Cuban Claret reflects on the financial aspects of being relegated and wonders whether we are about to be given an extra boost from the parachute payments.
Will the Clarets be laughing all the way to the bank?
SOME time later today (Thursday 29th April) Burnley should discover the extent of their windfall for exiting the Premier League.
Football League clubs are holding an extraordinary meeting to discuss Premier League proposals to change the way money is distributed to the lower divisions.
And should the Football League approve the plans, which could deliver more than £170 million excluding parachute payments over the next three years, then the Clarets will be in a considerably better fiscal state than even Barry Kilby would have dared believe when his club sensationally won promotion to the top flight in May last year.
If plans are approved, parachute payments for clubs relegated from the Premier League will total £48 million, payable over four years, more than double the previous pay-outs under the plans.
Crucially, there will also be significant increases in ‘solidarity payments’ to the rest of the League. However, despite this, certain clubs are opposed to the measures, especially those who enjoy large fanbases such as Derby County, Sheffield United and Wednesday.
These clubs will point to their healthy attendances and higher turnover to help them provide a competitive advantage over their rivals. The disparity of fortunes bestowed on a club like Burnley, after just one campaign in the Premier League, will more than negate the effect of such a perceived advantage. That said, the well documented travails of fellow relegation rivals Portsmouth and Hull City (who might well be fighting off administration cases next season) could well lead to the better run clubs, such as Middlesbrough and Sheffield United, seizing on the opportunity to close the gap, at least in the coming season.
Barry Kilby has been outspoken on the concept of parachute payments in the past, claiming it creates unfair competition. For so long serial Championship underdogs, the Clarets never considered themselves as likely recipients until Brendan Flood intervened and the choice was made to bring in Owen Coyle as manager.
Worldwide television broadcasting has led to the riches of the Premier League spiralling to such a degree that almost all clubs outside the top seven or eight clubs have become alarmed at the spectre of relegation, no matter how remote this might be.
In turn, the majority of the spare cash bursting out of the Premier League’s pocket is being redistributed among it’s recent members rather than being invested into the football league structure in a more equitable and even-handed manner, no matter how abjectly a club might have performed in the top flight either on or off the pitch.
Burnley’s relegation has inevitably led to accusations of the club lacking ambition and in some cases, even, that the chairman would somehow prefer relegation against survival, due to the relative riches the adventure has generated for the club.
While I find this idea bunkum, today’s proposals do pose some interesting questions for not only Burnley, but any other club of a similar stature hoping to compete in the Premier League, should they get there.
As the Super-rich get richer and the established clubs continue to nudge up the budgets in order to hold their own, where does this leave a promoted club operating on such a lower economy of scale after one victorious season.
The answer is a very difficult place.
It is nigh on impossible to create an even playing field for such a club, especially during one season, though it would be interesting to know whether the Burnley FC Board might have been prepared to spend more and increase the players’ wage ceiling had they been guaranteed of this extensive proposed windfall when the campaign began last August.
I suspect the club has already eaten into its first parachute payment with its January transfer dealings but just to put this income into perspective, the club’s annual wage bill for players during our promotion season was around the £11m mark, so we can expect we will be one of the bigger paymasters in the Championship this coming season at least.
The decision must now be with the Board whether to take a calculated risk in top-loading its finances into a title challenge, in the knowledge that the fellow relegated clubs are in dire straits, or settle for a more measured approach in restructuring the club and investing in its facilities, a tactic that could secure the long term future of the club at the risk of alienating impatient fans.
Today’s decision might even inform the decision on whether the club opts for a new manager to take us forward, though this looks unlikely.
We wait with baited breath.
Cuban Claret
It’s obviously bunkum to suggest Kilby would prefer to reap £12-£16 million parachute next season when had we stayed up we would be bringing in £40 million before even taking into account increased revenues from 21,000 average gates and associated merchandising but what I do find annoying as you know is that they didn’t show more guts in trying to get that £40 million
Well Phil thats in the past now whether we should have spent more or gone down the accountants way which we did, the next few weeks will tell us which way Kilby and the board want to go with our Club in terms of investment in players and management to get back to the premiership. Kilby can bull**** all he wants to the media but its the fans who want to know if the Club are going to have a real go next season.
Yep totally agree with that Fedup!
Phil they might be a few more Euro’s in the transfer pot if Fulham win the Europa Cup that would be a nice lift after the season we have had, must sort the passport out just in case.
Really good article, cuban! Doubtless it will kick off yet another round of debate about Claret financial management… indeed it already has! 🙂 It’s a pity that those of us debating on here can’t all be forced to gather in one room, and be made to make a decision together. Websites, in contrast, just allow all of us to go on and on and on recycling our positions at accelerating speeds, with very little evidence of anyone changing their views as a result, or even contemplating the phenomenon of a compromise. But hey! I haven’t had this much fun making myself go dizzy since I was in primary school!!! And our virtual hot air even adds to the Claret money pot… meaning there’s even more for us to discuss without resolution. Who said perpetual motion was impossible? 🙂
Good article CC – and good post CP. It certainly is an interesting one as to where we go with this parachute money and how patient we as a club or as fans can be? We could spend the majority of our money in getting back up straight away? OR we could spend a higher portion investing in youth to enable us to provide a stream of players (such as West Ham) which would hopefully see us get back to the top flight in a few years ( if not sooner). This should also see us make good profit on these players when they do come to be sold and should see the long term future of the club looking very healthy. Of course, the other side of it ( as I am sure TMP etc will argue :-)) is that if we spend the parachute money on the team/squad, get back into the Premiership and stay there – the financial side of the club will look after itself ( until such time as we were relegated). I just dont think the decisions for the board to make are as simple as some would think.
Looks to have been knocked back for now!
8c8 what does that mean for us, then?
Looks like we will have to wait and see what happens Barnsey more on it here. http://www.skysports.com/story/0,19528,11661_6123490,00.html
Yeah, good article CC . If we’ve got a vote on the subject, I’d say we go for strengthening the team for a quick return to the premiership, as that way we’ll have more dosh to improve everything else. By the way Couch, could that room be in a pub by any chance? I reckon we’d all be leaving with arms around each other in full agreement , albeit about what we probably wouldn’t give a toss about. Or would we be throwing punches I wonder? 🙂
In full agreement that we want another drink WC 🙂 If we did have a vote I think I would also go for team strengthening – But I would also direct a certain percentage ( 20%) towards youth strengthening. I have high hopes for this area of the club in future years.
Agree with you Dale about the youth development. Burnley used to be the club to aspire to in this field, and I think as finances begin to really bite and slowly but surely bring football back to the real world, more and more clubs will be forced to sensibly follow this route.
Not only would it be profitable – but very satisfying to have our own products playing first team football and higher up the league.
As we used to be in fact.