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Newcastle claim their attempt to join elite is held back by spending rules

Newcastle claim their bid to join elite is held back by spending rules

Newcastle United believe the Premier League’s spending rules are preventing them from breaking up the ‘Big Six’.

The club also warned they would have to sell players they would rather not lose in order to fund further investment to improve the quality of the squad. That is likely to mean either an academy graduate such as 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 was still a huge financial gulf between themselves and the established order in the Premier League, with new rules restricting sponsorship deals linked to club owners. Eales said an “upwardly mobile club” such as Newcastle are being prevented from closing the gap quickly enough for them to become the sustainable top-six team they aspire to be.

There is growing tension within the Premier League as Newcastle and other clubs do not believe the balance is right between the desire to protect clubs “from going bust and those that wish to invest” in order to consistently compete for silverware.

Newcastle increased their revenue for 2023 from £180 million to £250.3 million, but announced a loss of £73.4 million over that 12-month period. That takes their combined losses, signed off by an independent auditor, since the takeover to around £105 million. But Eales insisted they were compliant with the Premier League’s profit and sustainability rules and will continue to be in the future.

“When the takeover took place, the PSR regime was already in place,” Eales said, speaking to reporters to announce the release of the latest set of accounts. “So, we have always known those are the rules and we are operating within them. We will always be compliant.

“Those are the rules of the game, as it were. But I think it is also fair to say that if you are trying to be an upwardly mobile club it makes it a huge challenge. You have to do your business within that regime, it’s hard. You have to be able to create that level of income to be able to spend on the squad. There are many ways you can have a team on the pitch that can perform and compete, but ultimately investment in squad and size of wage bill is a big factor in where you finish in the table.

“The challenge for us as a club, and it’s one we embrace and relish, is we have to be efficient and maximise our resources. We have to think medium to long term and we have to be strategic. We can’t think week to week, month to month, [transfer] window to window. If we are going to get where we want to get to, which is a top-six sustainable club competing for trophies, we have to take a long-term vision.”

Newcastle claim their bid to join elite is held back by spending rules
Newcastle Co-Owner Amanda Staveley (C) with husband Mehrdad Ghodoussi (R) and Chief-Executive Darren Eales (L) - Getty Images /Chris Brunskill

On the potential for selling players to fund Newcastle’s continued progress, Eales said: “Increasing revenue is one way to create headroom with PSR. The other one, and it seems counter-intuitive, but when you have player trading.

“You have a £50 million player you can sell at your disposal and you bring in another player of the same value. What’s the point in doing that, you might say? It is risky as we’ve already got that player here and we know what they can do, but if you sell a £50 million player and bring in an identical one on £50 million, on the same wages, but amortize over the five years the player you are bringing in, that’s only £10 million a year. So, you are creating £40 million of headroom.

“If you are churning players you create more headroom. We have seen lots of examples of this elsewhere. Philippe Coutinho at Liverpool and they brought in Allison [Becker] and Virgil van Dijk. Jack Grealish going from Aston Villa [to Manchester City] and they have reinvested and reloaded. Declan Rice at West Ham [to Arsenal]. It’s just the nature of the beast. In a PSR world, every player has a price.

“It’s difficult to say specifically on certain players, but I can say that, if we’re going to get to where we want to get to, at times it is necessary to trade your players. Whether that is because of the contract length of the player in question, the offer is too good to refuse, you need to reload in certain areas.”

Eales confirmed Newcastle were very unlikely to make any big-money signings this month, which is why loan deals for players such as Manchester City’s Kalvin Phillips are so appealing. PSR will also continue to handcuff their ambitions in the summer, even though they are owned by the richest sovereign wealth fund on the planet in Saudi Arabia’s Public Investment Fund.

“There’s always a discussion on a whole raft of Premier League rules,” Eales said. “There is always that challenge of how you have a regime that protects football clubs from going bust and having the ability for clubs to invest and be upwardly mobile. That is always the tension you have. There will be dialogue from all the clubs in terms of, ‘Have we got that tension right, in allowing clubs to be competitive and protecting clubs against going bust or overspending?’”

The figures are startling: despite their 40 per cent growth year on year, Newcastle’s revenue is dwarfed by the established order in the Premier League. “To take a step back and the way the PSR calculation works,” Eales said. “There are ways to create some headroom.

“Raising commercial revenues and looking at our accounts today you can see there has been a 40 per cent increase in turnover. That’s back-to-back years of 40 per cent rises and that’s great from a projection basis as it shows we have great growth potential moving forward. But to put it into perspective, we want to be a top six sustainable club and Tottenham’s latest accounts available was £440 million [revenue]. We are at £250 million so there is a big step even to the lower end of the top six. We have also seen that Manchester City are £710 million in revenue in their latest accounts. There is a long way to go in growing those revenues.”

‘January is not a great window to be doing business’

Newcastle supporters hoping to see the squad improved this month are likely to be frustrated. Eales stopped short of ruling out any incomings, but whatever Newcastle spend this month will reduce their ability to invest in the summer.

“It’s a difficult window to get value when you’re in the middle of the season and you are trying to bring quality in,” he said. “Clubs aren’t willing to – or are less willing in January – to lose those types of players. Summer is always better from a value and a planning perspective.

“Secondly, we have had a number of injuries and we have got some very good players coming back in the second half of the season. Like everything, we have to approach it on the medium to long-term basis, rather than make knee-jerk reactions. For us, January isn’t a great window to be doing business. That doesn’t mean we won’t do any business, as we saw with Anthony Gordon last year. [But] It’s difficult to do any major surgery.”

Newcastle will continue to grow their commercial revenue. More sponsorship deals are in the pipeline and Eales stressed they would not break the rules to close the gap more quickly.

“On some levels it does instil discipline because you have to plan your strategy,” he said. “We have got the positive tailwinds of Sela front-of-shirt sponsor, Champions League money, Adidas coming in June, which will be a big jump for us as we can control our own retail and merchandise, which hasn’t been the case before. With the performances we have had on the pitch and the buzz around the club, we are seeing more and more commercial partners wanting to become part of this journey. It’s a snowball going down a hill. As we are doing better on the pitch it is helping us with commercial partnerships.”

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