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News
Newcastle United ‘livid’ at having to pay Leicester City’s PSR costs
Newcastle United have yet another reason to feel aggrieved about the Premier League’s PSR system.
PSR (Profit and Sustainability Rules) limit Newcastle to losing a maximum of £105m over a rolling three-year period, as long as the bulk of those losses are underwritten by PIF.
While the Saudi Public Investment Fund are the richest owners in the Premier League by an order of magnitude, PSR has acted as an anchor to ওtheir ambitions at St James’ Park.
Since the takeover in October 2021, Newcastle have still spent heavily and CEO Darren Ea🐟les has said that they will always spend the 𝐆very maximum allowable under PSR.
But they skirted dangerously close to the brink of a PSR breach for the monitoring period up until 30th June 2024 and were forced to sell starlets Elliott Anderson an💃d Yankuba Minteh to remain compliant.
Newcastle’s tribulations under PSR have made Leicester City‘s app✃eal victory over the Premier League sting all the more, with the Foxes essentially cleared on a technicality despite exceeding the PSR limit.
The ruling has sent shockwaves through the top flight and under🅠mined faith in a PSR system that was already considered by many to be unfit for purpose.
To explore how PSR strugglers Newcastle have reacted to the bombshell news, TBR Football spoke exclusively to Liverpool University football finance lecturer and industry i🌠nsider Kieran Maguire.
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PSR forcing Newcastle into player trading model
CEO Darren Eales, manager Eddie Howe and sporting director Paul Mitchell h💖ave all voiced their frustrations at the handicaps imposed by PSR.
The Tynesiders managed to avoid sell🌄ing any of their true A-listers this summer, but there is an acceptance൲ that might not be the case for much longer.
“There is a perception that Newcastle have a very good 16 players but beyond that, the squad is lacking,” said Maguire.
“This has been an issue as far as Eddie Howe is concerned.
“They showed against Spurs that the starting XI is very impressive. The likes of Guimaraes, Isak and Gordon could command big fees.
“But that would weaken the quality of what the club could put out.
“They will be reluctant to sell going forwards. They will be looking more to move on players who are not the crown jewels as we saw in the summer.”
The deal with Red Bull and Newcastle’s commercial landscape
Ever since the takeover, Newcastle have placed huℱge emphasis on boosting commercial income𒅌 in order to unlock new spending power.
Ultra-lucrative new commercial deals with Adidas, Sela and Noon have helped in this regard, but the Premier League’s fair market value provision makes exponen💙tial g🌱rowth difficult.
Plu✨ralisation and diversification of their sponsorship inventory is one option they are looking at, and the new deal with energy drinks titans Red Bull is emblematic of thi𓆉s.
Red Bull also recently signed a deal with PIF-owned 𒁃Al-Hilal and, unusually for a club getting in bed ▨with a potential direct rival, own a significant minority stake in Leeds United.
“There is an opportunity for high six-figure, perhaps low seven-figure returns from having partnerships with blue-chip brands such as Red Bull,” Maguire projected.
“You only have to look at the likes of the Manchester clubs, Liverpool and Chelsea. They will likely have dozens of these sorts of deals.
“I suspect that Newcastle want to position themselves so they creep up that ladder in terms of what they refer to as secondary sponsors and partners.
“This is clearly a directive from people high up in the club. They have to address revenue issues to allow the club to be competitive from a PSR point of view.
“Having a closer relationship with the likes of Al-Hilal can be competitive in terms of the loan market going both ways for both clubs.“
Newcastle’s reaction to Leicester’s PSR triumph
On the one hand, Newcastle supporters may have a degree of solidarity with Leicester and their successful attempt to essentially bypass ꦫa PSR system that many believe is🦩 unfit for purpose.
However, Maguire also highlights that the fact that Leicester’s Premier Lea🏅gue peers, including Newcastle, have had to foot much of the bill for the hearing will dampen their sympathy.
“I suspect most of the clubs in the top half of the Premier League will be very disappointed with the outcome of the Leicester case. Newcastle will be no exception.
“While the clubs at the bottom of the Premier League see that there is an effective get out of jail free card, it shows the huge failings of the two-body governance model.
“The rules in their current form are not fit for purpose. Perhaps it will further reinforce the view of many Newcastle fans that the rules were introduced to stifle the ambitions of any club with aspirations.
“They have had to sell to buy despite the fact that they have owner funds that could provide for a massive expansion into the transfer market.
“So, I think Newcastle will also be livid at the cost that has been borne by the Premier League, which has been passed on to all of the individual clubs.
“Newcastle have had to contribute to an outcome that has not had a positive outcome for any club, except the obvious exception of Leicester.”