Newcastle suffer £74m setback as Premier League issue statement
Newcastle United faces fresh challenges in their quest to leverage the vast wealth of the Saudi Public Investment Fund (PIF). Since PIF’s takeover in October 2021, the club has seen a significant increase in spending, with their amortization bill – the spreading of transfer fees over contract lengths – nearly tripling to £87 million. Football finance expert Swiss Ramble projects this figure to rise to £106 million when Newcastle releases their 2023-24 accounts.
Under the Premier League’s Profit and Sustainability Rules, clubs can lose no more than £105 million over a rolling three-year period, excluding certain costs such as infrastructure and youth development.
Newcastle managed to stay within this limit for the three-year period up to 2023-24, partly due to strategic player transactions like the quasi-swap deal involving Elliot Anderson and Odysseas Vlachodimos. However, this deal wasn’t without its costs, as the £20 million fee for Vlachodimos will impact Newcastle’s PSR calculation for the next five seasons.
To offset their significant expenditures, Newcastle must continue to boost their commercial income. The club has already made strides, increasing their commercial revenue from £28 million in 2019 to £47 million recently.
Much of this growth stems from sponsorship deals with PIF-linked companies such as Sela, Noon, and Saudia. Despite these gains, recent developments at Premier League headquarters suggest that Newcastle will not be able to capitalize fully on PIF-funded deals in the near future.
The Premier League mandates that all deals with related parties – owner-funded groups – undergo scrutiny by a fair market value panel to prevent clubs from securing inflated deals. This rule, introduced after PIF’s takeover of Newcastle, aims to ensure fairness and prevent circumvention of PSR through sponsorship.
Although Manchester City challenged these measures, claiming they violate anti-competition laws, the Premier League’s latest handbook for the 2024-25 season indicates no changes to these rules, suggesting that City’s challenge was unsuccessful.
Despite the restrictions, Swiss Ramble forecasts another increase in Newcastle’s commercial income for 2023-24, projecting it to reach £74 million. However, the club remains unable to freely inject funds through sponsorships without Premier League oversight.
This continued scrutiny means Newcastle must navigate their financial strategy carefully to comply with regulations while still pursuing ambitious transfer goals.
Amid these financial constraints, Newcastle is exploring the signing of Chelsea’s Noni Madueke. The explosive winger, who joined Chelsea from PSV for £30 million in January 2023, has reportedly agreed on personal terms with Newcastle. Although the transfer fee is expected to be between £35 million and £40 million, the impact on Newcastle’s PSR remains a concern.
Newcastle CEO Darren Eales recently highlighted that the £70 million loss recorded in 2021-22 is no longer part of the club’s three-year PSR calculation, providing some financial flexibility. With more favorable figures anticipated for 2023-24, thanks to Champions League participation and lucrative new commercial deals, Newcastle may have some leeway in managing their transfer expenditures.
Newcastle United’s journey to harness the financial power of the Saudi Public Investment Fund while adhering to the Premier League’s Profit and Sustainability Rules is a complex balancing act. The club’s ability to grow commercial income, navigate sponsorship regulations, and make strategic player acquisitions will be crucial in maintaining their competitive edge.
As Newcastle continues to strengthen their squad, careful financial management will be key to ensuring long-term success and stability in both domestic and European competitions.
