The world of football is not just about what happens on the pitch anymore. A big part of the game now takes place in the boardroom, with spreadsheets and financial rules playing a huge role in a club’s success.
For teams that have big ambitions and want to compete with the best, managing money has become just as important as scoring goals.
Two clubs that are learning this lesson right now are Newcastle United and Nottingham Forest. According to financial experts, both teams are walking a very fine line when it comes to the spending regulations set by football’s governing bodies.
The rules, often called Financial Fair Play or Profit and Sustainability Rules, are designed to stop clubs from spending far more money than they earn.
The idea is to create a level playing field and prevent teams from going bankrupt by chasing success. For clubs playing in European competitions like the Champions League or the Europa League, the rules are even stricter.
They have to keep their spending on player wages and transfer fees within a certain percentage of their total revenue. Last season, that limit was 80 percent, and it has now dropped to 70 percent.
Clubs are also only allowed to lose a maximum of £77 million over a three-year period.
Newcastle United, with their famous takeover by Saudi Arabian investors, have been in the spotlight for their spending. While their revenue has grown significantly, their wage bill has also shot up.
A former financial advisor to Manchester City has stated that it is almost certain Newcastle have broken UEFA’s financial rules for the last season.
The main reason is that the allowed loss limit for UEFA is actually lower than the Premier League’s, and Newcastle were already very close to the Premier League’s threshold.
Furthermore, certain commercial deals linked to Saudi Arabia are likely to be deducted from their calculations by the authorities, pushing them over the limit.
The situation at Nottingham Forest is similar. They have also seen their revenue increase, but their spending on wages has grown at a fast pace.
The expert believes that Forest are probably in a risky position regarding the same rules and might also be close to breaking the squad cost control ratio.
Both clubs have been trying hard to bridge the gap to the traditional top teams, and spending money on new players is a quick way to try and do that. However, this strategy now comes with serious financial risks.
So, what happens if a club is found to have broken these rules? The consequences are real and can be damaging.
We have already seen examples this year. Chelsea was hit with a large fine, and Aston Villa also received a financial penalty with the threat of more fines if they don’t fix their finances in the next few years.
For Newcastle and Forest, the most likely immediate outcome would be a heavy fine from UEFA. This is a financial punishment that hurts the club’s budget but doesn’t directly affect the team’s results on the field.
However, the bigger worry for the future is what happens if the financial situation doesn’t improve. Continued breaches could lead to much more severe punishments, like points deductions or even being banned from European competitions.
This is a wake-up call for these ambitious clubs. It means that their strategy must change. They can’t just keep spending money on new players.
They now have to be much smarter in the transfer market, focusing on selling players as well as buying them, and finding ways to grow their commercial revenue faster than their costs.
The dream of competing at the top is still alive, but the path to getting there now requires careful financial planning alongside good football decisions. The message from the governing bodies is clear: ambition is welcome, but it must be sustainable.
