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Newcastle United face skyrocketing £87m transfer bill as PSR plot could now backfire
Newcastle United could see their PSR-busting strategy of player swap deals backfire as their £87m transfer bill continues to mount.
The Magpies have spent heavily under the Saudi Public Investment Fund in recent windows, although the Premier League’s Profit 𒈔and Sustainability Rules have hamstrung them somewhat.
The club now appear to be scrambling to get within the three-year allowable loss limit of £105m ahead of PSR deadline day on 30th 🦂June, when the assessment window rolls over to the next three-year period.
This has seen Newcastle, as well as a number of other clubs, attempt♉ controversial quasi-swap deals where two players are exchanged for roughly equivalent fees in separate transactions.
Because of the PSR (formerly FFP) accounting rules, both clubs can engꦗineer a situation by which they improve their PSR position immediately by booking a transfer fee, while outgoing fees are amortised over the new signing’s contract lengtಞh.
Have Newcastle attempted to use ‘swap’ deals to pass PSR?
Until the deal fell through, Everton’s Dominic Calvert-Lewin was set to 𓃲sign for Newcastle in a deal many suspected was linked to Newcast𒁏le starlet 🐠Yankuba Minteh heading in the other direction.
Newcastle have also been linked with a player-plus-cash d♊eal for Wolves defen✱der Max Kilman involving academ൲y product Elliot Anderson going the other way.
Because of the way homeg🐭rown players are governed under PSR, any fee received for Anderson would be booked as ‘pure profit’, as opposed to a fee offset against a player’s book value.
There is nothing illegal about these deals and there♑ is no suggestion that Newcastle or any other club have brok📖en any rules.
However, are reporting that at least one club is fru♈strated enough by the accounting sleight of hand that they have rai♉sed the matter with the Premier League.
Elsewhere, it has been reported that the Premier Lꦍeague are considering setting up a🌜 working group to figure out how to close the loophole.
But any reforms to the system, which would need the backing of two-thirds of Premier League clubs, will certainly not be pushed through before 𒁏PSR deadline day on 30th June🔯.
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Why Newcastle’s PSR plan could backfire
While the quasi-swap deals improve Newcastle’s position in the short term,🎃 it is by no means a sil🎶ver bullet for their PSR problems.
The Magpies’ accounts show that their amortis𒀰ation (the way transfer fees are presented in accounting terms, split over a player’s contract length) charge stood at £87m in 2022-23.
That figure will likely rise again when the club release their 2023-24 accounts. And any fee paid for a player in a quasi-swap deal would cont𓆉ribute to its inflation.
And the amortisation charge associated with the incoming playཧer in such a deal would affect their PSR headroom immediately as the new assessment window starts on 1st July.
It can be argued that, while Newc𓃲astle need to meet the £105m threshold by 30th June to avoid immediate sanctions, they are kicking t♉he can down the road in the long term.