BURNLEY chairman Barry Kilby insists the need to balance the books at Turf Moor is more important than ever, despite fans’ fears that the club are being outmuscled by their Championship rivals.

In a specially-arranged question and answer session with Clarets shareholders last week, Kilby tried to alleviate concerns that the club is lacking the belief and the resources to compete for promotion back to the Premier League.

Kilby told the Lancashire Telegraph of his predictions for an almost £4million loss for this financial year.

The chairman outlined Burnley’s accounts and reiterated that finances from the Premier League allowed them clear their debts and go into the black.

And he explained why the impending UEFA Financial Fairplay Ruling has meant embracing a more prudent strategy to safeguard the club’s future.

As part of those plans, the Clarets chairman has set about a series of measures including:

  • Reducing the wage bill to around £6m for any Championship season
  • Establishing a younger squad
  • Looking at investment opportunities for new shareholders to increase capital for Burnley Football Club

"In 2013/14, if a club doesn't break even and records a loss on its trading account there will be penalties against it," said Kilby.

“That's going to affect every club in the Championship.

“It means that you've got to break even.

“In the trading figures for the last nine years we've only made a profit in three of them.

“This year, going off our management accounts, we going to make a loss, I think, of about £3.75m.

“It's got to be part of our strategy to keep a weather eye on the rules that are coming in."

Kilby explained the club's wage structure was the main factor in not securing midfielder Jack Cork on a permanent deal this summer.

“Would you want a player to be earning twice as much as every other player in the club?" said the Burnley chairman, who revealed they were left with little choice but to accept Bolton's offer for Chris Eagles and Tyrone Mears last week.

“They had one year to go on their contracts. They weren't interested in new deals," he said.

“It really would have been the logic of the madhouse not to take that money for them.”

Question and answer session

The question on every Burnley fan’s lips is: where has the Premier League money gone?

As I told the shareholders, it’s all in the accounts, but just let’s step backwards.

The season we went up we lost £11million. In the Premier League season we made a profit of £14m.

This year, going off our management accounts, we are going to make a loss, I think, of about £3.75m.

So in a sort of a way we’re back to where we were before we went up.

It’s all there in the flow of your movements.

It’s slightly simplified – it’s not cashflow, it’s not capital expenditure.

Interestingly, in player trading we have a big minus on that in cash terms over the past three years.

Does that include Steven Fletcher?

Yes. In the last three years, our player trading reads 2008/09 £6.5m out, nothing in; 2009/10 £7.916m out and £1.478m in, so that’s -£6.4m.

In 2010/11 with the Fletcher sale, it was £5.382m out and £6.842m in. With that we are +£1.4m.

Overall, we are minus £11.5m over the last three years in our player tradings.

In the previous three years it reads 2006 +£1.4m, 2007 -£2.5m, 2008 +£4.4m and +£3.3m over three years.

So that’s £1m a year to add.

In the trading figures for the last nine years we’ve only made a profit in three of them.

How has this affected how you look at things going forward, bearing in mind the impending UEFA Financial Fair Play ruling?

It’s got to be part of our strategy to keep a weather eye on the rules that are coming in.

The sixty per cent of turnover rule is now in force in League Two and League One are doing it voluntarily.

For the one that’s been provisionally passed (for the Championship) the devil’s in the detail in these things, and it probably will be voted in that in two years’ time – 2013/14 – if a club doesn’t break even and records a loss on its trading account there will be penalties against it.

The penalties that have been discussed and again have to be voted on and decided are a points deduction and, one that would hurt everybody, is you have to donate into a pool and that’s distributed to all the other clubs.

You will be penalised for the loss, the logic behind it being there is an unfair advantage when people come in and run up big losses, when some people are keeping their house in order, and then these people walk away – I suppose a la Portsmouth.

That’s going to affect every club in the Championship.

It means that you’ve got to break even.

Is that something that you have to prepare for now?

Yes, because we’re doing contracts now that would affect that time.

At the moment if you say you’re going to run at a loss in 2014, how are you going to pay for it?

Was that the sticking point in going for Jack Cork?

We wanted to keep him. The issue wasn’t the fee, which you can spread.

Would you want a player to be earning twice as much as every other player in the club?

I have seen this type of thing become a disruptive influence, so we were faced with that problem and in the end it was decided it was above what we could afford, or were prepared to pay.

What about overall attempts to bring the wage down?

If we have got to break even in a normal trading season for the Championship we are usually in that £10m/£11m bracket for our normal income.

So that’s what we’ve got to work with.

A sort of safe figure for your players’ wage bill if you’ve got to break even on that, is about £6m.

Your £10m will net down to £8m because you’ve got direct costs on that.

You don’t have to be a genius to see that’s where your levels have roughly got to be.

If you did a sale in that year and you were plus £2m you’d have a little bit more to play with, other than borrowing it, which we’re not going to be able to do because you’ve got to pay that back one day.

So you either increase revenues or people can buy shares and that comes in as capital and that counts towards what you can use.

Did you have to sell Chris Eagles and Tyrone Mears?

They had one year to go on their contracts when we got the offer in.

At the end of that year they could have just walked away for nothing.

They weren’t interested in new deals.

We could have hung on to them and said ‘no, you’re staying’ but we would have had two players that didn’t want to play for us.

I’ve seen it before – they get to Christmas and they don’t want to get injured and at the end of the day we would have passed up on £3m.

You’ve seen what that means to our finances.

It really would have been the logic of the madhouse not to take that money for them.

Will manager Eddie Howe get to use that money?

It will go towards strengthening us, which helps us in strengthening the team.

By the way, when people hear you’ve sold them for £3m do you think I have a cheque for £3m in my pocket?

You have to remember that we won’t get some of that money until three years down the line, the way these deals work.

In the £6m for Steven Fletcher some went to Hibernian, so it’s never quite the same as it seems.

How do you go forward?

One of the reasons for the new strategy and going younger is that we felt we had older professionals, who have been great – a lot of them, but we need to get a new ethos coming through.

That’s what we are trying for with Eddie.

Has managing expectation been harder than anything?

Yes, I’d say it has.

I can remember when we came up from Division One. We had been 20 years with barely one season in the top half.

We all do it, we all (raise expectations) to be fair.

But we need to keep in touch with reality and where we are, and remember where we were.

Has the criticism hurt?

I’m a fan. You get accused of being negative but there comes a time when figures can’t lie.

Is promotion still the aim?

It’s always the ambition. I think we have a chance.

I think there is a bit of a gamble going younger but I think that’s the way we should do it.

Only time will tell.

There has been a lot of speculation about your future as chairman. Where do you stand?

I’m not going to be around forever. I’ve got my bus pass now and my rail card.

There are younger members on the board and I think you can stay too long.

But at the moment I have sold half of my shares.

John B (Banaszkiewicz) increased his shareholding and took 7.5 per cent and Brendan Flood took 2.5 per cent.

Will you still be chairman this time next year?

The directors vote on the chairman and the shareholders vote on directors.

Two things can happen – I could get voted off by the directors or I can resign.

The board of directors have told me they still want me to stay on as chairman and I’m still a substantial shareholder in the club.