THE FINANCIAL PERFORMANCE OF THE BURNLEY FC HOLDINGS LIMITED

THE IMPORTANCE OF APPROPRIATE STANDARDS OF FINANCIAL REPORTS

FOR THE FOOTBALL INDUSTRY
Football today has evolved into a market, the main characteristic of which is the
investment of uncounted billions. Extravagant expenditure for transfers,
astronomical sums for signing of contracts with footballers, disputes and battles
among sponsors to get star footballers to promote and advertise their products,
endless negotiations to obtain a share of the TV rights, professional managers trying
to find the model team for potential investors, piece together the current soccer
environment
For Football Industry financial reports is important for public or supporter. Financial
statements or statements that the company generated jinandal through the course
of the accounting system is the representation of management the company, which
holds the primary responsibility for providing an overview regarding the financial
condition and performance of the company. Financial report present information
required various parties such as the Government, the people, Investor shareholders,
both foreign and internal affairs and the the lender for the taking of decisions that
must be made with fast based on adequate information. Finance reports that will be
presented must first audited before being consumed by the public. With the
financial report was expected to be taken the right decisions and strategic

FINANCIAL ANALYSIS AND RESULTS

In the first part of the financial performance evaluation, I consider the progress of
key accounting data and financial ratios of Burnley F.C on a year-to-year basis. Table
2 presents the evolution of some fundamental financial data extracted from all
football clubs annual financial statements. The overall picture suggests that
Burnley F.C clubs are more performance seekers and not profit maximizers, a fact
which is also evident in
Even though the amounts of sales and cash flows present an increase over the
years (net sales have increased from 1.04 million in 1993 to 72.1 million in and the
cash flows present an even greater raise ranging from 0.6 million in 1993 to 5
million euro in 2014 followed by a downturn of 0.45 million in 2014) this does not
result into an improvement on the final outcome.

The levels of gross, operating and net profit over the years are quite disappointing if
we consider that in the whole period of investigation not only profits have
surrendered their position to losses, but also with an increasing pace (with the
only exception in where the net income was 51.3 million euro). Net losses range
from 0.1 million in 1993 to 6.8 million in 2013 and 29.3 million in 2014. The only
profitable year for the Burnley F.Cleague was in 2013 (after the Euro Cup
competition) which proved to be the critical point for the football industry since the
investments that football clubs financed seem to prosper for that year. However, in
2014 the situation was reversed suggesting that managers are unable to
extrapolate any benefits from funds flowing in the football clubs from both investors
and fans and to render the clubs expenditure into an affordable level (total debt
presents also a huge increase from 23.3 million in 2004 to 172 million in 2014). This
behavior actually contradicts the basic business principle of profit maximization
followed by cost minimization. Whether the aforementioned situation is
discretionary or not is a question for future research.
These results corroborate relative findings of previous studies on this issue which
suggest that European football clubs are more performance maximizers than profit
maximizers

Additionally, in terms of liquidity the current and quick ratios are both below unity
indicating that Burnley F.C clubs are unable to cover their current liabilities from
their current assets, a fact which can create severe problems in their daily
operations. Finally regarding the capital structure of the Burnley F.C, it is heavily
based on external financing as the ratio of debt to equity reveals. Specifically, in
2013 and 2014 debt covered 30 and 10 times respectively the level of shareholders
equity a fact which can have a serious impact on the future viability of the clubs and
the professional football league in total. However, in 2013 and 2014 the situation
seem to be improved since the debt is slightly above unity suggesting that clubs try
to finance their activities mainly through their own resources and not from external
financing.
Based on the aforementioned discussion it is accurate to say that the Burnley F.C
professional football league during the last decade presents a devastating financial
performance in terms of profitability, liquidity as well as financing and solvency with
the only exception being present in 2013. It seems that the Burnley F.C clubs were
able to capitalize in part the success of the clubs into a worse financial position
compared to the pre-2003 era. In Burnley F.C the professional football league is
actually dominated by three major football clubs (MU, ARSENAL, CHELSEA) which
distinguish in terms of financial performance and athletic success. This statement
becomes even more convincing if we consider that the only countryside team which
won the championship within the last two decades.

Regarding the economic dimension of football clubs in Burnley F.C, data on Table 4
is quite revealing. As we can see among 17 football clubs MU, ARSENAL, CHELSEA
are the top three teams concerning the level of assets, shareholders equity, net
sales and cash flows. The aggregate level of assets, sales and cash flows of the
aforementioned three teams exceeds that of the other fourteen teams by 1.67, 1.12
and 1.0 times respectively.

Additionally, one possible solution to the financial instability and credibility of the
football clubs is to impose tighter financial regulations. One such measure is to
establish an independent committee (relative the committee established in France
during the early 1990s) to monitor the finances of the football clubs and to enforce
their rules under their law-supported power. However, such enforcement can be
effective only with strong legal backing so as to cope with pressures from political
lobbies and the national football federation. Moreover, an alternative to strict
regulation is the restructuring of football competition so as to create a more
nourishable basis for smaller clubs in order to assist them maintain both
competitive balance and financial stability. This can be achieved through the
adoption of salary caps, roster limits, revenue sharing and other redistributive
measures many of which have already been promoted in Europe.
Finally, specific actions need to be taken by policy regulators in order to promote
the idea of professionalism on the management of sport entities and organizations.
A specific act on that direction is to encourage leagues transparency by imposing a
full time employment contract on the members of the referee sociations, thus
reducing the allegations of referees malpractice and corruption. Also the
investment in higher education courses in sport management could be proved vital
for the future survival and growth of the game.
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