Burnley FC: From Rags to Riches
A toxic combination of Brexit and COVID have had contractionary effects on the English Premier League, vastly restricting the funds available for transfer spending; with only £84.2million spent over this winter’s transfer window in comparison to the £230million spent in the same period last year. Every month with empty stadiums translates into a loss of around £100 million in ticket sales across English football.
Despite this sorry state of affairs and the stunting of investment in the wider economy, the Premier League is, by some margin, still the most valuable domestic football league in the world and remains an attractive prospect for international investment groups. Back in April 2020, a Saudi Arabian backed consortium agreed a £300m fee for Newcastle United FC that subsequently fell through due to ethical and business questions arising from human rights and TV licensing issues. The San Francisco 49ers have successfully upped their minority stake in Leeds United FC from 15% to 37%. More recently, Burnley FC received an approach from Velocity Sports Partners (VSP), the sports investment department of the American Consortium, ALK Capital. A deal to sell an 84% majority stake in the football club was closed on the 31st of December 2020 for a reported £170million.
For Burnley, a town 20 miles from Manchester with less than 90,000 residents and formerly famous for its mills and cotton production during the industrial revolution, life in the Premier League with its new US majority owner seems an unlikely location for the latest tech-driven approach to winning football matches which are watched all over the world. Burnley FC is not necessarily the most well-known of English clubs, rising from the Championship into the Premier League in 2015 and with an average finishing position of 12th it is becoming a force to be reckoned with not least after beating the champions Liverpool in January. The club is the proud owner of a highly ranked academy at Barnfield Training Centre; developed for £10.6million in 2017 under the previous ownership, this asset helped to make the club an attractive prospect for ALK Capital. The English champions of 1920/21 and 1959/60, Burnley experienced European football for the first time in over 50 years in 2018/19. The club is one of the very few Premier League clubs to turn a consistent profit being in the black for the past three seasons; in the year ending June 2019, Burnley reported a pre-tax profit of £5m on the steady revenue of £138m brought in that year.
The following chart, illustrating the pre-tax profit of premier league clubs in 2018/19, is made more impressive in consideration of Burnley’s second-lowest revenue generated from the sales of players in the Premier League, behind Brighton and Hove Albion.
(https://theathletic.co.uk/1729003/2020/04/08/premier-league-finances-accounts-newcastle-palace/, using figures from Deloitte’s Annual Review of Football Finance publication)
The newly appointed chairman of the club, Alan Pace, took over from Mike Garlick who had been chairman of the clarets since May 2015. Both Garlick and the former shareholder John Banaszkiewicz will remain on the board of directors, facilitating the transition to new ownership and providing ALK Capital with the guidance and insights into running a profitable Premier League club.
Pace, aged 53, brings 20 years in the financial services industry working in securities at Citigroup and over a decade of sports management experience, most notably with his 20-month interim tenure at MLS club Real Salt Lake who lifted the 2009 MLS Cup during this period. He is set to embrace the philosophy associated with the club being the cornerstone of the city's culture and seems to be making all the right noises. Relocating from the US to live in Burnley he intends to engage in Lancashire life fully.
Pace stated in his first official press conference with the club, “You certainly haven't seen anyone like me come in and run a football club, interact with the community and live in the community they are going to operate in.”.
On the pitch this takeover has come as a significant relief; the new investor signals future stability to a club whose manager has consistently been pulling rabbits out of hats to keep the minimally funded operation in the topflight of English football. Pace will not look to change the club's investment and transfer structure drastically, neither will he try to mimic the successes of Fenway Sports Group’s takeover of Liverpool FC. However, the American investors have made it clear to the recently begrudging statements from Sean Dyche (Burnley FC’s manager and the EPL’s current longest serving manager), that he will see more financial commitment in the transfer market to strengthen squad depth further. It is well understood that new money does not necessarily translate to success though, particularly at the bottom of the table. Aston Villa’s invested around £60million in players during the 2015/16 season, only to finish 22 points below safety at the end of the season. To give them some credit, this is something Burnley have previously been wary of, especially in their public avoidance of rushed deadline day transfers.
Perhaps one the most significant aspects of this acquisition comes from the particular interest shown in the Premier League from the American buyers who hold what they believe is the key to the future of talent scouting in football. Earlier in 2020, ALK capital invested in two London-based football technology companies, AiScout and Player Lens. These firms look to take a new approach to the football scout market that is often considered outdated, implementing AI to automate the talent identification process for professional clubs fully.
“There is an evolution on the sports tech side, and it's really time football started to go a bit further. When you look at data and analytics, they don't require someone needing to have done 30 years as a scout. There is a little bit of living in the past (in football).”, Pace said on his arrival at Turf Moor.
With their cutting-edge subsidiary giving them a technologically focused mindset, the consortium aims to bring ‘Moneyball’ to Burnley – the award-winning biographical sports drama tells the Oakland A’s historical story of how data analytics revolutionised baseball. It will certainly be interesting to see if Burnley FC can reap the rewards from being a first mover in adopting AI in the scouting process.