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Newcastle United should be allowed to strike £90m deal as PSR ‘upper limit’ unlocked

Adam Williams

Mon 25 November 2024 17:41, UK

Since the Saudi Public Investment Fund’s (PIF) takeover in October 2021, staying afloat in terms of the Premier League PSR system has been almost as important as results on the pitch.

Profit and Sustainability Rules (PSR) caps financial losses over three years at £105m, thereby limiting PIF’s ability to freely fund lavish new signings ♎at St James’ Park💃.

The Saudis have increased Newcastle’s spending 🦋on recruitment and retention to never before seen levels, but their expenditure is in a different universe t🐻o that seen in the PIF-backed Saudi Pro League.

The Magpies know that they have to earn nearly every pound they spend, leading to a mad scramble to increase revenue through commercial deals and expand St James’ Park to keep pace with their rivals.

While the latter is a long-term ambition that will take years to bear fruit, Newcastle have had success in the commercial departme🐟nt, with sponsorship and merchandise income soaring since 2021.

However, the quantum leap that PIF⛦ want to make in their spendin🅘g on recruitment and retention will only come with structural change to the PSR system.

Ed🦄die Howe’s side have found form recently but are still not on track to hit their target of qualifying for European football this term, so PSR is again a talking point ahead of a January window in which they would like to strengthen.

Position	Team	Played MP	Won W	Drawn D	Lost L	For GF	Against GA	Diff GD	Points Pts
4	ArsenalArsenal	12	6	4	2	21	12	9	22
5	BrightonBrighton	12	6	4	2	21	16	5	22
6	TottenhamTottenham	12	6	1	5	27	13	14	19
7	Nottm ForestNottingham Forest	12	5	4	3	15	13	2	19
8	Aston VillaAston Villa	12	5	4	3	19	19	0	19
9	NewcastleNewcastle	11	5	3	3	13	11	2	18
10	FulhamFulham	12	5	3	4	17	17	0	18
11	BrentfordBrentford	12	5	2	5	22	22	0	17
12	Man UtdManchester United	12	4	4	4	13	13	0	16
13	B’mouthBournemouth	12	4	3	5	16	17	-1	15

Critics ague that the ‘Stability’ aspect of the Profit and Sustainability Rules is a smokescreen ღto prevent ambitious clubs like Newcastle from disrupting the elite.

And while the nature of the Premier League’s constitution means that PSR has the support of the majority of clubs, it is h🌜ard to argue that the glass ceiling is not, at the very least, a by-product of the system.

This week, there has been some positive news for Newcastle in this department, albeit with a side serving of uncertainty about where the civil war raging within the Premier League will g🥃o next.

• READ MORE: CEO g🌳ives v꧂erdict on Newcastle United owners PIF sealing biggest takeover yet worth £16bn

New APT rules a step in the right direction for Newcastle, says football finance expert

At one point, Man City’s challenge to the Premier League’s Associated Party ꩲTransaction (APT) Rules was fra💖med as a potential turning point for PSR itself.

But while City’s handful of victories over certain elements of the APT Rules were c▨ertainly celebrated by some clubs, the arbitration case’s outcome does not mean the likes of Newcastle can now spend freely.

However, as it stands, the revised version of the APT rules passed at a Premier League shareholder 🍨meeting last Friday, which Newcastle voted against, is a comma and not a full stop.

City argue that the whole APT syst🍬em is null a🦹nd void, and an independent commission is expected to rule on that in February.

For now, the APT rules have been amended to give clubs access to a database of commercial deals across the league used to determine whether sponsorships meet fair market value requirements, while soft loans (interest-free loans from shareholders) are now considered a subsidy and must include a commercial interest🐭 rate.

The databank issue, says Liverpool University football finance lecture🅠r Kieran Maguire, gives Newcastle the freedom to squeeze the absolute maximumജ from any deals struck with PIF-linked companies.

“I think the additional information now available to clubs will allow them to see the upper limit of the upper limit, as it were,” Maguire told TBR Football.

“It well let them see just how far they can negotiate before the Premier League says this is not acceptable.

Citing Manchester United’s £90m-a-year with Adidas – which is worth £50m more than Newcastle’s with the 🅷German sportswear giants – Maguire pointed out what he sees as a flaw in the PSR system.

“If Man United have a £90m shirt deal, presumably it would be acceptable for Newcastle United and Man City to also have a £90m shirt deal given that the Premier League specifically states that the rules are there to ensure competitive balance.

“I don’t know how they can keep a straight face when they say that.”

• READ MORE: Newcastle United’s £20m PSR loophole ha💖s now backfired

PSR: Are Newcastle United able to spend in the January transfer window?

Newcastle came dangerously close to breaching PSR in the three-year period up to 30th June 2024, only falling within the threshold thanks to the begrudgi🔴ng sales of Yankuba Minte🃏h and Elliot Anderson.

However, the Magpies are now in a new PSR assessm💜ent window that no longer includes the £73m loss they posted in 2021-22.

Respected football finance analyst Swiss Ramble forecasts that their losses for 2023-24, when they enjoyed lucrative Champions Leagu𓂃e football, wi♛ll fall to £56.1m.

That gives them some headroom to spend in January, especially given that any si👍gnings they make will be amortised over the next five years.

They would, for example, be able to bring Crystal Palace’s Marc Guehi to Newcastle for £60m and only £12m would hit their profit-and-los✤s accoun꧃t this season.