Newcastle United’s January transfer business and the club’s huge stadium decision are being hugely influenced by the need to comply with new Financial Fair Play regulations coming into force in 2025.
While the Premier League’s Profitability and Sustainability Rules (PSR) are a well-known entity that forced the Magpies to sell prospects Yankuba Minteh and Elliot Anderson in the summer in order to be compliant with a rolling loss of limit of £105m over three seasons, new squad cost control rules – coming into force in July 2025 – may prove even more restrictive to clubs with ambitions of breaking into the top four.
The i Paper understands that the new set of rules, which mirror Uefa’s financial regulations for clubs playing in European competition, are one of the driving forces behind the new player trading strategy being implemented by director of football Paul Mitchell and are also playing a big part in discussions about whether or not to build a new stadium or renovate St James’ Park.
Experts say revenue raising will be even more important in the new financial regime – and that means that building a new stadium is a “no brainer” from a business perspective for Newcastle.
Brad Miller, the club’s chief operating officer, said a new build could potentially earn “twice as much” in revenue – money that will be invested into player recruitment in the coming years.
The new rules, which were agreed by clubs at the Premier League last year, limit clubs to spending 70 per cent of their football revenue on wage costs, transfers, compensation for sacked managers and agents fees if they are playing in Europe.
The figure is higher – understood to be pegged at 85 per cent – for clubs that will not be competing in Europe.
Football finance expert Kieran Maguire says moving from St James’ Park to a new build, while emotionally tough, is the “logical decision to make”.
“In terms of impact on Newcastle squad cost controls will be restrictive,” he tells The i Paper.
“It is being driven by your ability to enhance revenues. So if you look at the key strategic decisions the club has to make – more than the January transfer window, the most important one is the stadium.
“The costs of a new stadium or rebuild are exempt from your cost base, so if the Public Investment Fund [PIF] want to build a 75,000-seater stadium in Newcastle which is going to be of a similar quality to Tottenham’s, they can go ahead with that.
“Spurs have trebled their matchday revenues and also trebled commercial revenues from the move from their old stadium. Given that for every £100 you generate you can spend £70 on player costs you can see that actually it’s not the next transfer window where critical decisions are being made at Newcastle, it’s the decision about the stadium.
“For Newcastle, building something with those revenue streams potentially takes you to the next level. From a business perspective, from a compliance perspective, it’s the logical decision to make. “
What is replacing PSR – and will it give aspiring clubs any more chance?
PSR – which limit clubs to a rolling loss of £105m over three years – remains in place until 30 June, 2025 and Premier League clubs must maintain compliance with those rules until then.
It raises the prospect of wheeling and dealing both in January – when some clubs may need to sell so as not to breach the limit – and at the end of June, which is when the accounting year ends.
That created an impromptu second transfer deadline last year, with Newcastle, Nottingham Forest, Everton and Aston Villa all active in the market in the early part of the summer.
After that squad cost controls are introduced for the 2025-26 season that take a more holistic view of a club’s supposed financial health. But they are no less restrictive.
In layman’s terms, it makes football revenue all important. That is defined as operating revenue (so matchday, broadcast and commercial incomings) and player sale profits.
The impact will be significant. Manchester City’s revenue is more than £700m, so they will be able to spend £490m on player wages, agent fees and amortised player purchases.
Newcastle’s newest revenue figure will be announced in January when the club release their accounts but they are hoping to surpass £300m. Even that will only give them £210m to spend – giving City a £290m advantage.
And then there is the challenge of actually hitting the cost control limit. As blogger Swiss Ramble wrote last year, Newcastle’s cost control ratio was 97 per cent in 2022-23.
The club have substantially improved revenues since then but still, pulling that down to 70 per cent is going to be a challenge.
What does it mean for Newcastle?
Without a great leap forward in terms of revenue in the next few years, they will need to box clever.
Player trading is seen as very important as it’s a big part of revenue calculations – in the new rules you can pick either last year’s sales or an average of the last two or three years (whichever is highest).
Mitchell’s plan is to make Newcastle “better sellers” in the coming years, trading on players who aren’t necessarily surplus to requirements but also aren’t the crown jewels.
He is a big fan of Liverpool’s approach – they raised £100m by selling fringe players to Brentford last season.
Squad cost controls also have implications for contract renewals. Big pay bumps – Alexander Isak’s representatives pitched for one in talks over a new deal – have to be considered as wage costs are a part of the calculations.
For Newcastle the potential ace in the pack is the stadium decision. Building – or renovating St James’ Park – could hugely improve their financial situation.
“The ability to generate revenues is key here,” Maguire explains.
“And whoever is making that big decision will have a huge impact on Newcastle for the next 10-15 years whereas buying players in an individual window – while catching people’s attention – won’t have as great an impact.”
What might the January transfer window bring for Newcastle?
It is understood that the club’s intention is to try and recruit in January, with all parties clear that the squad needs refreshing.
While some fans are beginning to question Eddie Howe after an inconsistent start to the campaign that sees them sitting 12th – way below Newcastle’s ambitions of qualifying for Europe – there’s an acknowledgement inside the club that two transfer windows without significant recruitment is playing a part in the loss of momentum.
Right wing is a key priority target but the ability to match the £60m valuation of Antoine Semenyo or Bryan Mbeumo of Brentford unless there’s a big sale is one of the consequences of PSR. Looking abroad is an option with PSV Eindhoven’s Johan Bakayoko another with admirers at the club.
22-year-old Maghnes Akliouche, who plays for Mitchell’s former club Monaco, is another on Newcastle’s radar, while signing younger players with potential who would develop with the first team is another possible strategy.
In terms of outgoings Miguel Almiron is available, although his price has put off suitors in previous transfer windows, while – as reported last week – Newcastle may have to consider unpalatable sales like that of Harvey Barnes.
Bruno Guimaraes’ future has been the subject of fresh speculation but Newcastle’s asking price – still close to £100m – far outstrips what the likes of Manchester City would be prepared to pay.
It may make January tricky although not everyone shares the club’s downbeat PSR prognosis.
Maguire, for one, believes they may have more leeway than the club is projecting.
“I think they’ve more room to manoeuvre than people give them credit for because I don’t think they anticipated selling both Minteh and Anderson,” he says.
“They made £30-35m on Anderson and £28m on Minteh, so that rolls forward.
“Remember, if you sign a player for £50m on a five and a half-year contract for PSR purposes it only counts as £5m so it’s not substantial.
“They’re making the noises because they fear a Newcastle tax in the same way we used to have a Manchester City and a Chelsea tax.
“They knew what was happening.”
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