Newcastle United set for '£255m budget' amid PSR twist

Newcastle United supporters are becoming increasingly familiar with complex financial terms like Profit and Sustainability Rules, Associated Party Transactions, and Fair Market Value.

These regulations have become a significant concern since the Saudi Public Investment Fund (PIF) took over the club.

With assets nearing £800 billion, PIF aims to transform Newcastle into a powerhouse akin to Manchester City or Paris Saint-Germain. However, their ambitions are constrained by football’s spending regulations.

PIF has already invested hundreds of millions into Newcastle’s recruitment budget, yet the club has struggled to generate substantial returns from player sales.

This spending spree nearly resulted in a breach of the Profit and Sustainability Rules (PSR) this summer, narrowly avoided before the June 30th deadline. The Premier League’s regulatory landscape remains uncertain, leaving Newcastle unsure about the framework they will operate under next season.

Two significant uncertainties are the potential implementation of a squad cost control ratio that ties expenditure to revenue and Manchester City’s ongoing case against the league regarding associated-party deals.

Manchester City has launched a legal claim against the Premier League, challenging the regulation that mandates all commercial deals be assessed for fair market value.

This rule, implemented after PIF’s takeover of Newcastle, is alleged by City to be anti-competitive.

They have also suggested a conflict of interest in the Premier League’s relationship with Nielsen Sports, the company responsible for assessing fair market value.

If City’s claim succeeds, it could have significant implications for Newcastle, which has signed several commercial deals with PIF-affiliated companies. According to Liverpool University football finance lecturer and ‘Price of Football’ author Kieran Maguire, Newcastle would secretly welcome a ruling in City’s favor.

Such a ruling would allow them to sign contracts of unlimited value, providing a substantial financial boost. However, they must also consider potential UEFA regulations, as their long-term goal includes regular Champions League qualifications.

UEFA introduced a new set of financial controls in the 2023-24 season, limiting clubs to spending a maximum of 70% of their revenue on wages, transfers, and agent fees.

The Premier League will trial a similar system with an 85% cap starting in the 2024-25 season. This contrasts with the current PSR framework, which limits clubs like Newcastle from losing more than £105 million over three years.

Maguire explains that while this new system might align Premier League regulations with UEFA’s, it doesn’t significantly alter the financial landscape for Newcastle.

Despite the potential for higher spending under the squad cost control ratio, Newcastle’s revenue remains significantly lower than that of clubs like Manchester City, perpetuating existing financial disparities.

Newcastle’s qualification for the 2023-24 Champions League subjects them to UEFA’s stricter financial controls. PIF’s ambition to make Newcastle a regular in European competitions necessitates close monitoring of UEFA’s regulations.

UEFA’s squad cost control ratio is assessed on a calendar basis, contrasting with the Premier League’s season-by-season approach. This means clubs must submit their accounts by March 31st, allowing UEFA to make any necessary expulsions before the following season’s competitions.

Maguire highlights a potential issue with this system: the accounts submitted to UEFA will not have been audited. This could lead to problems, as auditors play a crucial role in ensuring clubs adhere to financial regulations.

Newcastle United faces a complex financial future under the ownership of PIF. The club must navigate a challenging regulatory environment, balancing ambitious investment plans with stringent financial rules.

The outcome of Manchester City’s legal battle and the implementation of new spending controls will significantly impact Newcastle’s ability to compete at the highest level.

While the club’s financial future remains uncertain, PIF’s commitment to transforming Newcastle into a footballing powerhouse is unwavering.

By carefully managing their finances and navigating the evolving regulatory landscape, Newcastle can aspire to achieve long-term success both domestically and in European competitions.