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Newcastle ‘can spend £500m without breaching PSR’ as Eddie Howe wins Paul Mitchell transfer power struggle
Once sporting director Paul Mitchell leaves Newcastle United, Eddie Howe is expected to be increasingly influential on the transfer front.
Despite losing 1-0 on the final day of the season to Everton, Newcastle have qualified for next season’s Champions League — a huge boost on so many fronts.
Newcastle should now be confident of keeping stars like Alexander Isak and Bruno Guimaraes for one more year at least, two players who deserve Europe’s biggest platform.
Of course, Newcastle have always wanted to keep Isak, and the striker might be tempted to sign a new contract at St James’ Park.
But when it comes to incoming transfers this summer, fans on Tyneside would be forgiven for not knowing what to expect.
How much money can Newcastle spend in the transfer window?
That being said, Head of Football Finance at TBR Football Adam Williams has taken a look at Newcastle’s situation in terms of PSR and how much they might be able to spend on new players.
And in short, it could be good news for Newcastle fans.
First assessing Newcastle’s PSR cycle, Williams said: “Newcastle lost £11m in 2023-24, which after PSR-allowable expenses are added back will equate to a break-even point or better.
“In 2024-25, revenues will have been much more modest with no Champions League football. But costs also won’t have been as high with fewer bonuses paid to players in the financial year.
“The sales of Minteh and Anderson went through in the last financial year for PSR purposes, so while they had a positive net spend in the transfer market on paper, the situation will be a little different with the figures they submit to the Premier League.
READ MORE: £21m player now wants to join Newcastle this summer despite holding talks with Arsenal
“When you strip out player sales, their operating loss was about £69m last season and I suspect it will be around that level again for 2024-25, as indeed it has been for all of the PIF era.
“With that in mind, I’d forecast a loss of maybe £50m for the current campaign.
“It would be bigger but commercial revenues and matchday income have been rising at a quite remarkable rate in recent seasons. With PSR add-backs, let’s say that decreases to £40m.
“So yes, given that the £73m they lost in 2022-23 is no longer part of the three-year calculation, I think they will have far more PSR headroom this summer.”
Newcastle could afford to spend £500m on new players
Despite Mitchell’s upcoming departure, Newcastle have identified key targets already this summer.
The club are currently in negotiations with Callum Wilson over a new contract, but it could be a few months of significant change at St James’ Park.
And although Newcastle could spend up to £500m in theory, Williams thinks we are more likely to see an outlay just shy of half of that figure.
Williams continued: “PSR typically isn’t the only factor that determines how much a club can spend.
“With others, you have to then consider whether the owners are going to stump up the actual cash to underwrite the losses which are inherent to spending the maximum under PSR. At Newcastle, however, that’s not an issue.
“The owners have said they will always spend the maximum in a PSR cycle.
“£100m PSR headroom, i.e., the ability to post a £100m loss without breaching the spending rules, does sound about right.
“Because new signings are amortised over up to five years, that in theory means they could make £500m worth of signings and be able to still comply.
“They won’t do that because it’s not a free hit – you still have to bear the amortisation at £100m per season over the next five years, plus the wages of the players you’ve signed.
“But it is emblematic of the freedom Newcastle have to operate this summer.
“I wouldn’t be at all surprised to see an outlay of £200m-plus. That said, they’ve been very shrewd with their recruitment strategy so far.”
Eddie Howe’s side could accept UEFA fine
Ever since Newcastle’s Saudi Arabian-backed takeover in 2021, the club’s spending and transfer policy has perhaps been more restrained than most expected.
The Magpies broke their transfer record when signing Isak from Real Sociedad in 2022, but the club are yet to go anywhere near the £100m mark.
And in terms of the summer ahead, Williams wasn’t expecting to see a huge shift in strategy.
He added: “Newcastle aren’t going to spend for the sake of it – it will be about making the right signings for the right price.
“You’re also going to continue to see player churn. PSR isn’t just about one season.
“You have to think about how much leeway you’re going to have next season and the season after, so giving yourself leeway and liquid capital through player sales is essential.
“One more factor is that Newcastle are now subject to UEFA’s PSR assessment as well as the Premier League’s.
“The squad cost control element is hard to figure out as it’s done on a calendar year basis, but the football earnings rule is more stringent than the Premier League’s £105m cap.
“I could see them breaching that, but that’s not a major problem. They will take the fine, as Chelsea and Aston Villa are set to do. It won’t be a big hit.”