Preston chairman Maurice Lindsay says the club's financial position meant they had to take Burnley's offer for Keith Treacy.
The Clarets signed the Republic of Ireland international on a three-year deal for an undisclosed fee as North End bid to ease their "cash problems".
The 22-year-old winger made 38 league appearances for Preston last season and bagged seven goals, including one against the Clarets in September.
Yet Lindsay said: "A discussion was held with our owner, Mr Trevor Hemmings, who made it quite clear that we needed to seriously consider the offer to assist the cash problems at the club.
"We made the manager aware of that at the time and the fact that there was a need to reduce the cash injection from Mr Hemmings from £7million last season to £3million this season.
"The only way the club can stay in business is by Mr Hemmings putting in further monies, but he is adamant that this will be limited to £3m. It clearly leaves us with an inability to refuse offers of this kind for Keith."