by Newcastle United believe the Premier League’s spending rules are preventing them from breaking the ‘Big Six’.
The club’s chief executive, Darren Eales, has warned that the financial gap remains between them and the established order in the Premier League, with new rules restricting sponsorship deals involving club owners. Eales said that “an upwardly mobile club” like Newcastle is preventing them from closing the gap quickly enough to become the sustainable top-six team they want to be.
Tensions are rising in the Premier League as Newcastle and other clubs do not believe there is the right balance between the desire to protect clubs “from going broke and those who want to invest” to compete consistently for silverware .
Newcastle increased their revenue for 2023 from £180 million to £250.3m, but announced a loss of £73.4m over that 12-month period. That takes their combined loss, signed off by an independent auditor, from the takeover to around £105m. But Eales insisted that they are complying with the Premier League’s Profitability and Sustainability Rules and will continue to do so in the future.
“When the takeover happened, the PSR system was already in place,” Eales said, speaking to reporters to announce the release of the latest accounts. “So we’ve always known those are the rules and we’re operating within them. We will always be obedient.
“Those are the rules of the game, as it were. But I think it’s also fair to say that if you want to be an upwardly mobile club it’s a huge challenge. You have to do your business within that regime, it’s difficult. You have to be able to generate that level of income to be able to spend on the squad.
“There are many ways you can have a team on the field that can perform and compete, but ultimately the investment in the squad and the size of the wage bill is very important when you finish in the table. The challenge we face as a club, and one we embrace and relish, is to be efficient and maximize our resources. We have to think in the medium and long term and we have to be strategic.
“We cannot think week to week, month to month, window to window. If we’re going to get to where we want to be, which is a sustainable top six club competing for trophies, we need to take a long-term vision.”
Eales has confirmed that Newcastle are unlikely to make any big money signings this month, which is why loan deals for players like Manchester City’s Kalvin Phillips are so attractive. And PSR will continue their ambitions over the summer as well, even though they are owned by the richest sovereign wealth fund on the planet in Saudi Arabia’s Public Investment Fund.
“The whole range of Premier League rules is always discussed,” Eales said. “There is always that challenge of having a regime that protects the football clubs from going into oblivion and that allows the clubs to invest and be upwardly mobile.
“That’s the tension you always have. There will be a dialogue from all the clubs about, “Do we have that tension right, about allowing clubs to be competitive and protecting clubs from going broke or overspending?”
The figures are alarming – despite their 40 per cent year-on-year growth, Newcastle’s income is worse than the established order in the Premier League.
“To take a step back and the way the PSR calculation works,” Eales said. “There are ways to create additional space.
“In increasing commercial income and looking at our accounts today you can see that turnover has increased by 40 per cent. That’s back-to-back years of 40 percent increases and that’s great from a projection standpoint because it shows that we have tremendous growth potential going forward.
“But to put it in perspective, we want to be a sustainable top six club and the latest accounts available at Tottenham were £440m. [revenue]. We’re on £250m so it’s a big step up even to the bottom end of the top six. We have also seen that Manchester City have £710m in revenue in their latest accounts. There is a long way to go to increase that income.”
‘January is not a great window to do business’
Newcastle supporters hoping to improve the squad this month are likely to be disappointed. Eales could not rule out any income, but whatever Newcastle spend this month will reduce their ability to invest in the summer.
He said: “It’s a difficult window to get value when you’re in the middle of the season and you’re trying to bring in quality. Clubs are not willing – or less willing in January – to lose those types of players. . Summer is always better in terms of value and planning.
“Secondly, we’ve had some injuries and very good players are coming back in the second half of the season. Like everything, we need to tackle it on a medium and long-term basis, rather than knee-jerk reactions. For us, January is not a great window to do business. That doesn’t mean we won’t do business, as we saw with Anthony Gordon last year. [But] It is difficult to do any major surgery.”
Newcastle will have to sell players they would rather not lose in order to fund further investment to improve the quality of the squad. That would probably mean an academy graduate like Sean Longstaff or Elliot Anderson, or one of the “crown jewels” in Alexander Isak, Bruno Guimaraes or Sven Botman.
“Increasing revenue is one way to create space with PSR,” Eales said. “The other one, and it seems counter-intuitive, is when you trade players.
“You have a £50m player you can sell and you bring in another player of the same value. What’s the point of doing that, you might say? It’s dangerous because we already have that player here and we know what they can do, but if you sell a £50m player and bring in an identical one for £50m, on the same wage, but if amortized over the five years. player you’re bringing, that’s only £10m a year. So, you’re creating £40m of headspace.
“If you’re massaging players you create more headspace. We have seen many examples of this elsewhere. Philippe Coutinho at Liverpool and they brought in Allison and Virgil van Dijk. Jack Grealish going from Aston Villa [to Manchester City] and they have reinvested and reloaded. Declan Rice at West Ham [to Arsenal]. It’s just the nature of the beast. In the world of PSR, every player has a price.
“It is difficult to say specifically on certain players, but I can say that if we are going to get to where we want to be, it is sometimes necessary to trade your players. Whether that’s because of the length of the player’s contract, the offer is too good to refuse, you need to reload in certain areas.”
Newcastle will continue to grow their commercial income. More sponsorship deals are underway and Eales stressed they will not bend the rules to close the gap faster.
“On some levels it takes control because you have to plan your strategy,” Eales added. “We’ve got the positive tailwinds from Sela’s top shirt sponsor, Champions League money, Adidas coming in June, which will be a big leap for us because we can control our own retail and merchandising, which wasn’t the case before this.
“With the performances we’ve had on the pitch and the buzz around the club more and more commercial partners want to join this journey. It’s a snowball going down a hill. As we’re doing better on the pitch it’s helping us with commercial partnerships.”
