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Newcastle suffer £74m setback as Premier League issue statement
Newcastle United have suffered a fresh setback in their battle to unlock the near limitless wealth of the Saudi Public Investment Fund.
The Magpies have spent heavily since PIF’s takeover in October 2021, with their amortisation bill – transfer fees spread over contract length – almost trebling in that time to £87m at the last count.
According to projections from world-renowned football finance expert Swiss Ramble, Newcastle’s amortisation will rise to £106m when the time comes to release their 2023-24 accounts early next year.
Under Profit and Sustainability Rules, Premier League clubs are allowed to lose no more than £105m over a rolling three-year period – with certain excluded costs, such as infrastructure or youth development.
Newcastle just about got over the line for the three-year period up to 2023-24.
This was partly thanks to the quasi-swap deal which saw Elliot Anderson sold to Nottingham Forest and Odysseas Vlachodimos head in the opposite direction, allowing both clubs to book an immediate profit.
But that was not a free hit – the £20m fee for Vlachodimos will see £4m deducted from Newcastle’s PSR calculation for the next five seasons.
To offset that cost and the legacy of their huge expenditure in recent years, Newcastle need to continue to grow their commercial income.
Newcastle’s commercial income – that’s revenue from sponsorship, merchandise, events and so on – has soared from £28m in 2019 to £47m at the last count.
A chunk of that growth is attributable to sponsorship deals Newcastle have struck with PIF-linked companies. Sela, Noon, Saudia and the most notable examples.
However, the latest developments at Premier League HQ indicate that the North East club will not be able to open the floodgates when it comes to PIF-funded deals any time soon.
Newcastle learn outcome of Premier League sponsorship dispute
Newcastle have not publicly come out in support of Man City in their fight against the Premier League’s rules on associated party transactions.
But several reports have suggested that it is clear that the Tynesiders are among the clubs who would be delighted if the case led to a change in sponsorship regulations.
The Premier League decrees that all deals with related parties – i.e. owner-funded groups – must be scrutinised by a fair market value panel to stop clubs from signing inflated deals.
City claimed these measures violate anti-competition law.
The rules were introduced in the wake of PIF’s takeover of Newcastle, with some clubs worried that PIF could circumvent PSR through sponsorship.
No official announcement has been made about the outcome of the legal action, which began earlier this summer.
However, the officially released its official handbook for the 2024-25 season today, which outlines the rules by which all clubs must abide.
There are no changes to the associate party rules, strongly indicating that Man City’s challenge has been unsuccessful.
projects another growth in Newcastle’s commercial income for 2023-24, to £74m.
But this latest development means that PIF will continue to be unable to freely pump money into the club through sponsorship without Premier League scrutiny.
- READ MORE NEWCASTLE FINANCE NEWS: PIF unveil £48bn stadium plan as Newcastle get major St James’ Park expansion clue
TBR Analysis: How will Newcastle’s PSR situation affect Noni Madueke transfer?
It emerged earlier this month that Newcastle were exploring the signing of Chelsea’s Noni Madueke, the explosive winger who joined the West London club from PSV for £30m in January 2023.
Now, the Magpies have reportedly agreed terms with the England Under-21 player.
No value has been reported for the supposed agreement between the two clubs, although it has been suggested that his signature will likely cost Newcastle between £35m and £40m.
But how will this affect Newcastle’s PSR?
As outlined by Newcastle CEO Darren Eales last week, the £70m loss the club recorded in 2021-22 is now no longer part of their three-year PSR calculation.
That gives the club some flexibility as their figures for 2023-24 are expected to be more favourable, thanks to Champions League participation and a series of lucrative new commercial deals.