leave but the winger has a release clause worth £17.5million in his deal

Maxwel Cornet is set to leave but the winger has a release clause worth £17.5million in his deal

Burnley are also on the hunt for a new manager, with Derby boss Wayne Rooney on their shortlist

Burnley are also on the hunt for a new manager, with Derby boss Wayne Rooney on their shortlist

Interest in England goalkeeper Nick Pope, 30, is limited.

England Under-21 international Dwight McNeil has attracted interest from Crystal Palace and Aston Villa but either club is unlikely to meet the £40million valuation of Burnley. Republic of Ireland defender Nathan Collins, 21, has some admirers.

The Burnley players have relegation clauses in their contracts which should see them cut their £85million wage bill.

But that bleak outlook won’t help them search for a new manager, especially as they target big names such as Vincent Kompany and Wayne Rooney.

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