Newcastle United believe Premier League spending rules are preventing them from splitting up the ‘Big Six’.
The club also warned that they would have to sell players they would rather not lose to fund further investment to improve the quality of the squad. That probably means an academy graduate like Sean Longstaff or Elliot Anderson, or one of the ‘crown jewels’ in Alexander Isak, Bruno Guimaraes or Sven Botman.
Darren Eales, the club’s chief executive, warned there is still a huge financial gap between themselves and the Premier League establishment, with new rules restricting sponsorship deals to club owners. Eales said an ‘upwardly mobile club’ like Newcastle is being prevented from closing the gap quickly enough to become the sustainable top-six team they aspire to be.
There is increasing tension within the Premier League as Newcastle and other clubs do not believe there is a good balance between the desire to protect clubs “from bankruptcy and clubs wanting to invest” to consistently compete for silverware.
Newcastle increased its 2023 turnover from £180m to £250.3m, but announced a loss of £73.4m for the twelve-month period. That brings their combined losses, as signed off by an independent accountant, since the takeover to around £105 million. But Eales insisted they were adhering to Premier League profit and sustainability rules and will continue to do so in the future.
“When the takeover took place, the PSR regime was already in place,” Eales said, speaking to reporters to announce the publication of the latest set of accounts. “So we have always known that these are the rules and we operate within them. We will always be compliant.
“Those are the rules of the game, so to speak. But I think it’s also fair to say that if you’re trying to be an upwardly mobile club, it’s a huge challenge. You have to do your business within that regime, which is difficult. You have to be able to create that level of income to spend on the team. There are many ways you can have a team on the field that can perform and compete, but ultimately, investment in the roster and size of the wage bill is a big factor in where you finish in the rankings.
“The challenge for us as a club, and one that we embrace and appreciate, is that we have to be efficient and maximize our resources. We have to think medium to long term and we have to be strategic. We cannot think from week to week, from month to month, [transfer] window to window. If we want to get where we want to get, which is a top six sustainable club competing for trophies, we have to take a long-term view.”
On the potential for player sales to fund Newcastle’s continued progress, Eales said: “Increasing revenues is a way to create leeway with PSR. The other, and it seems counterintuitive, but if you have player trading.
“You have a £50m player you can sell and you bring in another player of the same value. What’s the point of doing that, you might say? It’s risky because we already have that player here and we know what they can do, but if you sell a player for £50 million and bring in an identical player for £50 million, on the same wages, but amortize over the five years the player that you bring in, that’s only £10 million a year. So you’re creating £40m of headroom.
“When you’re churning players, you create more headroom. We have seen many examples of this elsewhere. Philippe Coutinho at Liverpool and they brought in Allison [Becker] and Virgil van Dijk. Jack Grealish moves from Aston Villa [to Manchester City] and they have reinvested and recharged. Declan Rice at West Ham [to Arsenal]. It’s just the nature of the beast. In a PSR world, every player has a prize.
“It is difficult to say specifically about certain players, but I can say that if we want to get where we want to get, sometimes it is necessary to trade players. Whether this is due to the contract duration of the player in question, the offer is too good to refuse, you have to recharge in certain areas.”
Eales confirmed that it is highly unlikely that Newcastle will make a lot of money this month. That’s why loan deals for players like Manchester City’s Kalvin Phillips are so attractive. PSR will continue to control their ambitions in the summer, even though they are owned by the richest sovereign wealth fund in the world, the Saudi Public Investment Fund.
“There’s always a debate about a whole range of Premier League rules,” Eales said. “There is always the challenge of how can you have a regime that protects football clubs from going bankrupt and how clubs have the opportunity to invest and be upwardly mobile. That’s always the tension you have. There will be a dialogue between all clubs in terms of: ‘Do we have the right tension, allowing clubs to be competitive and protecting clubs from bankruptcy or overspending?’
The figures are startling: despite annual growth of 40 percent, Newcastle’s revenues are dwarfed by the established order in the Premier League. “To take a step back and look at the way the PSR calculation works,” Eales said. “There are ways to create some head space.
“If we increase commercial income and if we look at our accounts today, you see that turnover has increased by 40 percent. That’s back-to-back years of a 40 percent increase and that’s great from a projection basis because it shows we have great growth potential going forward. But to put it into perspective, we want to be a top six sustainable club and Tottenham’s last available bills were £440m. [revenue]. We’re at £250 million, so there’s a big move, even to the bottom of the top six. We also saw that Manchester City have £710 million in revenue in their latest accounts. There is still a long way to go to grow those revenues.”
‘January is not a good time to do business’
Newcastle supporters hoping to see the squad improve this month are likely to be left frustrated. Eales have not ruled out any income, but whatever Newcastle spend this month will reduce their ability to invest in the summer.
“It’s a tough time to get value when you’re in the middle of the season and trying to get quality,” he said. “Clubs are not prepared – or are less prepared in January – to lose these types of players. Summer is always better from a value and planning perspective.
“Secondly, we have had a number of injuries and we have seen some very good players come back in the second half of the season. Like anything, we need to take a medium to long-term approach, rather than knee-jerk reactions. January is not a good time for us to do business. That does not mean that we will no longer do business, as we saw with Anthony Gordon last year. [But] It is difficult to perform a major operation.”
Newcastle will continue to grow its commercial revenues. There are more sponsorship deals in the pipeline and Eales stressed they would not break the rules to close the gap faster.
“At some levels it creates discipline because you have to plan your strategy,” he said. “We have the positive tailwind from Sela, front of the shirt sponsor, Champions League money and Adidas coming in June, which will be a big jump for us because we have control over our own stores and merchandise, which is not the has been the case. for. With the performances we have had on the field and the buzz around the club, we see more and more commercial partners wanting to be part of this journey. It’s a snowball going down a hill. Because we do better on the field, it helps us with commercial partnerships.”